Sorry, there will be no Draw the Law, as I work on finalizing the talk and closing a business deal.  Today’s post, was supposed to be on alternative dispute resolution in a breach of contract situation, but guess what?

I will be talking about that tomorrow at The Greenhouse Innovation Hub, I will be discussing ADR, what is a contract, answering your questions, and I along with Docracy, the NYC startup trying to make using legal agreements user-friendly, will be using sample agreements to walk you through basic contract law.

The information is as follows:

Hope to see you there!

-RKH

Before I get to today’s Draw the Law topic, which is about stopping payment in the case of a breached agreement, let me inform you of two speaking events coming up.

Speaking Events with Me: Contracts and Business Entity Formation

First, is my Basic Contract Law Talk with Docracy. This will be held at The Greenhouse Innovation Hub from 6 – 7p.m. next week Wednesday, July 25th. Docracy is a startup providing open legal documents, with free e-signing. Their goal is to help take the mystery and fear out of legal agreements.  The goal with the workshop is a mixture of presentation and interactivity using documents provided by Docracy and helpful information to business owners when it comes to contract law.  If you are interested please find more information by clicking here.

The second is my Business Entity Formation talk, which will be done at the ING Direct Café found in Waikiki, on August 1st, also from 6 – 7 p.m.  This talk is being done for the Honolulu Chinese Jaycees, but is open for the entire public. So come learn the difference between LLCs and corporations, and what the right entity for you might be.  Feel free to contact me for more information on these talks and future ones.

Self-Help, Deny Them Payment

So last week, I said you might want to consider talking things out.  When one side shuts down, tempers usually explode and one-side immediately wants to go to a lawsuit. Generally, speaking talking things out and coming up with a new agreement (albeit not the original one) is less costly.  Another approach you may take, and this is with caution, is that if you are the person paying for the goods or services, you may refuse to pay for lack of goods or services.  The problem with this method is that by not paying, depending on the circumstances, you may be breaching the contract as well. IF YOU BREACH THE CONTRACT YOU MAY LOSE CERTAIN RIGHTS OR CLAIMS. That’s why this option is cautioned, and generally you should speak to your attorney to figure out if this is a path you might want to consider. I will talk about checks, credit cards, and briefly of PayPal.

Stopping Payment with Checks

Yes, I realize that checks are quickly becoming a relic of the past, but a large portion of small businesses starting up still accept and use checks before they set-up other forms of payment.  This is as simple as calling up your bank and telling them to not pay out on the check from your account IF the transfer has not already been made.  Generally, when you set-up a bank account your bank and you have a contractual relationship, and the person you are trying to deny payment to also has a relationship with the bank that is trying to collect.  Therefore, the bank has an obligation to pay out on checks you authorize and also stop payment on checks you no longer okay.

What you don’t want to do is empty your bank account, why? Consider, the fact that the bank is not a mind reader. However, you are a small business owner sending out tons of checks.  Consider for a moment that you, yourself receive tons of checks and different times, do you cash all those checks immediately? Probably not, you wait for a certain scheduled date and take all the checks down.  So given that, do you think you bank knows, which checks it should pay and not pay? Probably not.

Credit Cards

So if you are a small business owner, you may be using your personal credit card to pay for things.  Depending on the rights you have, as under contract with the credit card company, you may have your company not pay regarding the goods in dispute.  Recognize, that your customers may consider the same tactic.

Notice that I said personal credit cards, consumers generally have more protection than businesses as I have mentioned in prior posts.  The same goes for credit cards, there are personal ones and business ones. Check what you have, as you may far fewer rights on your business one than your personal one.

Good News For Merchants and Retailers: Charging More for Accepting Credit Cards

That being said, a good piece of news for you merchants and retailers that accept credit card. A recent class-action suit was decided in favor of the retailers and merchants against the major credit card companies. What this means is you may in the future be able to charge more for people who choose to pay by credit card. You can read more here.

