San Diego Startups: Structuring Corporate Stock to Satisfy Investors and Owners (Part III) If you are in the process of starting a new San Diego business, consider issuing different classes of stock -- voting vs. economic -- as a vehicle for enticing investors without losing control of your new [...]
Buy-Sell Agreements Should Contain a Right of First Refusal A buy-sell agreement governs the terms and conditions under which a business owner can sell -- or be forced to sell -- his or her ownership shares/units in the business. In general, a buy-sell agreement is an attempt to plan [...]
Five Keys to Using Negotiations to Resolve a Breach of Contract As we have said many times on this site, businesses run on their contracts. Hopefully, all of those contracts run smoothly, and all contracting parties end up getting the benefit of their respective bargains. Unfortunately - and inevitably [...]
Police Chases and the Company Vehicle There is nothing like logging onto your news app or turning on the television to see video of your company's delivery truck prominently featured in a police chase. Your first thought might be "oh no." Your second thought might be to accept the [...]
San Diego Business Contracts: "Materiality" Needed for Breach of Contract Claim Not every breach of contract will result in liability for the breaching party; the breach must be "material" for the breach to be compensable in a San Diego court. "Materiality" goes to the question of importance. Is the [...]
Can My Investors Take Over My Small Business? Many San Diego small businesses seek out investors to help start the business, but there is often some confusion about what role the investor plays and what rights the investor has. One common concern for small business owners is whether an [...]
Own a Business and Getting Married? Some Business Thoughts Planning a wedding is an exciting and busy time in anyone’s life, as there is much to consider. For small business owners, there are some practical concerns and worries as well. Here are some thoughts on some business planning to [...]
San Diego Business Contracts: Thoughts on Subcontractor-Limitation Clauses Many standard business contracts, particularly service-related contracts, contain provisions limiting the ability of the parties to subcontract their obligations under the contract. These subcontractor-limitation clauses make business sense and common sense because trust, experience, and reputation are often the basis for [...]
Business Contracts: Importance of Using Both Warranties and Indemnifications In complex business contracts, to protect your business, it is important that the contract(s) contain both warranty and indemnification provisions. A good San Diego corporate attorney can help review your contracts and ensure that your business is protected. In general, [...]
Should Your San Diego Business be Using Clawback Provisions? Clawback provisions are commonly used in various types of contracts. Typically, these are seen in investment and financial-related transactions where payments/salary are incentive-based. Sometimes these are called "Recoupment of Incentive Compensation" provisions. Indeed, some clawback provisions are mandated by federal [...]
California Federal Court: Calling a Soda "Diet" is Not False or Deceptive Advertising In August 2018, a California federal court sitting in San Francisco rejected consumer claims that labeling a soda as "diet" was false and/or misleading. The case was Becerra v. Dr Pepper/Seven Up, Inc., No. 17-CV-05921 (US. [...]
M&A: What is a Post-Closing Escrow? In business mergers and/or acquisitions, it is common for the parties to negotiate at least one post-closing money escrow. These are funded from the seller's purchase price. In general, an escrow is an agreement in which an agreed-upon neutral third party holds something [...]
General Assembly Defies US Supreme Court on Employee Arbitration/Class Action Waivers Recently, the US Supreme Court ruled that employers can require their employees to agree to binding arbitration with respect to employment disputes, and can require that their employees waive the right to file a class action lawsuit. See [...]
You Need Overlapping Protections for Your Company's Intellectual Property Every San Diego business has valuable intellectual property ("IP") including: Copyrightable materials such as slogans, advertisements, website copy, etc. Trademarks such as logos Potentially patentable inventions, designs, and/or methods -- not every business has these, but it is surprising what [...]
Time to Incorporate and Start Your San Diego Businesses By all reports, the economy is doing well and small business confidence and optimism is at an all-time high. For the last 45 years, the National Federation of Independent Business has been charting an "optimism index" for small businesses and [...]
More "Happy Cows" False Advertising Lawsuits "Happy cows" and claims of false advertising are back in the news. Back in the early 2000s, here in California, the animal-rights advocacy group, People for the Ethical Treatment of Animals ("PETA") accused the California Milk Advisory Board of false advertising with respect [...]
