Contract

As an independent contractor, there is no employer-employee relationship with the person or company that you are doing business with.  The independent 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 independent contractor can have dire tax consequences.

In your independent 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.

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

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If you are suing for a breach of contract you are probably wondering what money can you collect.  You could also be wondering if there is any other relief that you can obtain from the court. Listed below are the basics of what you can sue for in a breach of contract case:

  1. Compensatory Damages.
  2. Consequential Damages;
  3. Liquidated Damages;
  4. Injunctions and other Equitable Relief.

COMPENSATORY DAMAGES:

If you can prove your breach of contract claim, then the judge usually awards compensatory damages.  The purpose of compensatory damages it make the plaintiff be in the same place as if the contract had been performed.

CONSEQUENTIAL DAMAGES:

If you can prove that the other party knew or could have foreseen when the agreement was made, you can recover consequential damages.

One common issue in a breach of contract case regarding consequential damages is whether you can recover for lost profits.  The general rule is that you can only recover for lost profits if this issue was reasonably foreseeable when you signed the contract and the other party knew of your circumstances or if it is expressly written in the contract. For example, if you plan on opening a restaurant, and the party that you contracted with failed to install a stove, you may be able to recover consequential damages.

LIQUIDATED DAMAGES

When damages will be difficult to assess if a contract is breached, you can agree to a liquidated damages clause in your contract. A liquidated damages clause will state the amount of damages that will be paid if there is a breach.

INJUNCTIONS:

If monetary damages are insufficient, the judge has the power to order an injunction, attachment, specific performance and rescission.

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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 other financial dealings.  You can insert warranties and indemnification clauses in the stock purchase agreement. You may also be able to purchase insurance.

In New York, a void contract is simply no contract at all. It binds neither party.  If you enter into a void contract, nothing more has to be accomplished on your part.  It is binding by neither party and cannot be ratified.

Contracts that are usually considered voidable when one of the parties has the ability either to avoid or validate the agreement.

Once you perform the duties and obligations of a contract, it cannot be considered voidable.

For more information on void or voidable contracts, contact me at 212-233-0666.

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In my world, success is when you further your  interests. It’s as simple as that.

Since 1997 I have advised small business owners about what they must know  before entering into a contract so that they could limit their risk of facing costly civil litigation and bad press.  As a company lawyer,  I tell businesses owners and people what they should do if they have been sued.

I have successfully represented a range of New York companies, from non-profits to executive search firms, along with many people. I have lectured about business law for many different groups, including  continuing legal education classes for lawyers.

Take the first step. Contact me to get your New York Business Law and Civil Litigation questions answered by an experienced lawyer with a deep understanding of the problems you’re facing.

When you’re ready to take the next step you can begin the process online. If you’d like to schedule a free, no-obligation consultation in my office you can call 24 hours a day, 7 days a week at 212-233-0666 or fill out the contact form below.

Hiring a business law attorney is crucial for any successful business.  As a passionate business owner, I know that your business is important.  Your legal needs must be met so that your focus is on growing business.

I provide business adviser and legal services to entrepreneurs, start-up businesses and other entities from planning and formation to sale or other disposition of the business.  I will guide you through the development of your business plan, choice of entity and any business structural decision.

Below you will find a partial listing of our business law services. If you don’t see a particular topic listed and you would like more information, please contact my office so I can provide to you the information you need.

  • Draft and Negotiate Contracts
  • Buy-Sell Agreements
  • Purchase and Asset Sales Agreements
  • Employment Agreements
  • Independent Contractor Agreements
  • Settlement Agreements
  • Construction Contracts
  • Commercial Leases
  • Corporate Formation (Inc, C-Corp, S-Corp, LLC, LLP)
  • Corporate Minutes and Record Keeping
  • Shareholder Agreements
  • Social Media, E-Commerce & Social Media Law
  • Non-Disclosure Agreements/Confidentiality
  • Trademarks
  • Intellectual Property Agreements
  • Technology and Venture Licensing Agreements
  • Real Estate

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