Blog
March 13, 2013 6:31 pm
Small business owners often make verbal agreements with friends or colleagues instead of writing out a formal contract. This is a bad habit to get into even if you trust the people you are working with. It protects you from misunderstandings, allows you to enforce legal rights and may even save the relationship.
Verbal Contracts Are Not Enforceable
Verbal agreements only work as long as both parties honor the agreement. If either party defaults, however, the other party has no legal recourse.
When a party defaults on a written agreement, the court examines the contract to see what the actual terms of the agreement are and whether they were broken. The court cannot do this with a verbal agreement; all it has is each person’s account. There’s no way to objectively determine who is right. Thus, courts cannot enforce these kinds of agreements.
Verbal Agreements Can Cause Misunderstandings
If you rely on verbal agreements, you may not get what you expected because the other person misunderstood the agreement. For example, suppose your father-in-law agrees to do some contracting work, which you will pay him for upon completion. After finishing the job, he doesn’t clean anything up. Now you don’t want to pay him because you consider the job incomplete, but he doesn’t think cleaning is part of the job.
In this situation, nobody wins. You don’t get a clean space and he doesn’t get his money, and neither of you can get a court to compel the other one to do something.
Having a written contract resolves these types of problems. You can spell out exactly what needs to be done before you will pay for the job and how much you will pay so that there’s no confusion.
Written Agreements Protect You If Something Goes Wrong
Verbal agreements between friends often don’t take contingencies into account. These agreements tend to be informal; they don’t prepare you for possibilities such as equipment breaking or someone getting hurt on the job. As a result, if something happens, you and your friend have to figure out what to do and might end up arguing.
Written agreements are more formal and tend to take these possibilities into account. If an accident happens, you can then turn to the agreement to determine what to do.
For all these reasons, it’s vital you get every agreement related to your business in writing. If you need help writing contracts, contact your business attorney. Your attorney can esure your agreements are written properly and protect your rights.
March 12, 2013 6:29 pm
Many businesses consider parodying other businesses in their advertisements. Parodies can point out why your business is superior to the competition while getting viewers to laugh. However, it’s important to be very careful with parodies; you may infringe on someone’s copyright and get into legal trouble.
Unauthorized Use
If a business uses particular characters in its advertisements, those characters may be protected by copyright or trademark laws. These laws prohibit others from using the character without permission.
You could get around this by asking your competitor for permission to use his or her character. However most people are not likely to grant permission to competing businesses to use their characters, especially if you plan to make fun of the character.
Fair Use
Many parodies are protected under fair use laws. These laws grant certain exceptions to copyright laws so that people can use copyrighted material for educational or satirical purposes. Parodies such as skits on comedy shows are usually protected under this statute.
Advertisements and commercials, however, may not constitute fair use. If the copyright holder sues, you and your attorney would have to prove that your use qualifies as fair use even though you are using parody to sell your products or services. It is more difficult to win a far use argument if you are using the character for commercial purposes; however, it is not impossible.
Originality Requirement
In order for your commercial to be protected as a parody, it must contain some original elements in addition to the content being parodied. For example, a commercial using the Taco Bell dog to sell your tacos instead of Taco Bell’s would not be protected, even if it makes fun of Taco Bell; A commercial where the Taco Bell dog tells someone he’s glad they’re eating your tacos instead because he is so tired of being asked to say his famous line might be.
Using parody in your advertisements is risky because you don’t have permission to use the characters you are parodying. Courts have not consistently been on one side or the other with commercial parody lawsuits, so you may end up paying hefty fines in addition to being barred from airing your commercial. Consult a business attorney prior to developing any such advertisement to help lower your risk of being sued.
March 11, 2013 6:28 pm
Business owners need to be careful not to engage in unfair competition. Some business owners think if they don’t break antitrust laws, they are competing fairly. However, this isn’t true. There a wide range of things businesses should avoid doing in order to compete fairly and avoid legal problems.
Unethical Practices
Some businesses engage in unethical practices to try to get customers to buy from them. These practices are bad for business; they give you a bad reputation that causes customers to shy away from you. Many of them also constitute illegal and unfair competition practices:
• False advertising. You cannot state things you know to be untrue.
• Bait and switch. You can’t advertise one product, then tell customers you’re out of stock and sell them a higher priced product instead.
