While litigation may sometimes be your only recourse, many times it is a result of signing a bad contract or not fully examining the contract you have signed.  Here are ten things to know before entering into an agreement in New York that can help protect your business and your assets:

1.      Know the Other Party

Be sure that the business you are contracting with is registered to do business in the state in which you operate your business.  Should there be a problem later on, it will be much easier to institute a lawsuit as the states maintain addresses for service of process on registered corporations.  In addition, if the business is not properly registered in the state, there could be legal issues with your contract.  The business should also be licensed in the specific type of business it conducts, if this is required.

2.       Pricing Issues

If you are a buyer or a seller, know what you are paying or getting paid, when the money is due, how it is to be paid, where it is being paid to.

3.      What is the Exact Product or Service

While this may seem obvious there are thousands of lawsuits on just this issue.  Be sure you and the other party are on the same page, literally and figuratively.

4.      Delivery of the Goods or Services

Specify exact time frames for delivery of the product or service and when payment is due in relation to this time frame.

5.      Condition of the Product or Service

Are the items new or used?  If used, how much?  If new, in original packaging or repackaged?  If a service contract, specify who will be doing the service and his or her credentials?

6.      Warranties

What are the guaranties on the product or service?  What period of time do they cover?  What is the procedure for repairing or replacing an item or correcting a service mistake?

7.      Getting out of the Contract

While most contracts are made to avoid getting out of them, you can sometimes negotiate an “out” clause for poor performance or lack of proper delivery or other essential things.

8.      Renewal of the Contract

Is there an automatic renewal?  Is there any option to renew?

9.      Default

There are several ways to default on a contract. Two prevalent ways are non-payment and non-performance.  Non-payment can include not getting paid in full, on time or at all.  Non-performance can be not doing the job properly, in full, or not how you expected it to be done.  All of these can be combated with remedies in the contract.

10.  Remedies

Make sure the contract has a section dealing with remedies for defaults.  Remedies are compensation to the injured party for such defaults.  Outside of the contract there are other ways to be compensated for default in contracts, including state statutes, federal statutes like the UCC, fraud actions and illegality of the contract, dealing with minors, duress, undue influences, etc.

If you have any questions regarding contract law, contact me at the Law Office of Frederic R. Abramson at 212–233-0666

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Warren Buffett
Bruce Springsteen
Jackson Pollack
Steve Jobs
Julia Child
Mario Batali
Seth Godin
Rembrandt
Thomas Jefferson
Jerry Seinfeld
Salvadore Gaudi
Ghandi
Martin Luther King
Theodore Roosevelt
Tom Peters
Albert Camus
Abraham Lincoln
Bob Marley
Andy Warhol
Nelson Mandela
John Lennon
Bobby Flay
Vincent Van Gogh
Ernest Hemmingway
Bill Gates
Henri Matisse
Rosa Parks
Andrew Carnegie
Albert Einstein
Socrates
Napoleon Hill
Radiohead
Franz Kafka
Muhammad Ali
Richard Branson
Mom
Paul Cezzane
Eli Wiesel
John Adams
Dad
James Joyce
Mozart
Leonardo Da Vinci
Pablo Picasso
Thomas Keller
John F. Kennedy
Jackie Robinson
Ansel Adams
Learned Hand
Woody Allen
Thomas Friedman
Salvadore Dali

and of course my wife and 2 children

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Social Media such as Twitter, Facebook and Blogs are an easy way for employees to communicate with the world.  This can cause far reaching legal risks for employers. What can be done to prevent social networking sites from being used as a sounding board for an unhappy employee, a place to disclose trade secrets, or a means to defame bosses and co-w orkers? How can you protect your company from the possible legal problems due to social networking? I can help by advising you how to:

• Monitor employee use of blogs by telling you what’s legal & what’s not
• Draft workable blogging policies
• Assess your liability risks from your employees use of social networking site and blogs
• To minimize your risk for unnecessary and expensive litigation
• Comply with the New FTC regulations effective December 1, 2010 about blogging.

Here are some key issues that you need to be aware of:

• Blogs in the Workplace: Legal Risks & Liability You Need to Know
  • How to legally monitor your employee’s use of social media sites without infringing on their legal rights.
  • Does the employee or company own the blogs or social networking account?
  • If an employee posts something on a blog, or a social media site, can the employers be held liable?
  • Strategies to protect confidential and business information
• What is legal for your Employees to Blog about
  • What to do about bad comments of your employees in their personal blogs
  • What can you do to limit blogging by your employees when they are not working
  • What is the difference between bad behavior and the first amendment right to freedom of speech?
• Drafting Social Media Policies:
  • How to draft a social networking  policy to protect your company while balancing your employees right to privacy
  • Why you may not want to restrict from your employees from engaging in social media
  • How you can enforce the restrictions placed in your social media policy.
  • Assessing your employees rights  under the  National Labor Relations Act

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Sole proprietorships, such as computer consultants using a name other than the owner\‘s name should file a Business Certificate with the County Clerk\‘s Office in the county where the business is located.

