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Business Law Issues and Trends

Tuesday, May 30, 2017

Negative Online Reviews - Do They Constitute Business Defamation?

We are living in the digital age and consumers use the internet to make a variety of decisions, including what products to buy and what professionals to hire. During their research,  many savvy consumers go online to look at the reviews the business has received on local business directories like Yelp or Google+.  These online reviews can have a profound effect on the success of your business so it is important to understand your rights should your business receive a negative one. 

In the case that your business has received a negative online review, you may have recourse under state or Federal defamation laws.  However, before pursuing that route, you should consider using any dispute or review process provided by the review site.  Defamation is generally defined as the act of intentionally publishing a false statement that has the ability to negatively effect another’s reputation.  Defamation laws protect individuals and businesses alike.  Publication is the communication of the defamatory statement to another person and the act of posting a review to a website usually qualifies.  Whether a statement has a negative effect on another’s reputation is judged using a reasonable person standard and will be looked at on a case by case basis.  In order for the statement to actionable, it does not have to be intentionally defamatory; it just has to be intentionally published.  Defamatory statements must be false and cannot be opinions.  Whether your situation meets the necessary threshold for defamation may be difficult to ascertain, so it is important to consult with a qualified attorney before pursuing a claim for business defamation.

If you believe that your business has received an online review that contains false information and is damaging to your business reputation, you might have a claim for defamation.  Recent civil cases for this type of wrong have resulted in large verdicts for the businesses that were injured.  While you most likely cannot pursue an action against the hosting website, as they are usually exempt under the Digital Millennium Copyright Act (DMCA), you might be able to recover from the individual that made the statement.  All litigation should be considered using a cost-benefit analysis and business defamation cases resulting from online reviews are not any different.  


Tuesday, April 11, 2017

Why Your Business Needs an Email Policy.


In the contemporary workplace, email is an essential and efficient form of communication. Whether it is used internally among staff members, or for exchanges with vendors and customers, email is a necessary business tool. At the same time, misuse of this technology can expose an organization to legal and reputational risks as well as security breaches. For this reason, it is crucial to put a


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Tuesday, April 4, 2017

Entrepreneurial Immigrants: Building the American Dream.

The American Dream of starting your own business and pulling yourself up by your bootstraps is alive and well. If you are an immigrant and are considering starting a business in your new homeland, there may be a number obstacles ahead of you.
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Tuesday, March 28, 2017

Are employees owed overtime for checking and answering email after hours?


Technology is a double-edged sword. It allows us to work remotely and to have greater flexibility as to where and when we work, but the freedom it affords can also be a burden. All the work that is being done outside of work hours is creating a compliance problem for many businesses.


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Monday, March 13, 2017

Hiring The Right Person The First Time -


With the improving economy has come a tightening in the job market. Good employees are becoming harder to find. While no one can guarantee that you will always make a sound hiring decision, here are several tips to improve the odds that you will find and hire the best person available for your open position.


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Tuesday, November 15, 2016

Oral Contracts - Are They Binding? -

There is quote attributed to Samuel Goldwyn, a famous film producer in the early years of Hollywood, that goes "A verbal contract isn't worth the paper it's written on". While this is actually a misquote of what was really said, nevertheless it conveys a widespread misconception that verbal contracts are unenforceable.  However, a contract made orally with another party, without embodying the particular terms in a signed writing, can still be valid and binding. Even so, any disagreement concerning the deal may pose multiple problems for both parties. 

In order for the court to give a verbal contract legal effect, the terms of the deal will have to be demonstrated.


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Tuesday, November 1, 2016

Opening a new restaurant? -


Some key legal considerations for restaurateurs

Each year, approximately 30,000 new restaurants are opened in the United States. Most restaurateurs understand the great risk that comes with these ventures; in fact, some sources estimate as many as 18,000 of the 30,000 restaurants opened this year will fail within the first three years in business. Despite the risk, many chefs and hospitality professionals dive right in. If you’re a hopeful restaurateur, legal planning is an absolute necessity to ensure you don’t fall victim to many of the common mistakes that cause these businesses to fail. Consider the following:

Business Entity
All restaurant owners must carefully consider the best corporate structure for their businesses.


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Tuesday, October 18, 2016

Can Non-Compete Agreements Be Enforced?