• Using confidential information gathered from ex employees to undermine a competitor’s business
Intellectual Property Laws
One of the most common unfair competition practices some businesses engage in is infringement of trademarks or copyrights. You cannot use another business’ trademarked information in your advertisements or marketing efforts.
Many businesses accidentally break this law because they aren’t clear on what constitutes trademarked material. Some businesses think that their advertisements are legal because they are parodying another business. This is risky, however; the law is very specific about what constitutes parody and in many cases, your advertisements may not qualify.
Right of Publicity
Right of publicity is strongly tied to intellectual property right. People have the right to decide how their identity and likeness will be used. For example, you can’t use photos of your customers in advertisements without permission.
The rules are slightly different when it comes to public figures; you can’t impersonate them except for parody purposes, however. For example, you can’t hire an actor to play President Obama and say he endorses your product.
Most businesses want to compete fairly, but some may run afoul of the law because they aren’t aware that their activity is illegal. Consult a business attorney if you have any questions about what constitutes unfair competition.
March 8, 2013 6:26 pm
Many businesses use online sweepstakes to promote themselves. This type of promotion can get lots of people’s attention by offering attractive prizes; this draws visitors to your website. In order to set up this type of sweepstakes, it’s important to understand the laws surrounding them so that you don’t get into trouble.
Be Careful of “Like to Enter”
Many promotions require customers to “like” a Facebook status or retweet a post in order to enter. It’s important to talk to a lawyer if you plan to run this kind of promotion.
There are no laws specifically forbidding these promotions. However, some states may consider them lotteries rather than sweepstakes because your customers have to “pay” by giving you a like, mention or referral. In most states, lotteries are illegal. It’s vital to make sure you aren’t running afoul of anti-lottery laws.
Sweepstakes Rules
Your sweepstakes must have clear, written rules. Your official rules must contain the following:
• Clear statements that entrants don’t have to buy anything and that buying something won’t increase the odds of winning.
• An explanation of how to enter without purchasing anything. Your “consideration-free” method must provide your customers with an equal chance of winning.
• Your eligibility requirements (i.e. age, residency)
• The start and end date and time, including time zone.
• Your company’s complete name and address.
• A description and approximate value of each of your prizes
• An explanation of how, when and where winners will be notified and how to get a list of winners
• A statement that the sweepstakes is “void where prohibited.”
State Laws
Sweepstakes can be challenging because state laws vary. It’s important to talk to your attorney about the laws in your state; some states may require you to register with them before you can run any type of sweepstakes. In other states, it may be illegal to post sweepstakes at all.
A social media or other sweepstakes can be an effective method of attracting customers to your business. You need to protect yourself legally, however; contact our office if you need a business attorney to help you.
March 7, 2013 6:25 pm
Every business needs to understand intellectual property rights. No matter what type of business you are, you’re at risk of having your ideas stolen or of being accused of stealing someone else’s ideas. Most businesses retain a business attorney to help them deal with intellectual property issues.
Copyright Basics
Under US copyright law, anything someone puts in written form is copyrighted. This is important for you to know because it means:
• If a customer sends you a letter you cannot put that letter on your website without permission.
• If a customer posts about one of your products on his or her website, you cannot copy that review and post it anywhere without credit or permission.
• You cannot copy articles verbatim that speak about benefits of your products unless you give credit and get permission.
If your business collects other people’s ideas, you need to be especially careful. In some circumstances, you may be accused of stealing a customer’s idea. These types of lawsuits are expensive to defend, and if you lose a lawsuit, you will have to pay stiff penalties.
Contests and Promotions
Many businesses run promotions in which customers are entered into a drawing if they post a photo of themselves with a product. It’s vital to talk to your attorney if you plan to run this type of promotion. The terms and conditions should include the fact that all photos become your property; otherwise your customers could sue you if you post the photos to your website or use them in marketing materials.
Patents
Your business attorney will also help you secure patents on new and original products. This is important because if you don’t get patents, other companies can create their own version of your products.
The patent process is complex; not every product qualifies for a patent and it can take months or years to secure one. It’s best to let your attorney handle the process so that it’s done correctly and so you can focus on running your business while getting the patents in place.
If you are in business, you need an attorney who is familiar with intellectual property law to protect your rights and defend you from any accusations of theft of intellectual property. Contact us today for more information or to schedule a consultation
March 6, 2013 10:46 pm
Many debtors are embarrassed or ashamed of their financial situation. They may feel like failures because they simply don’t have the money to pay their debts. Unfortunately, this often makes them easy targets for unscrupulous bill collectors. These types of collectors engage in illegal practices such as verbal threats and abuse, harassment and intimidation, knowing their victims probably won’t fight back.
