I've Filed an LLC. I'm Personally Protected from Lawsuits, Right?

Filed LLCHow useful is a condom that is never taken out of its box and wrapper?

If you were the kind of person with enough forethought to buy a condom, you would probably want it to protect you from several things.

But it would not be very useful to go through the trouble of buying the condom and not taking the additional necessary steps to get its benefit.

Lawyers call certain legal services “prophylactic.” That’s because their purpose is to prevent problems and unwanted consequences.

Completing your necessary corporate compliance and regulatory paperwork is prophylactic. Buying an LLC and not taking it out of the box will not give you the desired results.

Video Transcript:

Say you filed an LLC using Legal Zoom. Are you personally protected from lawsuits?

Maybe a few, but mostly, no.

Because they don’t give legal advice, budget legal sites don’t tell you there are numerous things to do after you file the LLC to legitimately and legally set up your business.

After years of starting businesses, we have developed a list that is several pages long made up of single spaced bullet points.

If you don’t do all the things on this list for your LLC, then the “corporate veil” can be pierced.

But more likely, if you don’t do all of the things you are supposed to do to start up your business legally, you will violate one of several laws that carry personal liability even if you are incorporated.

There are legal traps in the areas of taxes, wage laws and even corporate laws and torts.

You may also be liable for some contracts and debts.

There are ways to limit your liabilities and protect your assets. While nothing is foolproof, a business-minded lawyer can help you significantly.

Do you know where your legal land mines are? To find out, call us for a Business Risk Review at 800-449-8992 or email us at [email protected].

Contract Negotiation and Drafting

CONTRACT NEGOTIATION AND DRAFTING

Contracts dictate the terms of all business transactions and professional relationships, ranging from dress code for employees to the responsibilities of business partners to the leasing of commercial space and equipment.  By establishing guidelines, providing clarity, and illuminating the path toward the successful completion of projects, clear and enforceable contracts benefit all types of employers and business owners.

Unfortunately, contracts and agreements are not always easy to prepare or interpret.  Boilerplate language, convoluted wording, and unenforceable clauses plague contracts of all varieties, and even experienced business owners can find themselves faced with a legal catastrophe if breach of contract is alleged internally or by another business entity.  Once an initial contract has been prepared, negotiations must be handled carefully.  Agreements which initially seem simple can lead to confusion, disputes, and eventually litigation, should unanticipated circumstances or complications arise.

The business attorneys of Bellatrix PC have extensive experience assisting start-ups, non-profit organizations, corporations, partnerships, and LLCs with the preparation and negotiation of contracts and written agreements.  As business owners ourselves, we focus our firm on providing clients with results-oriented, cost-efficient solutions for complex legal disputes.  To learn more about how we can assist your business, call our law offices at (800) 889-8376 to schedule a private consultation.

Contract Form

Contracts and Business Agreements Our Attorneys Handle

Contracts can take many different forms.  Our attorneys have the knowledge and skill to prepare and negotiate a wide variety of business- and employment-oriented contracts and agreements, including but not limited to the following:

  • Buy-Sell Agreements
  • Commercial Lease Agreements
  • Confidentiality Agreements
  • Consulting Agreements
  • Distribution Agreements
  • Employment Contracts
  • Joint Venture Agreements
  • Licensing Agreements
  • Non-Compete Agreements (Covenants Not to Compete)
  • Non-Disclosure Agreements (NDAs)
  • Operating Agreements
  • Partnership Agreements
  • Purchase Agreements
  • Real Estate Contracts
  • Releases
  • Separation Agreements
  • Severance Agreements
  • Software License Agreements
  • Stock Transfer Agreements
  • Waivers

Determining enforceability of contracts can be a daunting task in situations where the involved parties are located in different states or countries.  Our attorneys will assess your proposed contracts and agreements for legal vulnerabilities, advise you with regard to potential risks of the existing language, and take corrective measures as needed to protect your business’ legal and financial interests.

What Are the Elements of Breach of Contract?

It is not uncommon for clients, consumers, or other businesses to claim they have been financially harmed by a commercial defendant’s breach of contract.  While being sued is always a stressful and frustrating experience, try not to panic: in order for the plaintiff to prevail, the following elements must be proven:

  • A valid contract must exist.  This includes oral agreements.
  • The defendant deviated from the terms of the contract in a significant or material way.  Lawsuits arising from minor breaches are frequently unsuccessful due to the following point.
  • The breach must have resulted in damages to the plaintiff, such as loss of time, money, or other business relationships.  (For instance, the plaintiff lost a client because the defendant failed to deliver a shipment in accordance with the terms of the contract.)

