Business

New York Independent Contractor and Consulting Agreements

by Fred Abramson

New York Independent Contractor and Consulting AgreementsAs 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.

Interference with a Business Opportunity

by Fred Abramson

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:

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Why you Should Purchase the Assets of a Company Rather than the Stock

by Fred Abramson

One of the prob­lems that you may encounter when buy­ing a busi­ness in New York is under­stand­ing how to struc­ture the pur­chase.  Basi­cally, there are two ways that you can buy a company:

  1. Asset Pur­chase;
  2. Stock Pur­chase.

In most cases, you will be bet­ter off pur­chas­ing the assets. There are three big ben­e­fits to buy­ing the assets and not pur­chas­ing the stock:

  • Tax ben­e­fits. With an asset pur­chase, you can give dif­fer­ent pur­chase prices among the var­i­ous pieces of the com­pany.  For exam­ple, cer­tain equip­ment can be deducted imme­di­ately so you may want to assign a greater price for those assets.
  • You can choose not to acquire lia­bil­i­ties of the busi­ness you wish to buy. Per­haps the com­pany failed to pay a sup­plier for goods it ordered two years ago.  The statute of lim­i­ta­tions on a breach of con­tract law­suit is six years, so you could be hit with a law­suit four years after buy­ing the company.
  • You don’t have to buy every asset of the cor­po­ra­tion. It could be in you best inter­est to buy only the prof­itable por­tions of the company.

Some­times you are not given the choice of how a busi­ness sale could be struc­tured.  Many busi­ness that are for sale require pur­chase of stock only for a vari­ety of rea­sons. For exam­ple, the seller may believe that there are tax advan­tages for sell­ing all the stock.  If you have to buy cor­po­rate stock, it is imper­a­tive to con­duct a thor­ough inves­ti­ga­tion of the corporation’s books and oth­er­fi­nan­cial deal­ings.  You can insert war­ranties and indem­ni­fi­ca­tion clauses in the stock pur­chase agree­ment. You may also be able to pur­chase insurance.

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Why you Should Purchase the Assets of a Company Rather than the Stock

4 things you should think about when deciding how partners should be compensated

by Fred Abramson

4 things you should think about when deciding how partners should be compensatedDecid­ing part­ner com­pen­sa­tion when start­ing up a com­pany is crit­i­cal.  With­out a fair and just writ­ten com­pen­sa­tion  pro­vi­sion in a part­ner­ship agree­ment, the busi­ness can implode.  Here are 4 things you should think about when decid­ing how part­ners should be compensated:

  1. When will prof­its be divided? Will it be once a year, at the end of the year or will part­ners be able to draw their prof­its at some ear­lier point?
  2. Should a part­ner receive a addi­tional salary? In the case where one per­son may work more hours than the other part­ners, it is advis­able to either pay an addi­tional salary or pro­vide a larger por­tion of the profits.
  3. Should prof­its and losses be shared equally?
  4. Should a cer­tain per­cent­age of the prof­its be re-invested in the com­pany? For exam­ple, it may be impor­tant to retain some of the prof­its to pro­vide a bonus to keep a key employee.

It is vital that you and your part­ners how decide prof­its should be shared as early as pos­si­ble.  A lawyer can help you focus on what is impor­tant and select solu­tions. But ulti­mately, it is up to you to decide how prof­its are allocated.

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4 things you should think about when deciding how partners should be compensated

Attachment of Property in New York — Provisional Remedies

by Fred Abramson

The attach­ment of prop­erty is a strong weapon when used prop­erly in New York. A busi­ness­man who is hav­ing finan­cial prob­lems decides not to pay for goods that he pur­chased.  If your com­pany is the cred­i­tor, it could take years before he will have to pay. At that time, the funds could be depleted.  One key pro­vi­sional rem­edy that a cred­i­tor can seek is to obtain an attach­ment.  Here, the cred­i­tor can obtain an attach­ment on the bank account and the busi­ness­man would not be able to use the money. Even though the plain­tiff is not able to use or obtain the funds, the busi­ness­man will not have the lux­ury of time and would be more moti­vated to settle.

Attach­ment of prop­erty can have dev­as­tat­ing effects on the busi­ness­man.  Attach­ments can be ordered by the court ex parte, mean­ing that the busi­ness­man will have no notice.  This could cause checks to bounce and dras­ti­cally alter the abil­ity for a small com­pany to con­duct business.

In order to obtain an order of attach­ment, the cred­i­tor would have to show, as per CPLR 6201(a): 1. that \“there is a cause of action\” and that the plain­tiff will prob­a­bly suc­ceed on the mer­its; 2. that at least one of the grounds of attach­ment found in the law exists;  and 3. that the amont asked for in the law­suit exceeds any coun­ter­claims that the cred­i­tor has knowl­edge of.

If an order is granted, it is directed to the sher­riff, not the defen­dant. Some orders are granted with­out notice to the businessman.

