Blog

Beginnings and endings in the business world are delicate things. Whether initiating a business deal and partnership or terminating an employee, business owners must take great care to secure their business and adhere to California law. A contract will inform and outline these business relationships, from beginning to end. However, just because a contract ends does not mean the terms included in it should. That is when a survival clause will be critical. What are the basics of a survival clause? As discussed above – and in a previous blog post – a survival clause defines what terms of a contract will continue to be enforced even after a contract ends. These are not blanket clauses that cover every aspect of the contract. They must be specific to particular elements and worded precisely. A contract that lacks proper survival clauses could put the survival of the entire business at risk. When does your contract need a survival clause? Business owners should consult legal guidance to craft effective survival clauses when: The business shares intellectual property, including processes, trade secrets or related information, which the blog post mentioned above discusses further The business discloses confidential information, such as financial or client details, that is protected under a confidentiality clause or agreement The parties involved must make payments or continue certain obligations included under the contract for a specific period of time For example, it is only natural for employees to have in-depth knowledge of a business’ intellectual property. If a business terminates an employee, it will be critical to ensure the former employee does not divulge that information, even long after their contract ends. Including a survival clause in the original employment agreement or even a severance agreement regarding confidentiality can secure the business’ best interests and prevent serious disputes in the future. Every beginning and end requires careful planning and preparation. It is important for business owners to work closely with an experienced business attorney to help craft and enforce contracts that will keep the business secure.

No business and no one person is the same, nor will they have the same strategies and goals. Even so, each party in a business deal should come to the table with a focus on finding an agreement that is good for both businesses and the deal itself, for negotiations to be successful. Unfortunately, this is not always the case. Some parties may have only their own benefit in mind, and in turn, may negotiate in bad faith. While it is critical to consult a legal professional before you begin negotiations for a business deal or contract, it is also essential to prepare yourself, and know what to be aware of as you move forward. 2 SIGNS THE OTHER PARTY IS DEALING IN BAD FAITH California business owners know the art of the deal. There are many issues to be cognizant of as you enter into negotiations. For example, it is always helpful to consider what you should do as you approach business negotiations – after all, that informs you of the behaviors you and the other party should avoid as well. There are two opposing behaviors in particular that could indicate the other party is not acting in good faith. Business owners should watch for: Urgency: Perhaps the other party is rushing to reach an agreement without paying attention to the details. Or maybe they push one specific agenda aggressively, without thought for any compromise. A sense of urgency for no particular reason is often a sign that the other party is dealing in bad faith. Delay: The opposite side of the coin is also a red flag. If the other party constantly avoids any type of conflict, reschedules meetings or puts off agreeing to the terms, this could also be a sign of bad faith negotiations. It is only natural to have your own business’ interests in mind. However, when it is clear that the other party does not have the deal’s interests in mind and does not consider the future remotely, this is a dangerous sign. During negotiations, if you recognize signs of bad faith, the first step will be to speak with an attorney. Seeking legal guidance can help you navigate negotiations while protecting your business.

As a business owner, you know very well how important contract negotiations are. In order to preserve the benefits of the bargain you just negotiated, its equally important to make sure the terms of the negotiation are memorialized fully and accurately in the contract, which will guide every aspect of the deal. While not every contract is the same, there are certain elements that should always be included in every agreement to protect your business. 5 CLAUSES A CONTRACT NEEDS Regardless of the specifics of this contractual relationship, these are some key clauses to include: Dispute resolution or mediation clauses: Whether minor or major, disputes are almost inevitable. Establishing guidelines for how to approach and effectively resolve those disputes will be critical to reduce risk. While mediation clauses can rarely go wrong, in certain circumstances it may be beneficial to have an arbitration clause to avoid having the dispute go through the court system. Force majeure clause: There are some things neither party can control, but which could impact the ability to fulfill the terms of the contract. This clause helps to protect your business from such matters outside of your influence, such as employee strikes and natural disasters. Confidentiality clause: Classify exactly what information must remain exclusive between the parties. This will be especially critical to protect your business’s intellectual property. However, in terms of an employment contract, business owners and employers must take care that they do not violate an employee’s civil rights with confidentiality agreements. Limitation of liability clause: If the terms of the contract are violated, you must outline exactly what liabilities each party could face in that situation. Clearly explaining the penalties for violating the contract can help often help avoid a breach of contract, since each party will wish to avoid those consequences. Termination clause: When first crafting your contract, you may not wish to think about ending that particular business endeavor or relationship. Even so, it is important to address and outline the terms and details for when and how the parties involved can legally end the contract. In each case, it will be critical to ensure the details of these clauses, and the contract as a whole, align and adhere to California laws. These five clauses are by no means the only essential ones to include when drafting your contract. In the process of creating a contract, it will be beneficial to consult a business attorney to secure the interests of your business’s future.

