Despite the fact that it remains the better and safer practice to put all contracts in writing, many important business and partnership agreements are still made orally.  While oral contracts are enforceable in California in many circumstances, the California Civil Code specifically requires that certain agreements be put in writing to be enforceable. Specifically, California law requires that the following contracts be in writing in order to be enforced: A contract in which performance will necessarily exceed...

Previously on our blog, we discussed the enforceability of non-compete clauses. It is important to be familiar with the concept not only for contracting purposes, but also from the standpoint of being either an employer or employee. Recently, this issue has been in California state news, as it appears that large companies are trying to enforce non-compete clauses that are found in employment agreements of low-wage workers. The case at issue involved Benny Almeida, a former employee...

The phrase “doing business as” or “DBA” is a legal term used to signify that the trade name, or fictitious business name, under which the business or operation is conducted and presented to the world is not the legal name of the business responsible for it. For example, a company may incorporate under the name “XYZ Inc.”  This is their legal name and where the business’ creditors can seek payment or compensation, that is,...

California law requires corporations, limited liability companies and common interest development associations to update the records of the California Secretary of State on an annual or biennial basis by filing a statement of information.  Keeping up with these yearly corporate filings is necessary in order to maintain good corporate standing and avoid penalties and fees. If you do not file an annual statement of information and pay the accompanying nominal fee, the Secretary of State...

Whether you are buying or selling real estate, it is important to determine whether any easements encumber the property, and, if there are, what effect the easements will have on the deal. First, an easement is generally defined as a right to cross or use someone else's land for a specified purpose. For example, your neighbor may have a small easement over your land to access the closest main road. The easement does not allow...

In California, Close Corporations are creatures of statute. They are not judicially created as they can be in other states. Therefore, in order to benefit from the legal protections of a Close Corporation, it must be properly formed and meet all statutory requirements. A Close Corporation is designed to give its shareholders more control over the operations of the business and allow for a flexible management model. A California Close Corporation may not have more...

Ponzi schemes endanger investors and securities professionals, but these victims are not without recourse. Investors who fell victim to such schemes may pursue compensation from the brokers and other entities that perpetrated the fraud. They may also bring a clawback suit.  A Clawback suit allows them to seek compensation from the early investors who either knowingly or unknowingly benefited from their early involvement. A common type of clawback suit is brought through federal equity receivers or...

A recent survey by AlixPartners found that corporations are directing their attention to finding ways to proactively manage potential risks. In the face of rising litigation and regulatory enforcement actions, corporate compliance and legal departments throughout the country reported that their efforts are going towards implementing education and training programs to reduce litigation risk. AlixPartners' 2014 Litigation and Corporate Compliance Survey polled general counsel and compliance officers from more than twenty major industries including insurance, financial services,...

Contract performance is on one of the main sources of contract disputes, i.e., situations where there is late performance of the agreed upon terms, no performance, or performance that does not adequately match the contract terms. Generally, one party’s minor delay that does not significantly impact the overall contract or cause a material breach will constitute “substantial performance” and will not relieve the other party from performance. It is important to note, however, that...

Certain contract terms can limit liability exposure from potential lawsuits and other claims that may arise. These terms are generally found in limited liability clauses. Certain contractual terms can also limit damages, such as a liquidated damages clause. For these terms to protect contracting parties from liability, they have to be properly drafted and in line with California law. Limited Liability Limited liability clauses are permitted by California law, but courts will strictly construe such contract...