If you have a ques­tion about pro­vi­sional reme­dies such as attach­ment of prop­erty in New York, act now and con­tact the Law Office of Fred­eric R. Abram­son at 212–233-0666. Feel free to keep up to date on all New York Busi­ness Law issues by vis­it­ing my blog.

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Attachment of Property in New York Provisional Remedies

What To Do If An Owner of A Business wants to Transfer its Interests

by Fred Abramson

What To Do If An Owner of A Business wants to Transfer its InterestsNew Yorker\‘s are a mobile bunch. Espe­cially New York busi­ness own­ers. Busi­ness open and close every day.  It is risky to believe that your co-owners will still be with you five years down the line. It is likely that there will come a time when of your co-owners will want to sell his shares or inter­ests in the com­pany to some­one else.  One of the most com­mon ways that a small busi­ness can get dis­rupted is when an owner desires to sell or trans­fer his inter­ests in a com­pany. So, what should you do?  You should cre­ate in advance a method for the own­ers to review and block any that is not in the best inter­ests of the com­pany.  Here are some things you should think about:

  1. Right of First Refusal. This is the most com­mon pro­vi­sion in a buy-sell agree­ment. The owner who wishes to sell his inter­ests first offers it to his co-owners before any­one else.
  2. Decide the Price of the Own­er­ship Inter­ests in Advance. Often the price will be set at the price a pro­posed out­side buyer has bid.  I do not rec­om­mend this option because a fraud­u­lent offer is pos­si­ble. Another method is to set a pre-determined price at the time a buy-sell agree­ment is drafted.  Another option is to set a high down pay­ment price which would show good faith.
  3. Make clear the effect of any sale on Minor­ity Own­ers. Often a right of first refusal pro­vi­sion may freeze out a minor­ity owner from sell­ing his inter­ests.  As a result, it may be impor­tant to include a \“Right to a Forced Sale\” clause.
  4. Decide who can buy the inter­est. Should the com­pany have the right to pur­chase shares or the indi­vid­ual owners?
  5. Should an owner be able to give away his inter­est? Often own­ers wish to grant their inter­ests in a com­pany to a trust for estate plan­ning rea­sons. This could be prob­lem­atic because tech­ni­cally the trust would own the shares of the busi­ness. Often these issues are addressed when draft­ing a buy sell agreement.
  6. No Trans­fer Restric­tions. Refus­ing to trans­fer any own­er­ship inter­est is another pos­si­bil­ity. This can lim­ited in a few dif­fer­ent ways, such a no trans­fers to cer­tain per­sons and no trans­fers with­out writ­ten con­sent of the other owners.

You should decide in advance what to do if an owner of a busi­ness wants to trans­fer its inter­ests through a buy sell agree­ment to avoid unnec­es­sary prob­lems and poten­tial litigation.

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What To Do If An Owner of A Business wants to Transfer its Interests

Checklist for sale of a business

by Fred Abramson

If you are plan­ning to sell or buy the assets of a cor­po­ra­tion, before you go to your lawyers office you should pro­vide the answers to the  fol­low­ing questions:

  • Names and addresses of every­one involved in the sale
  • All assets and prop­erty that will be in part of the sale
  • What monies are being paid?
  • What are the debts and lia­bil­i­ties of the company?
  • Will the con­sid­er­a­tion be paid in install­ments or a lump sum?
  • When will pay­ment be due?
  • Have all due dili­gence doc­u­ments been obtained?  For exam­ple, have you inspected the books, prop­erty or busi­ness records?
  • Agree on a clos­ing date
  • Are there any warranties?
  • Any intel­lec­tual prop­erty, such as the use of the com­pany name be transferred?
  • Who pays any poten­tial taxes?
  • Are there any employee agreements?
  • Are there any leases?
  • What hap­pens if one party defaults?
Checklist for sale of a business

How long do I have to sue? The New York Statute of Limitations

by Fred Abramson

Cen­turies ago, there was no fixed time start a law­suit.  The Statute of Lim­i­ta­tions was enacted to pro­tect defen­dants against defend­ing old law­suits after a rea­son­able time has passed.  The law has spe­cific pro­vi­sions that pre­scribe how long a plain­tiff has before start­ing a law­suit. If you fail to com­mence your law­suit within the statute of lim­i­ta­tions, your case is gen­er­ally dismissed.

As a gen­eral rule, it is wise to begin a law­suit within at least six to eight months before the statute of lim­i­ta­tions expires. The rea­son for this is because the law is often quirky.  For exam­ple the law requires the plain­tiff to serve the defen­dant.  By allot­ting a six-eight month win­dow  before the statute of lim­i­ta­tions expires, it would be pos­si­ble to re-serve the defendant.

The spe­cific time peri­ods regard­ing the statue of lim­i­ta­tions can be found in the New York Civil Prac­tice Law and Pro­ce­dure Arti­cle 2.

