Another Limitation of “Limited Liability”: Personal Guarantees

If your LLC or corporation is getting any kind of loan financing, it is very likely that the lenders will ask you and your fellow business owners for personal guarantees.   Even if your business offers decent collateral, lenders like to see that you put some of your own skin in the game. Thus, even though you, as a busines owner, are not liable for the debt obligations of the LLC or...

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International Sales Contracts – Don’t overlook the United Nations Convention on Contracts for the International Sale of Goods

Gone are the times when small businesses had only local dealings.  Many small businesses sell or purchase goods internationally. When drafting an agreement for an international sale of goods, you must be aware of the potential applicability of the United Nations Convention on Contracts for the International Sale of Goods (CISG).  The CISG applies to: international transactions, i.e....

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The LLC Operating Agreement – Keep it Simple

Here is a little known secret about limited liability company (LLC) operating agreements:  They are often more complex than necessary.  Pick up any "standard" operating agreement from the internet or elsewhere and you will see a lot of provisions incomprehensible to a mere mortal.  Most of these provisions deal with so called "special allocations" among...

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Spotlight on Buy-Sell Agreements

Buy-sell agreements are like prenuptial agreements for people in business together; Buy-sell agreements set forth what is going to happen when things go wrong and business partners want to, or have to, separate.  As with prenuptial agreements, people tend to overlook their importance or simply don’t want to deal with the subject; after all, they are in love! But as Iowa business...

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On the Comma that cost 1 Million

You may have read it in the New York Times, the Legal Reader or on AboveTheLaw, a single comma in a 14- page Canadian contract may decide whether the contract was rightfully cancelled by Atlantic Canada, a telephone company.  This decision supposedly is worth 1 million Canadian dollars. The contractual language at issue is as follows: “This agreement shall be effective from the date it is...

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First Impressions in the Business of Law

A lot has been said about first impressions in the business of law.  Does your letterhead look fancy, are your business cards engraved, is your correspondence well written and free of typographical errors?  While all that is still important, I feel one aspect of professional appearance is rarely mentioned.  Does your lawyer (or other professional service firm) produce perfectly...

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Guarantor not bound by forum selection clause in guaranteed contract – Quebecor v. Harsha Associates

A recent case by a federal court in New York illustrates the importance of choice of law and forum selection clauses in each and every contract or guaranty. In Quebecor v. Harsha Associates (Quebecor World (USA), Inc. v. Harsha Associates, L.L.C., et al (2006 WL 2918797 (W.D.N.Y.)), the court held that a guarantor was not bound by a forum selection clause contained in the guaranteed contract....

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Form Contracts

Great line by Lema Korshid on Mindpetals: "The only thing that the form contract comes with besides an “idiot tag” is no guarantees." Read the full article "Form Contracts – Use them at your Own Risk". By the way, I think I called her a non-lawyer the other day.  From this article it seems that she (or he) actually is a lawyer.   Apologies. If you...

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Attorneys Not Allowed to collect Attorneys’ Fees from Clients

Thankfully, a New York court has held that the following provision in a retainer agreement is unenforceable: "If client fails to pay for charges due under this agreement and the law firm takes legal action and is awarded such charges, client shall owe to law firm costs, expenses and attorneys’ fees (including but not limited to the reasonable value of the law firm’s own work)...

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Memorialize that Deal in Writing!

Since I am in the business of memorializing deals for people, my repeated message of "get it in writing" might seem somewhat self-serving.  Thankfully, non-lawyers point it out too:  Lema Korshid on Mindpetals had a post yesterday entitled "Memorialize that Deal in Writing."  She writes: Entrepreneurs, save yourselves from future headaches! Ask your attorney...

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