PayPal

Finally, as I know we live in the age of smartphones and electronic payment, what about PayPayl?  With PayPal it is very simple.  You can cancel any payment that has not been claimed yet.  However, it must be unclaimed. If it has been claims you are back to last week’s post and contacting the other side for a refund. For more information on the step-by-step process, click here.

Last Word: Stop and Consider What you are Doing When you Try to Stop Payment

Consider what you are doing when you try to stop payment. This definitely is shutting off communications, which is why you might want to try to talk to them first as last week post suggested. In addition, depending on the situation, you may be reducing chances of settling this, losing claims or rights (being breach yourself), and finally subjugate yourself to a debt collection action.  Therefore, even if talking is not working, this still may not be the best option, may be you need an outsider to talk to the other side, which will be the subject of next week’s post.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

So last week I gave an overview of options you have to fix a breach in your contract.  Today, I will briefly go over one of your first, and generally speaking should be your initial approach – communicating with the other side.

The Practical Approach: Re-Opening Communication

Generally, when people do not do as they promised, such as making it on time for delivery of goods or services, a break down in communications begins.  The side that did not receive what they requested or paid for becomes upset and the breaching side for one reason or another stops communicating.  Consider the most optimal outcome if this move is successful: a) you have rectified the breach; b) it was inexpensive, as it only cost you a little time to phone call, email, or send a letter; c) and you gained invaluable information about how the other side operates.

Understanding the Other Side

The breaching party may have had several reasons for the breach: 1) they may have needed more time; 2) their suppliers or vendors breached their contracts with them and did not deliver; 3) they had an emergency and chose to break your contract over a more valuable one; 4) or they bargained too low and wanted a higher price.

While, I understand that situations 3) and 4) may be unpalatable to you personally, the reality is that businesses do have to make calculations.  However, that does not mean you ignore how the breaching side conducted itself in this situation.  If you do renegotiate or continue to use their goods and services in may be important to up the controls in future contracts to prevent the same breach from happening.

Do I Need a Lawyer?

In this situation, you may be quite capable of renegotiating your contract. However, in some cases having a lawyer to negotiate on your behalf and getting the other side to stipulate to your demands due to their breach can be beneficial.  You have to judge for yourself the situation and temperament, but before you do anything you could always call your lawyer and get some ideas on how to go over and things to ask for.

If it is a sophisticated deal and you have proposed a new way to handle the deal it might require you to have something drafted a “new contract” to replace the old.  In legal terms, you have a situation that requires an accord and satisfaction, where the creditor is willing to accept a lesser amount due or new way of handling the transaction and the need to amend the original contract.

One Final Strategy for Negotiating: If You Can’t Get to Them, Go Over Them

Depending on who you are dealing with, let’s say they are the authorized regional supplier for the sale of canned meat in the islands, you may have a better time dealing with the corporate office who grants the supplier the authority.  You can try to convince the corporate office to punish or force the nonresponsive, breaching supplier back to the table.  It may be telling them that the supplier is damaging their brand in the region by breaking contracts or that they are not meeting the company’s standards. It just depends on the leverage and relationship between the supplier and the corporate office.

If that does not work, you can always do what’s called “self-help”, which will be discussed next week.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

So last week, I talked about how a breach in a contract occurs. The other side either (1) failed to perform; (2) made it impossible for you to perform; or  (3) they repudiated the contract.  So now what?  You have a broken contract, what are your options?
Typically, you have a number of ways to remedy the situation with the other party before heading to court. I will briefly cover your choices in this post and cover them in-depth in separate posts.

How do I Handle this Mess?

Chances are if you are the party that did not breach, and you are waiting around for the other side to fix the problem, you are getting irritated.  You don’t want to talk to them, you want to call your attorney and tell them prepare a letter (what lawyers refer to a “nasty-gram”), which states “do what you are supposed to do or else.”  While, this definitely one-way to talk the opposing side, it probably is not the best.  However, it is a method, negotiate/communicate.

You got into this contract probably out of some form of communication and you definitely can fix it by talking it out.

