Previously on our blog, we discussed how more complex contracts allude to other existing contracts and documents. Incorporation by reference is the method of making these alluded-to documents part of a contract, and is often used to save space when parties want to include or reference another legal document or contract into a new contract. To properly incorporate another document by reference, it has to be adequately described in a new contract, and it...
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...
Even if your business is not based in California, you may be held to certain California filing obligations and tax liabilities if your business meets the legal definition of “doing business” in California.
There are two definitions for doing business in California. One is from the Franchise Tax Board, and determines whether an individual or business will have tax liabilities in California. The other is established by the California Corporations Code, and it determines what corporate...
It is prudent for parties to a contract to include a clause that addresses “changed conditions.” A provision in a contract discussing changed conditions should broadly identify altered circumstances from the time the contract was signed and how these new circumstances will be addressed.
A changed conditions clause is frequently found in construction contracts. This is because construction projects rely on so many variables, including weather, labor, and materials, that can be subject to unpredictable...
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,...
Parties often wait until a dispute arises to exercise or learn about their rights. However, it is often more prudent to know and exercise rights before a dispute arises. The main shareholder or partnership rights include limited “economic” rights, voting rights, inspection rights, the right to bring a derivative action, and, in certain circumstances, the right to start the dissolution process.
Business entities can dissolve or cancel their businesses at almost any time. In particular, California...
An indemnification clause is often found in contracts and is designed to protect one party from financial loss, and shift the risks and any potential loss to another party. Usually, the risk of loss is shifted to the party who is in the best position to control and prevent the risk at issue. While an indemnification clause is a great term to have in a contract to protect parties from certain events, they can...
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...
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...
