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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.

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.

So two weeks ago I discussed a marketing agreement (aka reseller agreement).  This was where you would allow someone to (re)sell your product or service for a fee.  The benefit of such an agreement should be clear to those who can produce a lot, but lack distribution channels.   As I said, I will be for several weeks charting some of the type of agreements you will come across as a business.

Licensing Agreements: Tool to Allow Usage, but Not Grant Ownership

Today I will focus on another type of contract that you might consider making, a licensing agreement.  Instead of selling your product or service to another, a licensing agreement allows another person to use your product or service.  The key word here is “use”, as with a licensing agreement the person who may be utilizing the product or service has no ownership.  In today’s electronic productive world, there is something that you should realize by now.  Most of your software (if not all) is not yours.  Why?  You have been granted a right to use the software through a licensing agreement., which means you cannot reproduce copies of your software and give those copies to friends.  It is a violation of a the licensing agreement.  This is why the term End-User License Agreement (EULA) pops up as you install a game, office suite, or some other type of software.

What the EULA says, more often than not, as you scroll to the bottom of the long document to click “I Agree” is you are the end-user, thus you get a license, and you understand you don’t own the software, nor will you copy and resale in en masse.

Now what does that mean for you small businesses with a strong brand or startups that are producing the next awesome software for everyone to use.  You can use a licenses to parse rights outs, the best example I can think of the art of licensing is you have a pie and you can choose to cut it up in any way you see fit (barring restrictions from the law).

Licensing Out IP: Factors to Consider

Let’s take a copyright license for a comic book.  You own the right to copy (which includes derivative works).  So let’s say you give the rights to “copy” to a movie company to produce a theatrical release, you give another license to a publishing company to do a novelization, then another to a Broadway producer to make a musical, finally you grant another license to a troop of interpretative dancers to perform the story on the street and open-air fairs.  These are all licensing agreements to use your right to copy a derivative work off of that one original comic.

Even what’s better for you as the licensor (the one granting the license) is you can change the terms of the agreement for each licensee (the one receiving the right to use).  Here are some things you want to consider in a licensing agreement:

  • Exclusivity – is the licensee the only one who gets the right to use? In one region?
  • Payment – does the licensee pay a one-time usage fee or do you make periodic payments?
  • Time – is the license forever? Is it finite? Does it end if a certain event happens?
  • Control – does the licensor have a right to dictate the quality, delivery, etc . . . of the product or service?
  • Indemnification – will the licensor move to defend the licensee if they get sued for using the product or service from a third party?


These are only a sliver of things to consider when using licenses.  As always while you may have your own basic ideas of what the objectives of your deal is it is best to go to an attorney to reduce your intentions to writing, especially when it comes to licensing intellectual property, land-use, and agreements that are to last beyond a year.

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.

Shameless Self-Promotion of My Future Events

Hey Everyone,

Sorry, this Draw the Law will be very brief.  It is a very busy week, as at the state Legislature it is Conference time, which means the House and the Senate sit down to hammer out compromises for the bills.  Basically, this is one of the last hurdles for a bill to become enacted into a law.  If it does not get out of Conference, it is dead.   Therefore, I am watching and tracking legislation so that over the summer I will be resuming Law in the Brief, where I will update you on new laws that affect your business.

In addition, I as an Oahu Director for the Young Lawyers Division (YLD) of the Hawaii State Bar Association (HSBA), I am charged as a co-chair of Law Week, next week (April 30th – May 5th).  Law Week is a focus on the legal profession and a time for many lawyers to do outreach to the community, as such the YLD will be taking to the KHON2 Actionline phone lines during the weekdays of Monday – Friday next week. Look for more information on my blog and the HSBA website.  Secondly, we will also be setting up free legal clinics throughout the state. See the flyer below to see for further information.

Draw the Law: Marketing or Reseller Agreements

Today’s Draw the Law is the beginning of a several posts where I talk about various types of agreements that a business owner will contemplate using.  As a transaction and compliance attorney, I am asked to look over documents.  Many of these documents are templates from the Web, which are not necessarily bad, however they sometimes are not written in the favor of the person who wants to use them.

One aspect you need to understand of contract drafting is that while there are many laws that protect consumers from unfair business practices in contracts, in the realm of B2B there are fewer protections.  If you sign it, you cannot argue you didn’t know about it; I know many small business and startup owners who still operate as if they are consumer because they have been used to just going to a store an accepting the store policy.  This is not the case: you are a business negotiating with a larger business.  So you really should have an attorney go through contracts to make sure they are in your interest/favor or fair to the parties involved.

So let’s get to an agreement that usually benefits a small business trying to grow, a marketing or reseller agreement.  Let’s say you make an awesome product . . . but you are stuck on an island in the middle of the Pacific.  However, Chinese and Midwestern tourists love your product, and you think that it would do well in those areas.  What do you do?