But, I don’t Want to Talk to Them or I Don’t Think They Will Respond

Sometimes communications have broken down completely, they don’t return your call or they ignore your Facebook messages (yeah, it sounds like a messy break-up).  You can take action on your own.

One method is that if you are the one that has to pay you could unilaterally stop payment. However, be warned that going down this path means you could be in breach of the contract as well.  Sometimes to preserve your rights under the contract you may still have perform. It depends, and sometimes legal advice should be sought.

Get a Third-Party to Decide

Alternative dispute resolution (ADR) is where you and the other party go through mediation or arbitration to resolve the matter.  Mediation and arbitration slightly differ in their approach and depends if they are appropriate to the dispute.  Couple things to note: (1) sometimes you put a clause in the contract in the case of a breach that you choose one or both; (2) because it requires agreement, if not in the contract, you cannot force the other side to ADR; and (3) ADR is not under a formal court system (but may produce a new agreement enforceable in court).

The Last Stop, I’ll See You in Court

Finally, there is the option you all already know and may consider (as you reading this post on a legal blog), law suit.  This should be the option of last resort.  You don’t need me to tell you that suing for damages or other remedies is costly, time-consuming, and an energy drain.   With this option, you definitely will want to seek legal advice on how to handle bringing your dispute into the court system.  However, consider the other three remedies as places to at least consult with an attorney to insure that this last option is preserved.  You do not want mistakenly lose the right to suit due to an action like self-help.

So I will see you next week where I will discuss remedy one, communicating with the breaching side to see if they are willing to fix the problem.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

I am happy to announce that I will be working with Docracy and The Greenhouse Innovation Hub to bring you a special seminar on Contracts Law here in Honolulu, Hawaii to be hosted at The Greenhouse Innovation Hub.  The seminar is tentatively scheduled for July 11th at 6-7pm with a representative from Docracy streaming live from New York.  We will be talking about what Docracy can do for your agreements and I will be talking about basics of contract law.
Check back on my blog and The Greenhouse Innovation Hub’s calendar for details.

As today’s Draw the Law continues the theme of discussing contracts, I wanted to get to talk about what business people care when they engage a business attorney. Today’s post is about contract disputes, and what is a breach of contract. I will follow-up about suing on contract, sending nasty letters, and getting damages in the weeks forthcoming.

Let’s Get the Lingo Right: What are Ways to Breach a Contract

Generally, when you want to end a business deal it is because of a number reasons: (a) you don’t like the other side and want to end the relationship; (b) you are frustrated because what you bargained for is not happening; or (c) a better business deal has arisen and you only have so much time. If you do not live up to what was agreed upon in the contract you would be in breach of contract or default. Breaches come up in 3 ways: (1) failure to perform; (2) making performance impossible; and (3) repudiation.

Failure to Perform

Sometimes you simply cannot live up to what was bargained for. For example, let’s say you said you would deliver a box of slippers to a retailer early next week. It would be a material breach if you never supplied the slippers.  In addition, you would be in material breach if you kept promising to deliver the box soon, and a month went by.

“Time is of the Essence”

Many contracts put in a “time of the essence” clause.  The function of this clause is meant to make the timing of performance a central part of the agreement. Therefore, if performance is not done in a timely manner you would be in default. 

Partial Performance, Partial Breach

Sometimes, a written agreement is comprised of multiple contracts, with multiple parts. It is sometimes possible to perform on some of those contracts, and completely fail to do others. Using our example, let’s say you are to do multiple deliveries of boxes of slippers, and they are to be delivered the first of every month, but you make several deliveries after the first.  You would likely have to pay to the retailer the cost of the times you were delayed in delivering, and not for the times you performed. 

Making Things Impossible

Speaking of timing, sometimes you set a specific time for someone to perform.  Continuing with our example, let’s say the retailer told you to deliver the boxes on Sundays.  However, they forgot that they are closed on Sundays and forgot to send someone to open the store.  They would be in breach because they made it impossible for you to deliver.  The retailer would you the cost of sending the delivery truck down and possibly the lost of the sale if you could have sold the box to another retailer.