You Have Rights
In order to avoid becoming a victim of these types of debt collectors, you need to know that you have rights and that you are entitled to appropriate treatment. Specifically, bill collectors cannot engage in the following practices:
• Calling too frequently or calling at unreasonable hours.
• Calling you at work after being told to stop.
• Demanding more money than you originally owed.
• Refusing to send you a written notice of the debt you owe.
• Threatening you with physical harm
• Threatening to take legal action they are not empowered to take or don’t intend to take.
• Verbally abusing you.
• Contacting unrelated parties about the debt.
If a debt collector engages in any of these behaviors, you may be entitled to large damages.
What to Do
It’s important to assert yourself with any debt collector that tries to take advantage of you. Stay as calm as possible and tell the debt collector to stop engaging in the behavior.
Document what happened. Write it down; state exactly what you said and what the debt collector said.
If the violations continue — for example, if a debt collector continues to call you after being asked to stop or you don’t get a written notice in the mail after asking for one — bring the problem to the attention of your attorney. Your lawyer can also demand the debt collector cease and desist the behavior and can file a lawsuit on your behalf if necessary.
It can be embarrassing to owe money, but don’t let debt collectors violate your rights because of your shame. Know that you are still deserving of appropriate treatment and take the necessary steps to assert yourself if a debt collector abuses you.
March 5, 2013 10:45 pm
Federal law allow consumers to file for personal bankruptcy without an attorney. However, it’s often a good idea to retain one anyway. Your bankruptcy attorney can help ensure that your bankruptcy goes smoothly and that you get as much debt discharged as possible. There are several reasons why you’ll need a bankruptcy attorney.
You Need to Decide on a Type of Bankruptcy
The two most common types of personal bankruptcy are Chapter 7 and Chapter 13. Some people may qualify to file for Chapter 11, a type of bankruptcy usually reserved for businesses.
When deciding on your own what type of bankruptcy to file, you probably will go by the requirements for each type of bankruptcy. However, just because you are eligible to file for a particular type of bankruptcy doesn’t mean it’s in your best interest to file for it. Your attorney can explain the different options open to you and help you decide what to do.
You Need to Fulfill All Requirements
Bankruptcy cases are complex. You need to fulfill all sorts of requirements — go to classes, fill out paperwork, attend meetings — and if you don’t, you’ll suffer negative consequences.
• Your case can be dismissed. If you refile, you won’t have the benefit of an automatic stay.
• If you file exemptions inappropriately, you may lose your home or car.
You may receive less protection than you are entitled to and have to pay more of your debt.
You May Need To File Additional Motions
Some debts are not usually dischargeable; you’ll need to file additional motions in order to discharge them. For example, student loan debt is only dischargeable in certain circumstances. Most people are not aware that it can be discharged at all; they also don’t have the legal expertise required to successfully file motions.
If you are facing this type of situation, don’t try to research and file motions yourself. Instead, rely on an attorney who already knows all the relevant laws and can draft the appropriate motions.
No matter what type of bankruptcy you’re filing for, you need an attorney to ensure that you get the outcome you deserve. Don’t risk filing on your own. Contact a bankruptcy attorney today.
March 4, 2013 10:39 pm
If you are overwhelmed by debt such as credit card debt, medical bills and other obligations you can’t pay, you may want to consider Chapter 13 bankruptcy. This type of bankruptcy allows you to create a structured repayment plan to repay your debts over time so that you can repair your finances.
Not everybody qualifies for Chapter 13, however. There are a series of eligibility requirements in place to ensure that only those people who truly want to make a fresh start can take advantage.
Basic Requirements
The most basic requirements are that you have a steady source of income and some debts you can’t pay. You need to have a job or other regular source of income because you need to make monthly payments for the next three to five years.
Debt Ceiling
You can only file for Chapter 13 bankruptcy if you owe less than a certain amount of debt. This rule is in place for a couple of reasons.
• It ensures that only people with straightforward debts apply for bankruptcy. Large debts are often more complicated and discharging them may require the approval of multiple creditors. Chapter 11 is more appropriate for these types of debt.
• It discourages people from amassing extremely large debts, since such debts are harder to resolve via bankruptcy.