The best way to minimize your company’s risk of facing breach of contract allegations is to prepare concise and clearly-worded agreements.  All agreements should be put into writing, so that you are prepared with a point of reference should disputes arise in the future.  Oral agreements, which do have the potential to be legally binding, leave your business vulnerable to accusations of breach and other misconduct.

Business contract

What Should Be Included in a Contract?

Of course, the answer to this question depends on the type of contract which is involved.  Likewise, business owners are strongly urged to avoid using generic, template-based contracts, as the boilerplate agreements widely available on the internet inevitably lack the level of detail and nuance necessary to cover each element of a real-world transaction.

While each contract should be unique and customized to the situation at hand, there are some general tips which can help you visualize the components of a well-written contract:

  • Use clear, plain language.  Dense legalese can be a roadblock to comprehension, which can only lead to confusion and disputes.
  • Do not include terms or clauses which could render the contract unenforceable.  For instance, covenants not to compete (non-compete agreements) are generally not enforceable in the state of California.
  • Always commit your agreements to paper, no matter how cordial the relationship.  If your agreement rests upon a promise and a handshake, you have no hard evidence to support your position should a dispute arise in the future.
  • Provide terms under which the contract may be terminated.  You must consider emergency factors like natural disasters, death, and disability, no matter how remote or unlikely these issues may seem to you now.
  • Keep all details accurate and consistent.  If a business’ name ends with LLC, make sure you include the LLC at each instance of the name.  Minor inconsistencies can present problems later down the road.
  • If the parties are located in different states, determine which state will have jurisdiction over the agreement.

If your company needs help writing or negotiating a business contract, get legal guidance from an experienced and respected law firm.  To set up a private consultation, call the contract attorneys of Bellatrix PC at (800) 889-8376 today.

Licensing Agreements

LICENSING AGREEMENTS

Intellectual property (IP) can be just as valuable, if not more valuable, than tangible assets like land and equipment.  Whether it’s a patent, trademark, trade secret, copyrighted material, or other proprietary information, IP is the driving force that gives your business an edge over your competition.  

While businesses must take careful steps to protect themselves from financial harm resulting from the unauthorized usage of IP, there can also be benefits to licensing intellectual property rights to other entities or individuals, such as creating strategic business alliances or freeing up room for greater innovation and flexibility.  In cases where a sale or transfer is unfavorable to the owner, licensing IP can be a suitable alternative, allowing the owner to retain the title.

To discuss your business’ intellectual property needs in a private consultation, call the licensing attorneys of Bellatrix PC at (800) 889-8376.  We have years of experience providing LLCs, partnerships, corporations, and non-profit organizations with cost-effective legal solutions, and have obtained favorable outcomes for numerous clients faced with a broad spectrum of intellectual property lawsuits and licensing agreement disputes.

Intellectual Property Lawyers Serving Your Business

If you’re considering licensing your company’s intellectual property, the preparation of a well-drafted licensing agreement is essential to ensuring that your IP will not be used to the detriment of your business.  The intellectual property lawyers of Bellatrix PC have the legal knowledge and business acumen to assist in the drafting and negotiation of customized licensing agreements across a wide array of industries and business, including but not limited to:

  • Arts and Entertainment
  • Beauty and Cosmetics
  • Biotechnology
  • Chemical Engineering
  • Computer Science
  • Digital Media
  • E-Commerce
  • Electronics
  • Fashion and Apparel
  • Food and Beverage
  • Mechanical Engineering
  • Medical and Pharmaceutical
  • Video Games and Computer Games

Our attorneys are prepared to assist businesses with IP matters such as:

  • Determining the ownership of rights and reviewing chain-of-title matters.
  • Litigation, mediation, or arbitration related to copyright infringement, breach of contract, or other disputes.
  • Handling patent searches.
  • Consulting on trademark and copyright law.
  • Drafting, negotiating, and enforcing the provisions of your licensing agreement.
  • Performing due diligence.
  • Consulting on marketing, advertising, and franchising.
  • Handling disputes related to unfair competition and unfair business practices.
  • Determining which parties assume product liability in the event of death or personal injury, and to what extent.

mergers and acquisitions business contract

What Elements Should Be Included in a Licensing Agreement?