General partnerships, which are operating a business under an assumed name should file a Business Certificate for Partners with the County Clerk\‘s Office in the county where the business is located.

Corporations, LLCs, LLPs, and limited partnerships register an assume name as part of their required business filings with the New York Department of State.

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As an independant contractor, there is no employer-employee relationship with the person or company that you are doing business with.  The indepedent contract is a consultant who performs specific duties that the consultant is capable of performing.

At the start of the relationship, it is absolutely vital to have an independent contract agreement (also known as a consulting agreement) drafted to protect both parties.  The consequences of failing to establish a consultant as an indpendent contractor can have dire tax consequences.

In your indepedent contractor agreement, it is important to establish that the consultant performing the services is is not under the control of the employer.  In addition, the employer may not directly supervise the consultant.

When it comes time to draft an independent contractor agreement, you should focus on the fee for services rendered and provide a complete description of the services that are to be provided.

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One of the most basic parts of a contract is describing its subject matter.   The subject matter is the part of the contract where you, the client, has the most imput. Generally, the subject describes the services that are to be perfomed, the goods that need to be sold, the property that needs to be assigned. 

When describing the subject matter of your contract be aware of the following:

• What are the basic facts of the contract?  A well-drafted contract requires an awareness that words have implications.  For example, during negotiations you may have agreed to purchased gold.  When you receive the contract, the seller may have changed the subject to metals.  This would have serious implications if the seller ships you silver instead of gold.
• What do common terms really mean?  A common term may change its meaning over time, so it is best to define it in the subject section of the contract.

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You have been negotiating for months with a supplier.  A competitor becomes aware of your negotiations and derails the deal.  Can you recover for your damages?  Under the Tort of Inteference with a Business Opportunity you may.

Generally, the types of opportunities that can be subject to such a claim include:

• Sale or Purchase of a Business
• Sale or Purchase of Property
• Employment Opportunities
• Sale of Goods
• Construction Contracts
• Professional Relationships

In order to prove the tort of Interference with a Business Opportunity, you must show:

• That there is an opportunity in existence that is definate and specific in scope and capable of being acted upon
• The other party had knowledge of the opportunity
• The other party with intent intefered with the opportunity
• They actually caused damage to your interests
• Actual Damages

More Reading:

• Should You Litigate?
• What Can You Sue For? Basic Contract Damages
• How long do I have to sue? The New York Statue of Limitations

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Your star salesperson has decided to jump ship to a competitor.  She has taken your customer list and has started soliciting for business. What can you do to stop her?

Under New York Contract Law, you may be able to obtain a permanent  injunction against her where she would be prohibited from soliciting your clients. 

A preliminary injunction can be granted in the early stages of a lawsuit. For example, a preliminary injunction may be appropriate to stop a former employee from doing business or soliciting any customers of the corporation who where customers of the company when she was employed by the company.

Generally the company needs to show that there was a written contract between the employer and employee and that the non-solicit clause was reasonable in terms of time and scope.

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It is not unusual where you may be purchasing goods that a third party has possession of, such as a warehouse or a bailee.  In such an instance, you should be clear in the contract where the delivery should be made.

Under the UCC, which covers the sale of goods, if the contract is one for goods that are identifiable and are known by both parties to be in a location that is not in possession of either party, then delivery is where the goods are located.   If you agree to purchase a car, and the car is located in warehouse owned by someone else, then the buyer has to pick up the car at the warehouse.

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Just because you may have a claim to start a lawsuit does not mean you should.  Litigation can be expensive.  It is absolutely critical to assess the economics in starting a lawsuit before doing so. 

During your initial consultation with an attorney, you have to consider the amount you are planning to sue for, what relief you expect to be granted, and the expense involved in obtaining a judgment. If you are being sued, you must weigh the cost of defending the lawsuit against the price of settling the case.  Here are some factors you should look at:

• Cost of Litigation.    You know that litigation is expensive.  A case can cost anywhere from $3,500.00 for a simple matter t0 hundreds of thousands of dollars for c0mplex litigation.
• What are your resources?   Does your adversary have deep pockets?  Do you have enough money to fund your case to trial?  If you don\‘t have the financial means, litigation is not for you.
• What is your emotional makeup?  I hate to say it, but litigation can take years.  If you want to change the system, contact your local assembly person and ask for more court funding. 

If you have the financial ability and you are able to delay gratification, control your emotions and think rationally, then you should litigate.

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