Currently, Chapter 13 debt limits are $360,475 in unsecured debts and $1,081,400 in secured debts. The majority of debtors fall under these limits.
Types of Debt
In order to qualify for Chapter 13 bankruptcy, your debts must be noncontingent and liquidated. This means:
• You owe the debt now. You can’t discharge debts that you don’t currently owe. For example, if you will only owe a debt if you quit your job within five years, you can’t discharge that debt. Many co-signer agreements are contingent because you onl owe the money if the primary borrower defaults
• Liquidated means you owe a specific amount. If you owe unspecified damages in a lawsuit, that would not be a liquidated debt.
If your noncontingent and liquidated debts are below the debt limit and you have a steady source of income, you probably qualify for Chapter 13 bankruptcy. Check with your attorney to find out if this type of bankruptcy is for you.
March 1, 2013 6:37 pm
When filing for personal bankruptcy, most people choose between Chapter 7 and Chapter 13. These types of bankruptcy allow individuals to shed personal and consumer debt so that they can start their financial life over. Some debtors, however, may benefit from filing for a third type of bankruptcy: the Chapter 11 protection traditionally reserved for businesses.
Why Chapter 11?
Chapter 11 bankruptcy is not appropriate for most personal debtors. The requirements are complex and the filing fee is $1,000 — far too high for the majority of debtors. However, in some cases people owe so much money that Chapter 11 is their only option for bankruptcy.
Under current rules, debtors cannot file for Chapter 13 if their unsecured debt exceeds $360,475 or secured debt exceeds $1,081,400. If either of these conditions is true, the debtor cannot file. For example, a debtor with no secured debt but a large amount of unsecured debt cannot file.
Many of the debtors who find themselves in this situation cannot file Chapter 7 because their incomes and assets are too high. Thus, these debtors turn to Chapter 11.
Advantages of Chapter 11
The major advantage of filing Chapter 11 is that you will be able to discharge multi-million dollar debts. In addition, Chapter 11 filers don’t have to attend credit counseling or financial management courses prior to filing, as other personal debtors have to do.
Chapter 11 Requirements
In order to file for Chapter 11, an individual must satisfy the following requirements:
• Fully disclose al debts, assets and income. You may need to file separate disclosures in addition to petitions and schedules.
• Commit future wages to repayment of your debts.
• Create a structured repayment plan with your attorney and your creditors.
Repay all debt owed under the plan before receiving your discharge.
Chapter 11 bankruptcy is a complicated process that can take a long time to resolve. If you are unable to qualify for other types of bankruptcy or want to explore the possibility of filing for Chapter 11, contact your attorney.
February 28, 2013 6:36 pm
Readers Digest filed for Chapter 11 bankruptcy on February 17, making it the latest iconic company to file. The company does not plan to close or to stop producing any of its 75 popular magazines; it is using its bankruptcy to restructure its finances and reorganize the way it operates.
Chapter 11 Usually Doesn’t Mean Going Out of Business
In most cases, Chapter 11 bankruptcy doesn’t mean a company is going out of business, although companies may shut down certain parts of production as part of their restructuring. For example, retail stores may close certain store locations as part of their reorganization following bankruptcy.
Chapter 11 is a complex type of bankruptcy in which a business must submit a plan to reorganize its finances and repay its debts. Creditors have the opportunity to review the plan; those creditors who will be paid less than the full amount due have the opportunity to vote on whether or not to approve the plan; after it is approved, the business has a certain amount of time to repay its debts.
Companies enter Chapter 11 for a variety of reasons. In Readers Digest’s case, the company’s owners believe that getting rid of excessive debt is the best way to enable it to move forward. Readers Digest lost money as a result of the shift from print to electronic media. By entering Chapter 11 bankruptcy, it can reduce its debt from $465 million to about $100 million.
Chapter 11 Allows Debtors To Take On New Debt
One of the reasons so many companies use Chapter 11 bankruptcy to resolve debt is that this type of bankruptcy allows them to take on new debt while repaying the old debt. Companies in Chapter 11 can get new loans at favorable terms. This can help them move forward in restructuring their company’s operations. For example, Readers Digest plans to borrow up to $45 million in new debt in order to help restructure its operations.
The hope is that by taking on new debt of this nature, Readers Digest will be able to reorganize and move into profitability again. Businesses usually file Chapter 11 instead of Chapter 7 so that they can stay open and become profitable again; Readers Digest intends to remain as strong a brand as it has been for the past 91 years.