Contracts of all types should be written as concisely and succinctly as possible.  However, due to the complex legal issues which are involved, licensing agreements can become dense with jargon and other obstacles to clear interpretation.  

Whether you are considering another company’s proposed licensing agreement, or are preparing to draft your own, close review by an experienced licensing attorney is essential.  The attorneys of Bellatrix PC will review your agreement clause by clause to identify and revise vulnerable points, while advising you with regard to your options and their potential outcomes.  By making your legal intentions clear today, you can reduce the risk of conflict and litigation tomorrow.  

Generic or template agreements should be avoided, which means the exact provisions of licensing agreements will inevitably vary from company to company.  However, there are some basic points which should be clarified in all licensing agreements.  No matter what sort of service your company provides, or what the relevant IP entails, your agreement should include the following components:

  • Clear identification of the parties involved in the agreement.
  • Recitals providing context for the agreement (e.g. whether the agreement resulted from a settlement).
  • A definition clause which supplies clear descriptions of each term being used in the agreement (e.g. “licensed patent”).
  • The compensation which will be provided by the licensee to the licensor, including matters like tax liability and payment schedule.
  • The obligations of each party under the terms of the agreement, including both positive and negative obligations.
  • A termination clause which provides an exit strategy by clearly addressing the circumstances under which the agreement may be terminated, and the consequences of such termination.
  • Means of conflict resolution should a dispute arise in the future, such as allegations of copyright infringement.
  • A grant clause determining whether the grant will be exclusive or non-exclusive.
  • A clause setting forth which, if any, changes or improvements may be made upon the original IP.
  • A clause addressing product liability in the event of a client or consumer’s death or injury.
  • A clause addressing whether the licensee has permission to sublicense the IP to additional parties, and if so, the extent of the restrictions upon such parties.
  • A due diligence clause addressing matters such as competing products or milestones which are expected to be met.

If your business is considering accepting or proposing a licensing agreement, don’t sign away the rights to your intellectual property until the terms of the contract have been examined by an experienced business attorney.  To arrange for a confidential legal consultation, call the law offices of Bellatrix PC at (800) 889-8376 today.

San Diego Contract Formation and Contract Dispute Lawyer

SAN DIEGO CONTRACT FORMATION AND CONTRACT DISPUTE LAWYER

Contracts are the foundation upon which all business transactions rest. In the absence of a clearly-worded, well-formed business agreement, the parties involved stand vulnerable to unfounded accusations of breach of contract, which can lead to contentious and time-consuming litigation. In other instances, unscrupulous businesses attempt to sneak in subtle clauses and stipulations with disastrous financial effects for the other signatory party.

The long-term impacts of contractual clauses aren’t always obvious, even to experienced entrepreneurs. In many cases, the smallest omission or change in wording could have lasting ramifications for the financial health of your business and its relationships with other companies or clients. Don’t sign or propose any commercial agreement until it is has been carefully reviewed by the experienced contract attorneys of Bellatrix PC. We have years of experience aiding San Diego businesses with all types of agreements and documents, from preparing the initial draft to closing the final deal, including the following:

  • Buy-Sell Agreements
  • Commercial Property Leases
  • Construction Contracts
  • Distribution Agreements
  • Employee Contracts
  • Equipment Leases
  • Government Contracts
  • Independent Contractor Agreements
  • Licensing Agreements
  • Manufacturing Contracts
  • Operating Agreements
  • Option Contracts
  • Partnership Agreements
  • Sales Staff Contracts
  • Severance Agreements
  • Third Party Beneficiary Contracts
  • Vendor and Customer Contracts

Whether your San Diego business needs help preparing an enforceable contract, or you’d simply like an attorney to review a lease or buy-sell agreement before accepting the terms, Bellatrix PC is here to provide legal guidance for all your contract formation needs. To arrange for a private legal consultation with Bellatrix PC, call our law offices at (800) 889-8376.