Repudiation

Finally, the last type of breach is a clear statement by one party that it will not be performing under the terms of the contract because it cannot or will not. Once again, let’s say you have to deliver your box of slippers to the retailer, but you get a call in the day before that a second retailer will pay you significantly more for the box of slippers.  You then send an email to the original retailer telling them that you decided to sell their shipment to someone else. This email is your repudiation.  Please note a repudiation is different than a disagreement as to the meaning of contract term’s.

Last Word

Breaching a contract does not mean you will go to jail. It is not illegal.  The government goes after you if you break safety laws.  Trespassing on someone’s property gives them a right to sue you, they don’t need a contract to go after you. However, remember last week, where I talked about the difference between property and contract law, understand that the nonbreaching party is only given rights to go after the other side based on what is in the contract.

In addition, breaking a contract can be costly based on the value of the deal, what the terms of the contract are, and how you handle the outcome. In coming weeks I will talk about seeking alternatives to dealing with a breach and the question you all like to ask your attorney, “what damages can I sue them for?”

See you next week!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Last week I discussed why an invoice (take by itself) is not a contract.  As was stated, it only shows a quantity and a price, but there is no evidence that the side being sent the invoice has accepted those terms.  Unless they have signed or there is another underlying contract an invoice alone does not make a contract.  During that week’s discussion I briefly mentioned a bill of sale.  If you remember in the court case I quoted it stated that an invoice is not a bill of sale, which is true.  A bill sale, unlike an invoice, facilitates a transfer of title to property and at the same time evidences contract.

Why is a Bill of Sale a Contract versus An Invoice?

If you remember the several Draw the Law posts about contract law, I mentioned that a contract requires mutual assent (which is offer and acceptance) and consideration.  In your typical bill of sale the seller agrees to sell the property to the buyer, if the buyer signs according the to the terms of what is described in the bill of sale there is acceptance of that offer. The consideration is the underlying exchange of cash for title to the property.  Notice that there is a transfer of property and a contract in one document.

Is there a Difference between Property Law and Contract Law?

Yes, there is a difference between the two; much of the confusion in our modern usage of legal terms comes from the fact that property and contracts law are tend overlap in many instances, such as in a real estate deal.  However, the two of them are very different.  The rights that arise under property law are different than the rights that arise under contract law. Generally (and simply) speaking, property law gives rights to the owner over something (i.e. land or a car) to be enforceable against other persons.  However, contractual rights give you enforceable rights against a particular person.

Today’s document, the bill of sale, transfers ownership over something, thus giving the buyer the ability to enforce their rights over their newly acquired property against all others. However, the exchange of valuable consideration between the two parties, for instance money for a car, gives the two parties contractual rights to sue against each other if the terms of the deal are broken.

Contrast this with a contractual agreement that does not grant the nonowner a property interest, nor the rights to enforce against all others.  For example, a license for copyrighted software – remember you the software user are only granted a license.  Therefore, you cannot enforce the copyright against all others whereas the software maker can, all you can enforce is that you did not receive access to use the software or it malfunctioned and the company can enforce you went beyond the license or you did not pay them for it.

Do Bills of Sale Require Any Other Information?

In many states (as well as under federal law), for particular pieces of property, such as cars, boats, land, etc . . . the bill of sale also requires other specific information to effect the transfer and evidence a contract.  For example, check the City and County of Honolulu’s form for a bill of sale for a car at this link.  On the form you will see the need to state the mileage of the vehicle and have it notarized.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Hey everyone, pardon the day delay of Draw the Law, but today’s post will continue the discussion of various forms and documents that businesses will use and see on a regular basis.  For today’s post, I will address a question I frequently get from small business owners who are either trying to set-up their invoicing system or they receive stuff from a vendor and do not want to pay for it.
The question is simple: is an invoice a contract? Do I have to pay it?

For once, in the law, the answer is simple. No, an invoice (by itself) is not a contract.

Why is it Not a Contract?

