When a contract contains a binding arbitration agreement, the parties to the contract are generally agreeing to waive their right to go to court when they want to litigate issues that arise under the contract. When the parties arbitrate a claim it  is submitted to an arbitrator who will have the power to make an enforceable decision in the case. An arbitration agreement is enforceable as long as it is not “unconscionable,” meaning it...

Previously on our blog, we discussed the importance of understanding the relationship between an agent and a principal.  Knowing the law that applies to principal-agent relationships is particularly important for business owners, so that they can prepare for and mitigate against potential legal liabilities that can arise from an agent’s actions. Agency laws also establish what fiduciary duties can arise from an agent-principal relationship.  It is particularly important to be familiar with fiduciary duties...

On September 28, 2014, California Governor Jerry Brown signed into law Assembly Bill 1897, which created a new Labor Code section. The new law affects businesses that obtain or are provided workers to perform labor from a labor contractor. Once AB 1897 becomes effective, private employers can be held liable for labor contractor’s failure to pay all required wages or to secure valid workers’ compensation coverage for contract workers. Under AB 1897, a business can be...

Under the doctrine of respondeat superior a principle (employer) is liable for the torts of its agents (employees).  A principle-agent relationship exists where the employee has agreed to work on behalf of the employer and to be subject to the employer’s control or right to control the physical conduct of the employee. Respondeat superior is Latin for “let the master answer.”  In the employment context, it might be read more accurately as meaning that “the...

What is the difference between a merger and an acquisition?  The terms “merger” and “acquisition” are common business terms, but they are often inappropriately used interchangeably, when in fact the two transactions are rather different. If you are planning to combine or purchase assets from another company it is imperative that  you understand the benefits and drawbacks of each. Merger In a merger, usually two or more businesses wind down as separate entities, and then a...

There are many reasons to invest in a business, such as joining a new startup, or becoming part of an established and successful business poised for more growth.  Sometimes these new or established companies just need a little additional working capital to be successful.  Before committing, however, it is important to approach the opportunity with objectivity, weigh all investment considerations, and understand the risks and goals associated with the potential investment. First, assess whether your...

A Choice of Law clause (also referred to as The Governing Law clause) is a provision in a contract that specifies which laws will govern in the event of a dispute between the contracting parties. A Choice of Law clause allows the parties to pick the laws of jurisdiction that will govern the interpretation and enforcement of the terms of the contract. The jurisdiction chosen for a Choice of Law clause does not need to...

Whether you are drafting a contract or reviewing one before signing it, it is important to understand the significance of a Forum Selection Clause. Although you may never need to use it, in the event of a dispute a Forum Selection Clause may become critical. A forum selection clause is a provision in a contract in which the parties agree that any litigation resulting from that contract will be initiated in a specific forum. In other words, it...

Consumer review based websites like Yelp have grown in popularity and power. Consumer voices are often trusted, and a bad online review can have costly consequences. However, online anonymity has led to abuse, and if someone has posted an online review about your business that is false there may be legal recourse for your injuries. Defamation is an action brought to defend reputation. It involves intentional publication of false, defamatory, and unprivileged information that has...

Many contracts between businesses contain arbitration provisions, where the parties agree that if a dispute should arise, it will be resolved through arbitration. Sometimes when disputes arise, one party will not want to go before an arbitrator or will disagree that the type of conflict is one bound by the arbitration provision. Whatever the reason may be, there are laws that guide whether the contract provision should be followed and enforced. Whether There Should be Any Arbitration If...