Update: 2018 California Consumer Privacy Act is Amended To great fanfare, earlier this summer, the California General Assembly passed the California Consumer Privacy Act of 2018 (the “CCPA” or the "Act"). See here. The CCPA has caused quite a stir among San Diego and California businesses and there have [...]
Contract Interpretation: The Language of Lists In this article, we take a brief look at two judicial concepts with respect to how California courts interpret complex business contracts. Both concepts, ejusdem generis and expressio unius est exclusion alterus, relate to how courts interpret the use of lists in a [...]
What Does a Business Lawyer do? An experienced San Diego business lawyer is essential to the success of your business. Many people think that a lawyer is a luxury or only needed if there is a lawsuit. Both are common misconceptions. Lawyers are as basic as plumbing and electricity [...]
Five Hallmarks of a Well-Drafted Company Harassment Complaint Form San Diego businesses that have employees are prohibited from engaging in sexual harassment and other types of discrimination. Moreover, businesses are required to prevent agents, employees, volunteers, and others from engaging in such behavior. Part of the activity that must [...]
San Diego Class Action Lawsuits: Arbitration and Enforceable Contractual Waivers This article provides some basic information on class action lawsuits, their purpose, and some recent trends with respect to contractual waivers. California courts are generally hostile to contractual waivers of class actions, but at the same time, the US [...]
Can Specific Performance of a San Diego Personal Service Contract be Ordered? As a general rule, San Diego personal service contracts are enforceable under California law. An example might be a personal service contract for in-home nursing care for a certain number of months or years. If the nurse [...]
Employee Social Media Account as Stolen Property? In some recent articles, we have written about a dispute between sports reporter Andy Bitter and the owners of the Roanoke Times media outlet. As we have discussed, Mr. Bitter was, until recently, a reporter covering the Virginia Tech Hokies sports teams [...]
Contract Protections For San Diego Subscription Plans: Four Must-Have Provisions San Diego businesses are increasingly looking at subscription agreements as a way to boost revenues and even drive sales (as a form of marketing and promotion). "Subscription agreement" is the new marketing term for the old idea of time [...]
Forming Contracts in San Diego: Browsewrap vs. Clickwrap Everyone who spends any time on the internet has encountered terms of service/user agreements that go by the names of "browsewrap" and "clickwrap" agreements. A classic "browsewrap" agreement is a statement located on a website that says something like: "By visiting [...]
Tezos Litigation: Claims Against Swiss Foundation can be Maintained in California Many have heard of Bitcoin and Ether blockchain cryptocurrencies. Since those currencies were introduced, there have been a succession of blockchain coin or token offerings. As we discussed earlier on this blog, more often than not, such coin/token [...]
Ensuring Your Letter of Intent is Non-Binding Letters of intent ("LOI") are useful tools when San Diego businesses are in the process of negotiating a complex transaction. The letters of intent are often used to summarize points that have been agreed to and are revised many times during the [...]
Dynamex, Senate Bill 1343 and Sexual Harassment Prevention Training As the San Diego business community continues to absorb the many implications and impacts of the Dynamex decision, one new question raised is whether "gig workers" should be receiving sexual harassment prevention training. As we have discussed, under the Dynamex [...]
"Made in the USA" Product Labeling: 2016 Statutory Changes are Deemed Retroactive Back in 2015, the California legislature amended the "Made in the USA" labeling law to provide a more liberal definition of how much content is allowable for a product to still be labeled as "Made in the [...]
No Slave-Labor Product Labeling Required Under California Law if No Active Misrepresentation Made In 2010, the State of California enacted the California Transparency in Supply Chains Act. See Cal. Civ. Code, § 1714.43. The General Assembly took note of the fact that de facto slave labor is common in [...]
Anti-Harassment Policy Basics for San Diego Businesses Every San Diego business with employees must have a company anti-harassment policy approved by the President/CEO of the business. It is actually preferable that the anti-harassment policy be approved by the Board of Directors or Managing Committee and it is important that [...]
Strategies for Making a Handshake Deal More Legally Enforceable For many, "handshake deals" are the best kind of deals. They are based on the good people involved, the right kind of people who honor their promises without the need for writing, and such deals are quick and easy in [...]
Transferring Ownership of Small Businesses: Contract Considerations Most often, small businesses are transferred through a sale/purchase, but there other circumstances in which ownership is transferred that do not involve a sale/purchase. Such include: Transferring partial or full ownership of a family-run business to a spouse or new members of [...]