Hiring a new employee or training an existing staff member in new skills is a costly endeavor. Employers want to make sure that the money is well spent and the employee will not use the skills or knowledge of the employer's business to compete. Employers try to restrict employees from going to competitor and employees, of course, do not want to be limited to working for only one company especially if a better offer comes along or things do not work out with the employer. Employees also make an investment in their skills and capabilities, and may bring to the employer decades of knowledge of their industry, their profession, or customers. Each side has valuable rights and interests that need to be balanced. What often results is that the employer requires employees to sign a document that restricts who the employee can work for if he/she leaves the current employer.

While permitted in most states (California being a notable exception) Courts typically disfavor “covenants not to compete” or “non-compete agreements.”  Therefore, the terms and provisions of these contracts must not be overly restrictive of the employee.  In order for a non-compete to be upheld, the document must “be reasonable in scope, geography, and time.”  It cannot last for years on end, or prevent the employee from working anywhere in the entire state or states. Likewise, an employer cannot prohibit an employee from working in a large variety of industries, especially if the restriction includes industries wholly unrelated to the employer’s line of work. 

Two other elements are analyzed by a court to determine the validity of a non-compete agreement:  (1) there must be mutual consideration between both the employer and employee at the moment the contract is signed and (2) the non-competition agreement must protect “a legitimate business interest of the employer.”  Preventing a former employee from working for an employer’s business rival, or preventing disclosure of trade secrets or personally identifiable information of important clientele, are typically considered justifiable business interests.

Non-compete agreements are generally implemented to protect a company’s most important assets:  its reputation and its confidential information.  However, the terms protecting these assets cannot be overly broad or vague.  Thus, in evaluating the “reasonableness” of a non-competition agreement, the court will conduct a “balancing test.”  This is a comparison of the employer’s need to protect its “business interests” with the “burden that enforcement of the agreement would place on the employee.” 

The validity of non-compete agreements is decided on a case-by-case basis. The court will consider circumstances such as the length of time certain information will be kept confidential, and the company’s reasons for limiting the employee's job search to a geographical area. If the court finds that the agreement serves a valid interest and does not exceed the range necessary to protect that interest, the entire agreement may be upheld. The agreement cannot prohibit the employee from earning a living or be against the public's interest (for example, it is in the public's interest to permit people to hire any attorney they wish to, so non-compete agreements are generally prohibited in law firms).

The court also has the option of doing away with overly intrusive terms in a non-compete, rather than invalidating the agreement entirely. In cases in which a non-compete is perceived by the court as punitive, unduly restricting an employee from obtaining employment, the agreement will not be upheld.  A licensed attorney who specializes in employment law will be able to gauge the likelihood that a particular non-compete agreement will be enforceable.

The Law Office of Randall P. Brett assists employers and employees in navigating this important but difficult area of the law. Give us a call if you have questions about non-compete agreements or any other matter.


Wednesday, September 28, 2016

Protect Your New Business with Preventative Legal Planning -

Most Legal Issues Can Be Resolved Before They Even Arise. Here’s How.

Most people are familiar with the idea of “preventative medicine". But business owners, especially those who are just beginning a business, should also know about "preventative legal strategies".

The term refers to anticipating legal issues and conflicts and working to prevent them, rather than solving them or “winning” them once they occur. Companies can benefit from implementing preventative legal strategies as this approach is often less expensive than litigation, mediation, arbitration, and local, state and federal fines.

By working with an attorney early on in the creation of your new business, you can build a sound foundation for your company while likely saving money down the road. The following steps can serve as a great starting point for sound legal planning:

  1. Establish a relationship with an attorney who can assist you with the legal issues your new business will face early on in the start-up process. When an attorney is familiar with your firm from the onset, he or she can more effectively anticipate and address legal challenges and provide solutions. Also, many business law attorneys will allow for a flat-fee relationship that enables you to address legal issues as they arise without incurring any additional expenses.

  2. Determine what you want, negotiate it and memorialize it in proper legal documents. Businesses encounter disagreements with vendors, landlords, employees, partners and others. To minimize the number of conflicts, it’s important to establish written contracts for all important agreements, arrangements and accommodations.