Most business owners are natural problem solvers. They assess the issue that lies before them and develop a strategy to overcome it. It’s a critical mindset to have, but do all business owners have the skillset to solve every issue? While it is understandable that business owners may want to attempt to resolve issues on their own, it is invariably beneficial to obtain guidance for legal issues earlier rather than later. 3 REASONS TO CONSULT AN ATTORNEY SOONER THAN LATER Many people might consider working with an attorney to be a last resort. Typically, this is not the case; rather, getting knowledgeable legal counsel sooner than later can help business owners because: It’s Cheaper: Early legal intervention can often prevent disputes from leading to litigation, which can be expensive. Working with an attorney to resolve a conflict before it escalates into a larger issue is often a good business decision and wise investment. There’s a Better Chance to Obtain the Best Outcome: Working with an experienced attorney early on can also be key to protecting everything a business owner has worked so hard to build. While the attorney works to secure the reputation and goodwill of the business, the owner can continue to focus on running it. You’ll Experience Less Stress: Legal issues – whether they involve a contract, a competitor, an employee, or a trade secret, on top of the everyday issues with your business – can cause an incredible amount of stress. This is especially true when you don’t really know how to deal with legal issues, or worse you think you can until you get so deep into it that you start waiving certain valuable rights. Don’t let this happen. Try getting help from a reliable attorney before an issue gets out of hand. Contacting an attorney even when you think it may be unnecessary could ultimately save your business a lot of time, money and aggravation.

Time is of the essence in any construction project. So, if a dispute arises at any point, business owners generally wish to avoid the chance of a time-consuming case going to court. Can California construction businesses manage these disputes effectively outside of court? It is possible in some cases. Business owners should carefully consider these three steps. 1. GO BACK TO THE CONTRACT Even if the contract is at the center of the dispute, it is important to refer to any details regarding dispute resolution included within the document. It is common for contracts to have some form of a dispute resolution clause. In such a case, both parties should follow the steps outlined in that agreement. 2. COMMUNICATE AND PREPARE TO NEGOTIATE To resolve matters outside of court, it is critical for the parties to attempt to find a solution themselves. They are the ones who understand the project best after all. When addressing the dispute, it will be important to: Keep emotions out of it: Anger and frustration are common in such a situation. However, professionals must keep their emotions under control in business matters. Remaining civil and polite can go a long way to help keep matters out of court. Clarify your positions: Explain your expectations and your perspective clearly. Then, be sure to use active listening while the other party shares their perspective on the dispute. Misunderstandings and miscommunication can often contribute to disputes. So, clarifying and truly understanding the matters and perspectives at hand can help on the path to a resolution. Stay solution-oriented: Focusing on the problem will often cause the dispute to escalate. On the other hand, concentrating on finding a solution can keep the process moving forward more efficiently. Effective communication can be key to keeping a dispute out of court. Additionally, both parties must also be willing to negotiate. It is possible to agree on changes to the project, such as adjusting the deadlines or other terms in the contract, in order to avoid litigation. 3. SEEK HELP FROM A PROFESSIONAL The Judicial Branch of California suggests that parties attempt to solve disputes out of court as well. If the parties cannot find a resolution on their own, they may still be able to prevent litigation. For example, they can: Consult a neutral third party in mediation Consider alternative dispute resolution processes Obtain guidance from an experienced legal professional These options can keep details of the dispute private. However, they can also help both parties keep moving towards a fair solution, even if they cannot reach an agreement themselves. It is not always possible to prevent a case from ending up in court. Even so, there are steps that construction businesses can take to secure their best interests and resolve a dispute without litigation.