Reasons for Caution When Demanding Separated Employees Turn Over Control of Employee-Operated Social Media Accounts We wrote recently about whether a Twitter account could be considered the property of and a trade secret of the company that may have created it. That is the current dispute between the owners [...]
What is Quantum Meruit as a Quasi-Contract Measure of Damages? Quantum meruit is a legal doctrine that allows a person to sue and recover for the value of goods or services even though there might not be a specific business contract. As a simple example, your delivery truck has [...]
California Business Law: Retroactivity of Court Decisions and Dynamex As we have written, in April 2018, the California Supreme Court changed the test for determining whether a worker is an "employee" or an "independent contractor." The new rule essentially makes all workers "employees" unless strictly defined conditions are met. [...]
Revisiting "Unconscionable Contracts": California Usury Law In general, usury laws forbid lenders from charging interest in excess of the rate listed in the applicable statute. California has a usury law that caps interest rates, but the law only applies to non-bank consumer loans that do not exceed $2,500. See [...]
New Study: Trademark Registration Helps Your Business Grow The US Patent and Trademark Office ("USPTO") just published a new study that found a higher growth and success rate for businesses that register trademarks. See study here. Highlights of the study include: Trademark registrants statistically tend to have higher revenue [...]
M&A: No-Reliance Contract Clauses and Avoiding Post-Closing Claims of Fraud A post-closing claim of fraud is one of the most common litigation risks associated with buying/selling a San Diego business or with a merger and acquisition. In general, this is a claim made by a buyer who has "buyer's [...]
Pay Special Attention to Provider Numbers When Purchasing a Medical Practice In general, one of the most valuable assets of a medical practice is its government-issued provider number(s). For those not in the industry, a provider number is a business identification number that is used to process payments from [...]
Cost Factors to Consider When Buying a Franchise One of the quickest methods of starting your own business here in San Diego -- becoming your own boss -- is to buy a franchise. There are many advantages of buying a franchise including knowing that you are selling products or [...]
How are "Qualified Purchaser" Investors Different From "Accredited Investors?" Both the US and California governments regulate the offering and sale of securities under various statutes such as the federal Securities Act of 1933 and the California Securities Act of 1968. In addition to those two statutes, there are many [...]
Buy-Back Agreements: Removing a San Diego Shareholder for Cause or No-Cause With small, closely-held San Diego corporations and limited liability companies, it is important that the shareholders, members, and owners get along at a basic level. Maybe not best of friends, but the ability to work together for the [...]
Outlining the Parameters of a Contractual Restraint on Trade: Golden v. CEP (9th Cir.) As we have written previously on this blog, California law does not allow noncompete or other types of agreements that prohibit or unduly interfere with a person's ability to work in his or her trade [...]
San Diego Commercial Leases: Nonconforming Use Clauses When your business enters into a commercial lease, there will likely be a clause related to "nonconforming use" of the property. These clauses often are limited to use of the leased premises that conform or fail to conform to governmental zoning, permit, [...]
Is a Company-Associated Twitter Account a Trade Secret? In the news recently is a fight between a local sports reporter -- Andy Bitter -- and his former employer, the owner of The Roanoke Times. Mr. Bitter was a sports writer for the media outlet covering sports events at Virginia [...]
Selling a Medical Practice? Transitioning is Often Better Than Abrupt Termination Selling a San Diego medical practice is different and more complex than selling another type of business. With a medical or other healing arts practice, two somewhat competing goals are in tension - the desire to maximize the [...]
Three Essential Agreements Needed When Hiring Employees Even if your San Diego business chooses not to have employment contracts with your workers, there are still other essential agreements that you must have your employees sign before they begin working. These are needed to protect your business and its assets. [...]
Does Your Family-Run LLC Need an Operating Agreement? In brief, "Yes." Even a family-run limited liability company ("LLC") needs a well-drafted and solid operating agreement. One of the most common mistakes made by family-run businesses is assuming that normal business practices are "not necessary because we are family." The [...]
Can I Fire an Employee Who Lied on Their Resume? An employee who lies on his or her resume or on his/her employment application has committed a form of fraud because he or she has provided false information. This is true even if the employee has worked at your [...]