 

Formation of Contract: Owoman signing a contract with a smileffer and Acceptance

A contract is any legally binding agreement between two or more parties, be it written or oral. At least one party must make an offer (the offeror), which may then be accepted (acceptance) as-is by the offeree. Alternately, the offeree may propose a counter-offer with revised conditions, which may require considerable negotiation. An invitation to treat, such as an auction or display of goods, is not the same as a formal offer.

In order for a contract to be formed, all parties must be legally capable of agreeing to the proposal. This means neither minors nor incapacitated persons can enter into a business agreement.

Employers and business owners should also note that some types of contracts are typically not enforceable in the state of California – and by extension, not enforceable in San Diego. For instance, with a few narrow exceptions, covenants not to compete (non-compete agreements) are frequently ruled unenforceable by California courts.

Our attorneys will help your company identify the appropriate type of contract for your needs, and when preparing your documents, will carefully exclude any terms or clauses which could create problems with regard to enforceability.

Defending Businesses Against Breach of Contract Claims

In today’s litigious business atmosphere, it is unfortunately not uncommon for companies to allege breach of contract. In some cases, mediation or renegotiation proves sufficient to settle the dispute; but in other instances, litigation becomes necessary.

If your San Diego business is being sued, try not to panic. It is critical that you refrain from making comments out of anger, and approach the situation with a calm, cool head. Do not send any emails or make any posts on social media which could later compromise your legal position.

Contract Form

Remember: when demonstrating that a breach of contract occurred in California, the burden of proof falls upon the plaintiff. In order for the plaintiff to prevail against your company, they must be able to prove all of the following components existed:

  • A formal contract was entered into by the plaintiff and defendant.
    • It’s very important for business owners to understand that oral contracts can in fact be legally binding. We advise our clients to eschew oral contracts and use written contracts instead, simply because oral agreements cannot provide you with any sort of reference point or evidence should a future dispute arise.
  • The plaintiff satisfied its end of the contract, or was excused from satisfying its end of the contract.
    • Material (significant) breach of contract generally excuses the non-breaching party from performing its contractual duties. Immaterial breach can potentially give rise to damages, but critically, does not excuse the non-breaching party from completing its end of the deal.
  • The defendant failed to satisfy its end of the contract, either by (1) engaging in prohibited acts, or (2) failing to complete an obligation provided by the contract.
  • The plaintiff was financially harmed by the defendant’s failure (i.e. damages).

Our attorneys have successfully defended numerous companies against breach of contract claims, and are well-versed in the affirmative defenses which may be raised. If your San Diego company needs help drafting and negotiating a document, or if you aren’t sure whether you should agree to another organization’s proposal, call the attorneys of Bellatrix PC at (800) 889-8376 today to arrange for a confidential consultation.

I’m Going Into Business With My Best Friend. Do We Really Need a Partnership Agreement?

Business and FriendshipI had a law partner for 3 months. She and I were not friends before we partnered, actually, but we became fast friends once we decided to do business together. About a month later, she joined my law firm.

It was temporary, though. Within a couple months, we disagreed on how to build and manage the business.

We parted ways shortly after that. It seemed amicable at first… until it came to the money. Then it got a little ugly (although we worked it out pretty quickly).

Now she won’t speak to me. Needless to say, we are not friends now.

Even though I did not know her long, I felt hurt and betrayed by several of her actions. I felt also some loss and grief.

I can only imagine how much worse this would have been had we been friends for a while beforehand. I do not think that a friendship beforehand would have prevented the problems — we simply clashed over business strategy and who was responsible for making certain decisions.

So here’s the lesson: if you want to keep your friend after going into business together, you better have all the boundaries and duties worked out and in an agreement.

Video Transcript:

I’m going into business with my best friend. Do we really have to sign a big, long, complicated, legal partnership agreement?
YES.

Relationships need boundaries — especially ones that involve money.

You may be longtime friends but business is not the same as friendship.

The fastest way to kill your friendship is by going into a business partnership without clear boundaries and responsibilities.

No matter how close you are, you will have different ideas and different expectations from one another and the business.

Contracts are not about trust. You must trust someone to do business with them, whether you have a contract or not. Contracts are about defining expectations so that no one is disappointed.

They are essential in outlining the rights and responsibilities of every person or company with whom you do any business. A contract will make your business and relationships smoother.

Do you know where your legal land mines are? To find out, call us for a Business Risk Review at 800-449-8992 or email us at [email protected].

