Every contract in California (and across the country) must meet certain legal requirements to be considered “valid,” such as the manifestation of assent by both parties to be bound by the terms of the transaction.  For centuries parties have been “signing on the dotted line” to evidence their assent to the terms of the agreement. In an increasingly digital economy many contracts are being consummated electronically.  The Uniform Electronic Transactions Act (the “UETA”) (found at Civil Code...

Selling partnership shares often involves various considerations.  In most partnerships, partners can choose to sell their share of the partnership to the partnership or a new potential partner as part of the resolution of a partnership dispute or simply because the individual or entity no longer desires to be part of the partnership. Selling partnership shares will be governed by a partnership agreement, or if there is no partnership agreement, state law will govern sale of...

Changes to a construction contract are  a part of doing business in most cases. Therefore, parties to a construction contract almost always have the right to make change orders. However, there are often limitations to the changes that can be requested and made. Parties to a construction contract should be familiar with what a permitted change is, and what an impermissible “cardinal change” is. Construction contracts should contain what is often called a “contract changes”...

A flow-down clause (also referred to as a pass-through or conduit clause) is usually found in a construction contract and provides that subcontractors will be bound to the general contractor in the same fashion as the general contractor is bound under its contract with the property owner. Flow-down provisions are important to protect parties to a construction contract by spelling out that a subcontractor's obligations to the general contractor are identical to the ones a...

There are many reasons why parties may end up dissolving a joint venture. Their efforts may have been unsuccessful, their project may me complete, there could be clashing management styles, or there could simply be a need for a new characterization of the businesses. If the parties to the joint venture have a written agreement governing the relationship, that agreement will likely contain the provisions that will determine the process for dissolution. In the absence of an agreement,...

Recently, California State Senator Bob Hertzberg proposed a new tax on professional services. Although the bill, known as Senate Bill 8 or the Upward Mobility Act, would replace Proposition 30, which was passed by California voters in 2012 and is set to expire in 2018.  If passed, Senate Bill 8 will take effect in 2019. While the Upward Mobility Act is currently a work in progress, it is being touted as a means of starting a conversation in...

A sole proprietorship is the most common business form because it is simple to establish and easy to maintain.  For the same reasons that it is easy to start a sole proprietorship, and dissolving a sole proprietorship is relatively simple as well.  If you own your own business and run it as a sole proprietorship, you can close your business in a few simple steps. Because only one person can own a sole proprietorship, dissolving one is...

The procedures for compensating a corporate officer and setting corporate officer compensation will depend on the type of business entity in operation, the industry, the entity’s profitability, and the corporate bylaws and/or operating agreement.  In general, corporate officer compensation is permitted so long as it is “reasonable” for their efforts in carrying on a trade or business.  In such cases, a corporate officer is often considered an employee of a corporation, and is paid as...

A court may find that a contract, or some of its terms, should not be enforced if the contract as a whole or certain contract terms are unconscionable.  Regardless of whether you are drafting a contract or signing one, it is important to understand what types of contract terms may be found unconscionable. Below are a few examples and specific considerations. Courts commonly describe unconscionable  contracts or contract terms as those that  “shock the conscience.”...

Unlike patents and trademarks, trade secrets are protected without any procedural formalities associated with the benefits of registration with a government agency. The benefit to this is that a trade secret can be protected for an unlimited period of time and requires no public disclosure. The downside is that defining and protecting a trade secret can be trickier. There are different definitions of what constitutes a “trade secret.” California law has adopted the Uniform Trade Secrets Act definition,...