Thoughts on Handling a Dissident Director Under California law, the board of directors of a San Diego corporation is charged with the management of the company. See Cal. Corp. Code, §300 which states that "... the business and affairs of the corporation shall be managed and all corporate powers [...]
Nine Changes in Your Business That Necessitate Hiring a Good San Diego Corporate Lawyer One can conceive of a business as a living, growing organism that migrates through various changes and evolutions. We here at San Diego Corporate Law have discovered that there are natural growth points and retraction [...]
Three Often Overlooked Steps for Maximizing the Value of Your Business When Selling Like preparing a house for sale, when you are preparing to sell your San Diego business, there are many well-known preparatory steps to take. Many of those steps include various strategies for cutting costs and enhancing [...]
Thoughts on Buying an Existing Business or Starting a New One Owning and running your own San Diego business can be a dream come true. Fortunately, there are many ways to accomplish this goal. Two of the most common methods are starting your own brand new business, or buying [...]
When a Joint Venture Might be a Better Alternative to a Merger or Acquisition Mergers and acquisitions ("M&A") can be effective methods of expanding your San Diego business into new markets and customer bases. However, merging with or buying another business are both risky endeavors. Depending on the circumstances [...]
Corporation Classes of Stock, Control, and Money: Lessons From Facebook On July 26, 2018, Facebook, Inc. lost nearly $120 billion in market capitalization value as stock prices plunged more than 19%. According to news reports, that was the largest total single-day drop in market value ever recorded. See here. [...]
California Corporations Law: Board is the Boss, CEO is the Employee Many people get confused about how corporations are run. We are used to seeing the Chief Executive Officers of a company in the news and the media. It is tempting to see that person as the "boss" and, [...]
San Diego Business Contracts: Anti-Assignment Clauses When it comes to ongoing and long-term business relationships, the person with whom a business partner interacts with is often very important. Business runs on personal connections, loyalty, and trust. This means that many ongoing business relationships are built on reputations and integrity. [...]
California Business Forms and Structures: An Overview If you are just starting your new San Diego business, California law provides you with many choices as to the form and corporate structure of your business. There are advantages and disadvantages for each form/structure, and a good corporate attorney can help [...]
Can You Void a Contract by Claiming You Were Too Drunk? For a valid and enforceable contract to be formed under California law, there must have been: An Offer Acceptance Consideration and A meeting of the minds -- that is, both parties understood the subject matter of the contract [...]
FAQs Regarding Forming a California Medical Corporation In California, physicians, nurses, and other healing arts practitioners are permitted to form professional corporations pursuant to the Moscone-Knox Professional Corporation Act (“MKPCA”). See Cal. Corp. Code, §§ 13400 et seq. Other professions, such as lawyers and accountants, can also form professional [...]
California Contracts: Are No Oral Modification Clauses Enforceable? Many written business contracts contain what are commonly called no oral modification clauses. In general, such no oral modification clauses state that any modification of the contract must be in writing and signed by the parties. However, business owners should take [...]
Can My San Diego Teenager Form a Corporation and Start a Business? Some have probably heard that Kylie Jenner may soon become a billionaire at the young age of 20 years old. See here. In the new economy, young entrepreneurs are increasingly using technology and online marketing/sales platforms to [...]
Signs That a Partnership Fight is Looming Forming a partnership is often an excellent way of starting and running a business. There are tax advantages, mutual help and assistance is created, different skills sets can enhance the chances of success, etc. However, as with any relationship, conflict can result [...]
Serving on a Board of Directors: What You Need to Know A California corporation is governed at the highest level by its board of directors. The day-to-day operations of the company are conducted by the corporate officers, who carry out the policies made by the board. This article discusses [...]
Incorporation Assistance: Reasons to Hire an Experienced Corporate Lawyer to Help We here at San Diego Corporate Law emphasize the need to form a corporate entity such as a corporation or a limited liability company to run your business. There are many reasons why this is important. It is [...]
San Diego Corporate Law: Beware No-Poach Provisions in Franchise Agreements Employer no-poach agreements have made news headlines lately. See CNN-Money report here. It has been reported that, in mid-July 2018, seven fast food restaurant chains agreed to end their franchise rules that prevented or prohibited franchise employees from being [...]