Debt Collection and Accounting

CREDITOR’S RIGHTS AND DEBT COLLECTION

All parties to a written contract are expected to comply with the provisions of that contract.  When a commercial debt goes unpaid, the delay in receipt of payment can wreak financial havoc on the creditor.   When your business suffers financial harm because another company fails to live up to the terms of your contract or written agreement, you are entitled to exercise your legal rights as a creditor.  

The debt collection attorneys of Bellatrix PC take an ethical but aggressive approach to recovering commercial debts on behalf of corporations, partnerships, and limited liability companies.  We have extensive experience handling debt-related legal matters including but not limited to Chapter 11 bankruptcy, writs of attachment, writs of execution, foreclosure, garnishment, commercial liens, detinue, and replevin.  We focus on recovering commercial debts as rapidly and efficiently as possible, so that your business can keep moving forward with minimal disturbance.

To arrange for a private legal consultation with our experienced business attorneys, call the law offices of Bellatrix PC at (800) 889-8376.  The sooner you reach out to us for assistance, the sooner we can start exploring the possible routes toward resolution of your debt-related legal issue.

Does the FDCPA Apply to Business Debts?

Congress enacted the Fair Debt Collection Practices Act (FDCPA) in 1977 to better protect consumers against abusive debt collection practices.  The FDCPA prohibits, among many other tactics, calling debtors at certain times of day, using certain language, and communicating with third parties.  The FDCPA is further bolstered by similar laws on the state level, such as California’s Rosenthal Fair Debt Collection Practices Act (the “Rosenthal Act”), Cal. Civ. Code §§ 1788 et seq.

The FDCPA applies exclusively to the collection of consumer debts, and does not regulate business debt collection agencies or their representatives.  15 U.S. Code § 1692a provides the following definition of a consumer debt:

“The term ‘debt’ means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.”

Only debts which meet this criteria are subject to the collection regulations mandated by the FDCPA. That being said, commercial creditors must nonetheless take precautions to avoid engaging in abusive business debt collection practices.  For instance, members of the Commercial Collection Agency Association (CCAA) must comply with CCAA ethical criteria, or risk losing their CCAA certification.  

Our attorneys will help your company evaluate its legal options to determine the most appropriate and cost-efficient means of debt recovery available to you.

money collections and debt collection

 

Domesticating and Enforcing Foreign Judgments

If a judgment has been entered in a state other than California, it is considered a foreign judgment and must be domesticated in the state of California before it can be lawfully enforced and collected by the creditor.  Depending on the specific origin and nature of the debt, the creditor may be required to:

  • Domesticate a sister state judgment.
    • Cal. Civ. Code § 1710.10(c) defines a sister state judgment as “part of any judgment, decree, or order of a court of a state of the United States, other than California, which requires the payment of money, but does not include a support order as defined in Section 155 of the Family Code.”
  • Register a federal judgment.
  • Domesticate a foreign judgment.
  • Confirm a foreign arbitration award.

In accordance with Cal. Civ. Code § 1710.15, judgment creditors are required to apply under oath for the entry of a sister state judgment.  The application must be filed in a superior court, and must include, among other components:

  • A statement confirming that the judgment is not based on a statute of limitation which has already expired.
  • A statement confirming that no court has ordered a stay on the judgment which would interfere with enforcement and collection.
  • A statement confirming that no pending actions are ongoing in any other courts.

Once the judgment is properly registered and domesticated, it becomes a California judgment.  The judgment becomes enforceable once it is served on the commercial debtor, and the creditor may obtain a writ of execution within 30 days.  The debtor has 30 days to file a motion to vacate the judgment.  Due to the short deadlines which are involved in these types of cases, it is essential for creditors to be proactive and seek legal assistance as soon as possible.  

You’ve already rendered a product or service – now you deserve to be paid for your time and effort.  If your business has suffered financial losses because of another company’s failure to pay the debts which you are rightfully owed, our creditors’ rights attorneys are prepared to take aggressive collection and enforcement actions on your behalf to protect your financial interests.   

If litigation is not desired, we are also qualified to assist your business with alternative dispute resolution in a mediation capacity.  In some cases, mediation proves sufficient to effectively resolve the collection matter.  To start discussing your business debt issue in a confidential consultation, call the experienced legal team at Bellatrix PC at (800) 449-8992 today.