First, let’s talk about what it is and what this document usually has on it.  It is a bill, with itemized amounts of the goods sold by the invoicing party.  If you remember earlier posts, remember that a contract is not a piece of paper.  At its most basic level, it is a promise for a promise.  So when the vendor sends just the invoice and the other side has not accepted, there is no contract.

In an old Supreme Court case, the court stated the following in their opinion:

An invoice is not a bill of sale, nor is it evidence of a sale.  It is a mere detailed statement of the nature, quantity, and cost or price of the things invoiced . . . standing alone, it is never regarded as evidence of title.

Dows v. National Exchange Bank of Milwaukee, 91 U.S. 618 (1875).

Is there a Way to Make an Invoice a Contract?

Yes, have the other side sign off on it.  Remember that so long as the recipient has acknowledged the terms and there is some evidence (like they signed) of accepting those terms there will be no contract.  In addition, if you received goods, held onto them, and started reselling them, there is an indication that you accepted the goods.  If you are rejecting the invoice, you should also reject the underlying goods you received (whether that be shipping the whole thing back, writing a letter, or some other overt act).

Invoices and Emails

Nowadays, there is a habit to just send invoices frequently through email.  This brings up an article I posted on my Facebook account last week, which is that a series of emails can be a contract.  You can read more about it by clicking here.  Basically, consider the back and forth exchange of your emails as the terms of the agreement, as soon as the sides “accept” there is a contract.  So it is very easy to see that you could agree to something that you didn’t intend to by “accepting” and hitting that “reply” button if you aren’t careful.

So double-check the invoices you send and receive, alone they are not a contract, but any evidence of acceptance will form a contract.

See you next week, where I will talk about how a bill of a sale differs from an invoice, and why it is a contract as compared to an invoice.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Last week I discussed using Informed Consent Forms (in the context of fitness and health activities) to tell the participant that they are assuming all the inherent risks of the activity.  The point of this disclosure is that the participant has been forewarned of the dangers and gives the goods/services provider a legal defense, known as assumption-of-the-risk, against the participant should they become injured, incapacitated, or even killed (in those instances where death occurs people on behalf of the deceased bring wrongful death suits).
Today, I will discuss another form, Waiver Forms, which is usually found in the company of Informed Consent Forms, so I will continue using the health and fitness theme from last week for today’s Draw the Law post.

So What Makes a Waiver Different from Informed Consent?

Informed Consent provides a defense against injury due to inherent risks of the sport or activity whereas a Waiver Form is used to protect against claims of negligence.  The main feature is that in a waiver there is an exculpatory clause.  This special clause “waives” a person’s right to sue.  So in the fitness context, if a trainer or club employee acted negligently and a client or customer got injured, if they signed the waiver, that injured participant would be unable to sue.

Is there Magic Language?

While, there are no exact words, the specific language that you will always see to referring to a waiver is “any negligent act or omission”.  The reason being is that negligence claims can arise from actions (also known as a commission) or inaction/failure to action (referred to as an omission).

What is the Difference between Negligence and Inherent Risks?

Inherent Risks – are those injuries that are a part of the activity, such as if you are taking a Turbo Kickboxing it would be clear that you might suffer injuries typical from jumping and kicking, like hurt knees or ankles, these types of injuries are not any person’s fault.

Negligence – is the failure to act, where a reasonable person would have acted under the same conditions and situation, thus in a class of Turbo Kickboxing it would be the instructor giving improper instructions or advice or possibly failing to render first aid if a participant got injured.

Does a Waiver Require Anything Special?

Yes, more often than not, many states require such an agreement to have that exculpatory clause in conspicuous font and formatting.  Basically, it is to help the average person notice that this is special language and that they need to read it.  Many times clubs will put a waiver, hidden amongst a larger set of documents or buried in a membership form.  This tend to be problematic as many jurisdictions may invalidate this type of agreement versus that of a separate document.  Why? Public policy is that we would like to give fair warning to people that they are giving up the right to sue in case they get injured due to the negligence done by a club or fitness trainer, and allowing businesses to hide such clauses in giant boilerplate documents would be unfair.