Amended Corporations Code Section 1601: Right to Inspect Corporate Records Under the California Corporations Code, San Diego corporations are required to allow inspection of "accounting books, records and minutes" by shareholders of the corporation. See Cal. Corp. Code, § 1601(a). This right to inspect is one of several rights [...]
San Diego Business Law: When to Have Signatures Notarized Sometimes, with particularly important contracts and agreements, it is useful and beneficial to ask that the signatures of the parties be notarized. If you have ever bought a house, then at some point during the transaction, you participated in the [...]
What Should be in Your San Diego Distribution Agreement? If your San Diego business produces goods, then you likely need help with distribution. Many businesses handle distribution and sales in-house, but distribution can be done through agents, resellers, distributors, and other business partners who help get your goods to [...]
San Diego Business Law: What is the Doctrine of Laches? In general, the doctrine of laches is a defense to various claims that might be asserted against your business -- such as a breach of contract or a claim for reinstatement by a terminated employee. The doctrine of laches [...]
Buy-Sell Agreements for California Professional Corporations While Buy-Sell Agreements are incredibly valuable tools for any small business to have, they are particularly important for professional corporations. The best time to have a Buy-Sell Agreement drafted for your California professional corporation is in the beginning, after the corporation is formed [...]
What the California Consumer Privacy Act of 2018 Means for San Diego Businesses On June 28, 2018, California passed the California Consumer Privacy Act of 2018 (the “CCPA” or the "Act"). See news report here. Here is a quick rundown of the CCPA and how it will affect your [...]
Are You at Risk for Being Sued for Negligent Hiring? If your San Diego business has employees, there is always the risk of being sued because of actions taken by those employees. The legal concept of respondeat superior dictates that an employer is usually responsible for the negligent acts [...]
Checklist for California Corporation Articles of Incorporation Finding a good and experienced corporate attorney to assist you in forming your corporation the right way is important. At San Diego Corporate Law, we believe in doing things right the first time. While each business is unique, there are some items [...]
What Does Dynamex Mean for San Diego Copyrights and Ownership of Creative Works? The distinction between "employee" and "independent contractor" is not only important for employment law, but also for copyright law. With respect to the former, the category in which a worker is placed determines whether the worker [...]
Dynamex and Grubhub: San Diego Employee or Independent Contractor? We wrote recently about the California Supreme Court's decision in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (Cal. Supreme Court April 30, 2018). See our discussion here. Dynamex established new rules in California with respect to how [...]
California Makes 2018 List of Top 10 States for Launching Startups The website wallethub.com just published its list of the top 10 states for launching a startup. California makes the list coming in at number eight, and Texas was number one. See here. California would have ranked higher, but [...]
California's Proposed Gender Quota Law for Corporate Boards San Diego and California corporations are governed by their respective boards of directors. Lawmakers in Sacramento are getting close to passing a new law that would require gender diversification on corporate boards of directors. The proposed law is currently designated as [...]
Defining “Default” or “Event of Default” In San Diego Business Contracts A good San Diego business contract will define the concepts of "default" and "event of default.” With a simple contract, default is probably failure to deliver or failure to pay. These terms should be defined for more complex [...]
Avoiding Family-Owned Business Pitfalls: Minority Shareholder Oppression Claims It is often the case that many family-run businesses emphasize the "family" part of the business, providing jobs, money, and resources for members of the family. In fact this is often among the main reasons to start a family-run business - [...]
"As-Is" Contracts Part IV: Avoiding Claims of Fraudulent Concealment In this article, we discuss another aspect of "as-is" contracts here in San Diego and in California. In previous companion articles, we discussed two necessary components of well-drafted “as is” contracts, namely language with respect to a buyer's due diligence/inspection [...]
Can I Use GPS or Phone Apps to Track My San Diego Worker's Movements? In brief, yes, a San Diego business can use a GPS device or a smartphone app to track the geo-spatial movements of its workers as long as it informs those employees BEFORE beginning such tracking. [...]
San Diego Business Contracts: What is a "Condition Precedent?" In San Diego and California, for a business contract, a "condition precedent" is simply some obligation that one party to the contract must perform before the other must perform his, her, or its obligation(s). A simple example would be a [...]