If you have a ques­tion of how the statute of lim­i­ta­tions impacts your case, con­tact my law office by phone at 212–233-0666 or via email at fabramson@abramsonlegal.com

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How long do I have to sue? The New York Statute of Limitations

Your small business is a party to a New York Civil Litigation lawsuit. How can you protect yourself?

by Fred Abramson

You are sit­ting in your office on the busiest day of the year, and just when you think noth­ing else could go wrong, a per­son walks in and utters the fate­ful words “You’ve been served”, while hand­ing you a stack of papers.   Your busi­ness is a party to a New York civil lit­i­ga­tion law­suit. Your busi­ness has  just been sued.  What is the best course of action you can take, and how can you pro­tect your­self as well as your business?

Your small business is a party to a New York Civil Litigation lawsuit. How can you protect yourself?

Who?

Read the papers that are given to you to find out the party that is suing you and the type of civil lit­i­ga­tion you are involved in.  Is it a cor­po­ra­tion, a part­ner­ship, or an indi­vid­ual?  Are they a cus­tomer or a sup­plier of your busi­ness? Who is the lawyer rep­re­sent­ing the party that is suing you?  This infor­ma­tion will help your attor­ney obtain a more favor­able result for you by research­ing the other party and its coun­sel. (Do they set­tle often?  Are they a big com­pany?  What are their finan­cial resources?  Do they have a rep­u­ta­tion to main­tain and there­fore may want to set­tle quickly?).

What?

What exactly are you being sued about?  Is it a breach of con­tract claim? Is it a non-payment claim, or a non-performance claim?  Those are many rea­sons why a busi­ness may be sued.

When?

In Civil Lit­i­ga­tion, tim­ing is crit­i­cal in a law­suit.  Responses must be filed within a set period, which in New York is  usu­ally within 30 days.  While an exten­sion can be granted, don’t wait until the last minute to con­tact your attor­ney.  It takes time to pre­pare an appro­pri­ate answer to the papers.  If you do not respond in a timely fash­ion, you will be con­sid­ered in default, and a judg­ment may be taken against you.  This means you may lose the case with­out the oppor­tu­nity to pro­vide a defense.

Also, don’t assume you are judg­ment proof, because judg­ments can be col­lected from future earn­ings as well as assets.  In addi­tion, do not assume that your insur­ance cov­ers every­thing, although it may be wise to notify your insur­ance car­rier as well as your attorney.

Where?

What court are you being sued in?   What county?  State or Fed­eral Court? You may be sued in a state far away if, for instance, you have done busi­ness in that state.  In that case, your New York attor­ney will have to obtain local coun­sel for your small busi­ness in the other state, and this takes time.

Why?

Why did the party resort to a law­suit?  Is it some­thing you can fix by hav­ing your attor­ney talk to the other side and nego­ti­ate a set­tle­ment?  Is there a run­ning ani­mos­ity between your com­pany and the other party, in which case set­tle­ment will be dif­fi­cult?  Do you need to file a coun­ter­claim against the other party?

How?

Imme­di­ately notify and sup­ply the civil lit­i­ga­tion  law­suit papers to your attor­ney.  Make sure you retain a pho­to­copy for your­self.  Inform your attor­ney of all the facts rel­e­vant to the case.  Your attor­ney will decide what is impor­tant and what is not.


Orga­nize your doc­u­ments per­tain­ing to the case so that you can min­i­mize the time the attor­ney must spend going through them.  This will save your attor­ney ’s time, and there­fore save you legal fees.  Do not talk to the other party’s attor­ney.  He works for the other party, just as your attor­ney works for you.  Let your attor­ney do this for you.  In addi­tion, remem­ber that in law, just as in any pro­fes­sion or busi­ness, there are rules and pro­ce­dures  your attor­ney knows and you may not.  To stay out of trou­ble, leave the legal work to your attorney.

A trial can take sev­eral weeks in New York, includ­ing prepa­ra­tion time.  There­fore, it may be in your best inter­est in cer­tain cases to set­tle.  How­ever, be real­is­tic in your set­tle­ment expectations.

Con­clu­sion

Hav­ing an ongo­ing attorney-client rela­tion­ship will help pro­tect you in the event of a civil lit­i­ga­tion law­suit.  The more your attor­ney knows about your busi­ness, the bet­ter the attor­ney will be able to help you.  In addi­tion, dis­cussing busi­ness options and prob­lems with your attor­ney ahead of time could help pre­vent a law­suit from ever start­ing.  Either way, it will save you money in the long run.

Please be advised that the above is for infor­ma­tional pur­poses only. If you have been sued, con­tact me at the Law Office of Fred­eric R. Abram­son at 212–233-0666.

Why Officers Should Sign Contracts In Their Corporate Capacity

by Fred Abramson

With­out regard with their title, offi­cers of the cor­po­ra­tion should trans­act all busi­ness and exe­cute all con­tracts in the name of the com­pany.  The offi­cer should have his or her title next to or under their signature.

Why is this impor­tant? Because if the com­pany defaults on the under­ly­ing trans­ac­tion, the offi­cer may be held per­son­ally respon­si­ble for any loss if the other party can demon­strate that it rea­son­ably belived that the offi­cer was doing busi­ness on the offi­cers\’ behalf.

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