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,...

Previously on our blog, we discussed what a joint venture actually is and how to create one. Now we will share a few tips for making a joint venture relationship more successful. Have a Written Agreement By its very nature, a joint venture is a commitment by two or more different individuals or entities to work together on one single goal.  Much like any relationship, this set up leaves a joint venture vulnerable to management...

According to California law, a joint venture exists when two or more entities or individuals combine their property, skill, or knowledge to carry out a single business undertaking and agree to share the control, profits, and losses. Joint ventures are common in business dealings when two or more entities, individuals, or established businesses decide to partake in a particular enterprise together, and is often used to facilitate a new project and pooling of resources while also...

In the U.S. Congress, members of both parties are working together to reduce the corporate tax rate and simultaneously limit business tax breaks. The plan to cut business tax rates is getting strong opposition from U.S. businesses. Reducing corporate tax cuts and the corporate tax rate is a complicated issue because millions of U.S. businesses do not pay taxes through the corporate system. These businesses are often referred to as “pass-throughs” because the income they receive is...

A “B” Corporation is an unofficial designation for socially responsible businesses.  It can also be referred to as a B Corp, Benefit Corp, or B Corp Certification. The 501(c)3 nonprofit, B Lab, determines and designates B Corporations. There are over 1,000 Certified B Corps in more than 60 industries.  Companies that have obtained B Corp designation include Etsy, Method, Seventh Generation, Ben & Jerry’s, and Patagonia. There are many benefits associated with B Corporation status. Designation as...

The state of California has joined in a lawsuit against BP, the British energy giant, in a whistleblower action that was originally brought by a former BP employee, Christopher A Schroen, and alleged violations under the False Claims Act.  Since Schroen’s suit, Los Angeles County, the University of California Board of Regents, and the Trustees of California State University have also joined the suit alleging that between 2004 and 2012, BP defrauded the state of California of...

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...

Varying circumstances may require parties to a contract to modify their original agreement.  For example, contract modification may be necessary if parties want to extend a contract, change its duration, alter the quantity of goods to be sold or delivered, change a delivery time or place, or change a payment amount or type. Parties typically can modify a contract at any time, as long as all the parties agree to the changes.  Minor changes in a...

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...