Last Word

These documents tend to be highly contested, and the risk of a court invalidating them is definitely there due to errors in drafting.  In addition, certain states do not even recognize these as a valid contract.   Therefore, it is best to seek out legal advice from an expert to have something specifically drafted for the activity that you would like to prevent clients or customers from suing you with a negligence claim.

Stay safe and healthy, and see you next week!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

For the past several Draw the Law posts I have toured marketing, licensing, and nondisclosure agreements.  These are many of the typical forms you will see all-types of businesses use.  Today, as I have done with my photographer friends regarding rights of publicity and releases, I will do a couple explanatory posts for my friends who work in the fitness industry with regard to informed consent and waiver forms, and their use in dealing with risks and lawsuits.

What’s the Context We Use these Forms in?

All businesses carry some kind of risks with them.  Sometimes the risk is monetary (as with the financial sector) other times it is bodily, such as with the fitness and health industry.  As I am sure any fitness instructor can tell you, many people receive an exercise-related injury at some point if they workout frequently.  Among those hurt by the exercising, some of them may consider a lawsuit against the trainer and the club they work for because in their mind they feel they are the ones responsible for the injury.  On the other side one of the goals of any business is to reduce costs and one way to reduce costs is to mitigate or control risk.  In case of a personal trainer or a fitness club, it is the risk of a lawsuit by an injured client or patron.

Enter the Informed Consent Form

So for those who participate in fitness club activities, for example Turbo Kickboxing, there are risks associated with the activity, such as landing on your foot funny, getting a bruise from a stray kick, or falling down (because you find your instructor hilarious, ok this part is completely a joke).  These are called inherent risks.  However, let’s say you are a new client trying a completely new exercise routine?  Would you know what are inherent risks?

No. This is where the informed consent form tells the client what the risks are with the activity.  Why do we want that?  Without getting into too much legalese, if a client signs an informed consent form they are stating that they assume a risk and acknowledge the potential for getting hurt.  This is key because it provides the personal trainer or club with the assumption-of-the-risk defense in court because they will enter it into evidence.  Basically, assumption of the risk is as it sounds, by  understanding everything that is written in the form they assume those risks.  Therefore, an informed consent form should contain the following:

  • Wording that IDs the risks that could occur;
  • the consequences of what could happen to the person if those risks did occur (for example, the possibility of dying); and
  • if the client is still unclear on the risks, a notation on the document that the personal trainer verbally clarified in advance the questions that client had.*

*Note that this act will not prevent a lawsuit. It merely creates evidence of assumption of the risk.

Is this a Type of Contract?

You are probably getting sick of seeing this, as I say it over and over on this blog and in-person.  However, remember the document is just that, a piece of paper.  A contract is more than just paper. It is a promise for a promise.  In this case, the document embodies the agreement, which is that between the two parties (fitness trainer and client) that all the necessary information was included and that the client hereby assumes the risk, which was disclosed.   If you need a refresh of consideration you can click back at the older Draw the Law posts.

If this is a Contract can Minors Enter it?

Good question, and remember in a prior post that only adults have capacity to enter contracts, children lack capacity to give consent to be bound in contract.  With that being said, many times for instructors that deal with children they have the guardian sign an agreement to participate, which amounts to a permission slip.  With that being said, it can still be used as evidence.

Does this Form Help the Instructor or Club Avoid Liability?

No, unless it contains what is known as an exculpatory clause.  Basically, the claim people often make in court, when they are injured (whether it be monetarily or bodily), is negligence.  This is the injured client basically stating that the trainer or club did (or did not do something) that a reasonable person would have done in the same situation and because of that they got injured.   To combat claims based on that argument, attorneys that draft agreements will use an exculpatory clause, which would then make the document a waiver, which I will discuss next week.

Last Word

Informed Consent Forms are not limited to the fitness and healthy industry, but you can see how they are readily applicable to those fields.  In general in situations where there is a service provider that has people following their instruction and there are inherent risks of bodily or monetary harm due to participating in the activity you will see the service provider usually having people sign an informed consent form among the papers they hand them before providing the service.