"As-Is" Contracts Part III: Dealing With the "Sophistication of Parties" Problem In two companion articles, we have discussed a couple of important aspects of “as is” contracts. "As-is" contracts are among the most vulnerable contracts to an eventual court challenge if the buyer has remorse after the transaction is [...]
Employee Handbooks: National Labor Relations Board New Guidance A good corporate attorney helping and advising with respect to drafting and updating employee handbooks must be on the constant lookout for new and changing laws. Such might be found in new statutes, caselaw, and in new rulings from labor administrative [...]
"As-Is" Contracts Part II: Avoiding Claims of Fraud In a companion article, we discussed some aspects of an “as is” contract including the importance of the buyer's due diligence/inspection requirements. As noted in that article, “as-is” contracts are enforceable in San Diego and California. In this article, we discuss [...]
Due Diligence With Respect to "As-Is" Contracts in California Sometimes, San Diego businesses and individuals agree to what are generally called “as is” contracts. In general, such contracts are enforceable under California law as California law favors the idea of "freedom to contract." However, "as-is" contracts present a host [...]
Revisiting Website Accessibility for California Businesses in Light of Wayfair, Inc. Not too long ago, we discussed the fact that San Diego and California businesses must ensure that their websites are compliant with the Americans With Disabilities Act ("ADA"), with the Unruh Civil Rights Act ("UCRA"), and with the [...]
US Supreme Court: San Diego E-Commerce Businesses Have to Collect Sales Taxes A new US Supreme Court decision has reversed long-standing precedent and now, e-commerce businesses must collect taxes for sales transactions made with residents of other states under some circumstances. See South Dakota v. Wayfair, Inc., Case No. [...]
Using Contract Language to Avoid Litigation Over Claims of Mistake-in-Fact Under California law, a contract can be defeated if a party can prove there was a mistake-in-fact. For a contract to be enforceable by California courts, there must be a "meeting of the minds" between and among the parties [...]
US Supreme Court Declares Railroad Stock Options Not Taxable Many San Diego and California businesses offer their employees stock options as a form of compensation. Sometimes (rarely) the stock option is without cost; more often, the option is a right to purchase company stock at a set price. Assuming [...]
San Diego Business Contracts: What is Fraudulent Inducement? There are many possible defenses to a claim of breach of contract. One such defense is a charge of fraudulent inducement. Under California law, there are two types of fraudulent inducement with respect to contracts - fraud in the "executing of" [...]
New SEC Guidance: Cryptocurrencies are Not "Securities" (but Sometimes They are) In mid-June, 2018, William Hinman, Director of Corporate Finance for the Securities and Exchange Commission (“SEC”), offered new guidance on the question of whether cryptocurrencies are "securities." See news report here. Previous guidance and SEC enforcement actions had [...]
How Detailed Job Descriptions can Help Avoid Employee Lawsuits If your San Diego business has employees, you want to put your business in the best position possible to avoid employee litigation and to help win those lawsuits if they are filed. One often-overlooked aspect of avoiding employee litigation is [...]
Dealing With Avoidance of Executory Contracts Under the Bankruptcy Code In this article, we discuss another aspect of the US Bankruptcy Code (the "Code") as it relates to business contracts. In a previous article, we discussed the automatic stay, which limits your rights to continue efforts to collect debts [...]
Trademark Basics: Coexistence Agreements and Consent Agreements As many know, in San Diego and in California, you and your business are not allowed to infringe upon the trademark rights of another person or business. Infringement will bring expensive litigation and hefty civil penalties. As with many commercial dealings, there [...]
Using Contract Provisions to Shorten Statute of Limitations and Reduce Risk In San Diego and elsewhere in California, there are certain statutes that limit the amount of time in which a lawsuit can be filed. These are generally known as statutes of limitation. With respect to contracts, for example, [...]
Selling a San Diego Business: Minimizing Contractual Indemnity Obligations If you are selling a San Diego business, almost certainly, the contract for purchase/sale will contain provisions requiring various indemnifications. In a companion article, we discussed the definition and general basics of indemnification clauses. In this article, we discuss how [...]
San Diego Business Law: What is Contractual Indemnification? Typically, a business sales/purchase contract will contain provisions imposing indemnification obligations. These are often called "hold-harmless” provisions. In general, one party to a contract indemnifies the other party by agreeing to “hold them harmless” by paying for the legal fees, litigation [...]