    A business law attorney can help you identify all key concerns regarding employee compensation and benefits, property usage and maintenance, relationships with suppliers and responsibility and profit sharing with partners. An attorney can ensure that, when a question, disagreement or conflict arises, your interests are written down, clearly stated and legally protected by a mutual agreement with the party in question.

  3. There are many exciting steps in starting a new business venture; selecting the type of legal entity the business will be is rarely one of them. Yet, it’s important to select a business structure early. Corporations offer numerous advantages but also require officers, boards, articles of incorporation and other formalities. Partnerships and sole proprietorships are simpler than most other business structures but open owners to potentially costly liability. Limited liability companies offer a middle ground for many, providing a liability shield and comparative simplicity. A business attorney can help you determine which business structure will work best for you by taking into account tax planning, location and other key considerations.

Even with preventative legal planning, a lawsuit may arise. If it does, it’s important to approach it from a business, not a personal standpoint. This strategy can help you make decisions that are best for your company’s future, keep your focus on the day-to-day needs of your business and avoid unnecessarily disclosing information.

The Law Office of Randall P. Brett can provide legal advice and hands-on assistance during the formation and continued operation of your business.


Tuesday, September 27, 2016

Buying Out a Partner When There Is No Shareholders’ Agreement in Place -

Like most relationships, business partnerships frequently experience highs and lows, with periods of both prosperity and turmoil. When ongoing disagreements cannot be resolved, or one partner decides to leave the business, the remaining partner(s) often seeks to buy out the shares of the departing party. If there is no shareholders’ agreement in place, and the partners are in agreement, the dissolution of the partnership can usually be accomplished with the help of a qualified business law attorney and a CPA.

If the business is a corporation, the purchase would likely be structured as a stock sale. In essence, one party would purchase the exiting partner’s shares of stock in the corporation, in exchange for the purchase price. The purchase price could either be paid up front at the closing, or some, or even all, could be paid to him over a period of time. If any of the purchase price is to be paid over a period of time there normally would be a promissory note that the remaining partner(s) would sign documenting that the departing partner is owed the money, and providing for payment terms. These payment terms would include the interest rate, number of payments, and frequency of payments. Typically the remaining partner(s) stock in the company would be pledged as security for the repayment on the note. If the business is not a corporation the steps would be similar but slightly different.

Prior to the dissolution of the partnership, all parties must consider whether the business has any debt. If it does, all partners will need to carefully review the loan documents to make certain that the partner’s departure from the business does not trigger some type of acceleration of the debt. In a small business it is normal for a lender to require the business owners to personally guarantee the debt. So, if this is the case, the business may need to negotiate with the lenders to get the exiting partner released from the debt.

Another item to consider, which should be explored with the guidance of a qualified tax advisor, is whether the partner’s sale of the business to the remaining partner(s) will trigger any taxes. This may be more so from the departing partner’s standpoint but there may be some capital gains taxes that will have to be paid and all parties should get appropriate advice.

Finally, if there is real estate involved that is used by the business, there may be steps that have to be taken to address that. Perhaps the business leases office space from someone else. The business will need to make certain that the change in ownership does not somehow violate the lease and if it does, the partners should seek the landlord’s consent. If the departing partner has personally guaranteed the lease, the remaining partner(s) may need to negotiate with the landlord to release the exiting party.

The bottom line is there are many factors that come into play when dissolving a business partnership. An attorney should be contacted before any decisions are made to ensure all of the necessary details and consequences are considered in the preparation of a purchase agreement.

The Law Office of Randall P. Brett has assisted many business owners to restructure their business arrangements, purchase other member's shares, and ensure that the organization remains on-going. Give us a call to see if we can help you, too.

 


Tuesday, May 17, 2016

Terminating a Franchise Agreement -


Buying a franchise can be a great opportunity for an entrepreneur to start a business using a successful operational structure of a proven model. Despite all the resources that a franchise provides, not all are successful. Unfortunately, with most franchises, you can’t just shut your doors and cut your losses; getting out of a franchise agreement can be difficult, leaving a once hopeful entrepreneur stuck in a business that may not be profitable or enjoyable to operate.

If you are looking for a way out of a franchise agreement, it’s absolutely imperative that you contact an attorney who has experience with franchise law and understands the many complexities of the franchisor-franchisee relationship. In determining whether you can terminate the agreement, you will need to carefully review the contract which should clearly outline the circumstances which must be met for either party to terminate it.
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