Sometimes, these forms may be incomplete or the employee of the organization has not been properly trained to deal with questions that arise on these forms.  In general, an attorney can help you with those matters.

Stay healthy and fit this week, and see you next week!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Pardon the Delay and IP Law Talk this Week

Hey everyone, I am sorry that this Draw the Law was delayed by a week.  Like many things in the legal world situations develop that require an attorney’s attention and in my mind clients do come first, as much as I love doodling stick figures. Before I get into the post that I was supposed to do last week, please be reminded that I will be having an IP Law Talk tomorrow night, Wednesday, May 23rd.  I will be discussing intellectual property matters (copyright, trademark, and trade secrets) for small business and startup owners seeking to protect their content and brand in this increasingly connected hypercompetitive world.  So here is the information for that event:

  • When: Tomorrow, May 23rd  (Wednesday)
  • Where: The Greenhouse Innovation Hub (685 Auahi Street)
  • Time: 6:00 – 7:00 p.m.
  • Price: $20.00 will get you in for the 45-min talk, discussion period, and the presentation and materials

Please consider coming to check it out if you are a marketer, small business owner, or someone who uses the web frequently to showcase your brand and identity. Click here for further info and reserve your spot.

Today’s Draw the Law: Nondisclosure Agreements

This subject is tied into tomorrow’s talk due to the fact it deals with NDAs and their usage to protect trade secrets.

What is a Nondisclosure Agreement?

Nondisclosure Agreements (NDAs) is a contract where the parties agree to protect a trade secret or confidential information.  Often the “Discloser” will give valuable information to the “Recipient” in order to achieve some business objective. They are frequently used in startups who have come up with a novel business method or possibly a patentable invention, by businesses that rely on consultants and independent contractors who see sensitive information, and for executives that sign have access to confidential business information.

What is a Trade Secret?

I just want to touch a little bit on what constitutes a trade secret.  It is information that has economic value by the virtue of it not being generally known AND is the subject of reasonable efforts to maintain secrecy.

Without those four things, it is NOT a trade secret.  One of the most famous trade secrets is Coca-Cola’s recipe, which has generated a great amount of fascinating articles and discussion.  Here is a couple for you to read at your leisure:

When is a Mutual NDA Appropriate?

More often than not, there is generally one side disclosing information and the other’s expertise or ability to do something with that information is being sought.  So in that case the flow of information is one-sided.  However, in many joint ventures, one company has a piece of useful technology and the other side also has a useful piece of technology.  If the companies share these technologies (they will form a super-awesome robot! Sorry, little geek humor there) both stand to gain from the partnership.  In this case, a mutual NDA would be appropriate because they are sharing secrets together in their collaboration.

For my friends who are marketers, a mutual is also useful, let’s say you have a marketing method that is golden and your client company wants to give you sensitive information or access to their database that dovetails with your method to launch a great marketing campaign.  In this instance, both sides would use a mutual NDA.

What Can I do if the Recipient Violates my NDA?

Well, it depends. First you will probably want to review the contract. Often times, contract attorneys will put some form of damages.  In addition, typically the Discloser will probably ask a court to make the violator stop disclosing and possibly file a suit against the third-party who the Recipient tipped off to have them stop making use of the trade secret, and also possibly give up monies they made off of violating the trade secret.

Final Word: Drafting a NDA

Due to the sensitivity of trade secrets, you want to have an attorney work with you extensively to identify some aspects you want protected and to go over certain provisions. Consider the following:

  1. Define the confidential information that you are protecting (including what is not confidential information);
  2. Describe the duties and obligations of the Recipient; and
  3. Miscellaneous provisions, such as time, jurisdiction, and dispute resolution.

You businesspeople know that some of the information in your head can make you money, and sometimes copyright, trademark, and patent protection will only go so far.  Those are times that you may ask yourself who knows about your information, what can they do with it, and if the information is widespread do you lose your competitive edge? At that point consider a NDA.

See you next week!


*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.