You could build a presence in those locations.  However, building brick-and-mortar is expensive, and then there are labor costs if you need to staff the store.  Online retailing is a possibility, but let’s say your product needs a salesperson to explain how awesome it is and why customers need to buy it.

Supposing you know a distributor or a massive retailer that wants to carry your line of products, this is where a marketing or reseller agreement steps in. Basically, this agreement allows them to sell your product (or service) for a fee.  They get access to your stuff, and your stuff gets exposed to a larger market.  Now, this is where a business sense and lawyering meet, negotiations.

Consider the Following: Negotiate Provisions, Do Not Accept What is Placed in Front of You

Remember I said that B2B contracts have fewer protections for the small business than consumers have in a B2C situation. Therefore, if you are a small business owner, but you know your product or service is awesome you have to leverage that to push on certain clauses.  Here are some clauses you might want to think about when negotiating a marketing agreement:

  1. If there is a dispute under the agreement, where will it be resolved? – I discussed this concept in a Boilerplate Blurb post.
  2. Can the company that is reselling your goods sell competing goods? – Think cereal aisle at the supermarket.
  3. Does the resellers salespeople needs special training to sell your goods? Do you have to pay for that? – Consider that if your item is awesome it will bring people into the store, but if it is complex or a hard sell it takes up valuable space.

These are only a sliver of things that need to be discussed, while many large companies will try to force a small business desperately trying to grow do not sign their contract without understanding what it entails.  You can always ask them to clarify a clause that you don’t understand or you would like to know how it operates in practice.  At the very least you know what you are getting into before rather than after. Finally, if you push back you may get favorable language inserted into the agreement or a compromise.

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 the use of an agent to enter contracts on your behalf.  This week we discuss other people in the context of when you have a contract and you either like to assign it or delegate it to a 3rd party.

Delegating Your Duties

So just remember this: you can only pull a double duty and you have the right to make an ass out of yourself . . . . You must be reading that and thinking, huh?  It’s my mnemonic to remember that you can only delegate duties (DD) and assign rights. Don’t confuse them! I have posted before you can quickly discern the parties involved and the type of agreement going on by reading the label given to the parties.

Anyway, let’s talk delegation of duties.

Example: So you have a contract formed already, and the other party is expecting you to delivery chairs and tables for an event.  However, you only have one driver and another delivery worth more to you. What do you do?

You delegate your duty to perform. Specifically, you contracted to do the duty of delivering the chairs and tables in exchange for money. However, unless the contract specifies it has to be you can delegate this to another delivery company.

Sometimes, depending on what is being contracted you cannot delegate the duties.  For example, singing. If you hire one celebrity singer for her talent, she cannot say she is easily replaceable with another and delegate her duty to sing to a 3rd party singer.

Assigning Your Rights

Generally, assigning rights tends to be more flexible because your ability to receive something is less likely to frustrate the performance of the contract if the party is changed.  The most likely right to be assigned is the transfer of money.

Example:  Let’s continue with the example above.  The right to receive money comes from when you perform your duty and deliver the chairs and tables.  However, let’s say you have fallen behind your payment to a supplier.  In that instance, you would tell the other party you are assigning your right to payment to another, the supplier.

Assigning rights tends to be easier and less restrictive.  A couple things to note though, most assignments are required to be put in writing and you cannot assign a right if the assignment would increase the risk or cost of the other party.

Last Word: Take a look at the “Miscellaneous” Section

A lot of times people look at the beginning of their contract, basically how much is it who are the parties, going to cost, what is the duration of the agreement, and what do they get out of the agreement.  As discussed in the Boilerplate Blurb series of posts from last year, you want to look at the Miscellaneous section. Why?

The discussion above about assignments and delegations can only happen if you are allowed to do so within the contract. Many times, businesses prefer to restrict this ability due the fact they do not know who you may assign your rights or delegate your duties to. This is especially, the case for delegation.  Can you imagine the situation where you expect the party to perform their duties only to have a new person show up the next day?

*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.

Yesterday’s post was primarily about an agent’s authority to enter into contracts with another party.  As many of you know, as a small business or startup owner there are advantages to using an independent contractor over hiring an employee.  I will not go into the tax details or compliance issues here, as I do a seminar that goes into that in-depth.  In addition, I covered some of those issues in a prior post.
What I did want to mention today is this: while all employees are agents, not all agents are employees.  Some agents may be independent contractors.  Finally, agents that are not employees do necessarily have to be independent contractors.

Why is this important?  The manner of the relationship is important when things go wrong, such as when there is injury or accident.  Your independent contractor agreement may not fully reflect the independence of your independent contract and you may be liable for the problems they caused.  Where is one of the places the law looks to see what dictates who is responsible in these situation?

Your agreement. Consider having an attorney or an expert review the provisions that deal with liability, duties, and responsibilities shifting.

*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.