A friendship may not survive a business venture. While there is no contract for the friendship, both partners must adhere to the contract they created at the start of their venture to dissolve the partnership. In a previous blog post, we addressed when business owners should make use of survival clauses in their contracts. There, we mentioned how survival clauses can protect one’s intellectual property when forming a new partnership. However, what about when the partnership has reached its end? THESE CLAUSES DO MORE THAN PROTECT IP As discussed in the past blog post, a survival clause ensures that certain terms of the contract continue to apply for a specified amount of time – even after the partners terminate the contract and go their separate ways. Establishing such a clause can certainly help keep intellectual property safe. It can also: Protect both parties, even after the partnership ends Preserve the reputation of the business Keep specific matters private Extend the rules of conflict resolution, as they pertain to business matters Like other elements of a contract, you can customize a survival clause and include the terms of the contract that are necessary for your situation. That way both partners can secure their own interests as well as those of the business. THEY CAN ALSO PROTECT THE FUTURE FROM THE PAST It is no secret that the end of a business partnership – as well as a friendship – can be complicated. The other party may resort to personal attacks or even escalate disputes until it requires litigation. Including a survival clause in your initial contract is one way to reduce the risk of both of these issues, while protecting your future in the business world. This protection will also be necessary if you are ending the partnership but continuing the business in any capacity. California business owners must ensure they follow all of the procedures necessary to dissolve their partnership or business. However, it is critical to be proactive in order to secure the future in this process.

Back in 2021, we discussed the difference between trademark infringement and trademark dilution. Business and trademark owners know that both issues can have a considerable impact on their reputations. However, the main concern when it comes to dilution often lies in determining whether or not it is truly a dilution of a trademark or a parody. In that previous blog post, we addressed the particular case involving Jack Daniels’s trademark whiskey bottle design. This case – and the effect parodies have – remains at the center of this complex matter. ONGOING BATTLE OVER DILUTION WENT TO THE SUPREME COURT This legal battle has gone back and forth over the last few years. Some courts determined that the dog toy shaped like the well-known whiskey bottle is indeed a parody, and therefore the company that created it has First Amendment protections. However, in 2023 the Supreme Court ruled that it is not quite a parody. The Supreme Court determined that the toy reflects the trademark enough that it violates trademark protections and rules. The different opinions on this matter illustrate just how complicated it is. So, what must business owners consider? TAKE A CLOSER LOOK AT DILUTION The definition of trademark dilution is quite broad. The federal Trademark Dilution Revision Act of 2006 does not actually consider the risk of confusion or negative economic impacts – as trademark infringement does. The law defines dilution as the use of a mark that might tarnish the mark itself or the reputation tied to it. In short, this law focuses only on protecting the trademark. It is not necessary to prove that consumers may be confused when it comes to a claim of dilution. This allows businesses to protect their image. After all, a business’s public image is an important factor in gaining and maintaining consumer approval. Any mark that would sully or degrade that image the business worked hard to build could be a considerable concern and risk. DILUTION V. PARODY: A SUBJECTIVE ISSUE Of course, the law also explicitly states that parodying is not dilution. These cases are often quite subjective, as the differing opinions also indicate. This subjectivity can just as easily work in favor of businesses trying to safeguard their intellectual property, as it can against them. Protecting a trademark requires vigilance. However, it is also beneficial to obtain skilled legal counsel in order to effectively protect the brand and business in such subjective situations.

It should be simple: you provide a service, and your customer pays you for that service. Unfortunately, it is not always so simple. Not getting paid for your work can be one of the most frustrating issues, especially for small businesses. It also does not take much for money matters to lead to larger disputes. So, what should small business owners do in these cases? 1. START WITH A REMINDER NOTICE Most sources, including the U.S. Chamber of Commerce, agree that business owners should not begin by escalating the situation. Take time to review and fully understand the circumstances of this individual case. Then, begin with resending the invoice or sending reminders to pay. 2. BE OPEN TO NEGOTIATIONS After sending any reminders – and depending on the response you receive – you should then consider scheduling time for negotiations. As much as obtaining that income is important, you do not want to lose a customer or have this issue impact your business’s reputation. Moving forward with a negotiation can show you are serious about obtaining proper payment, but also understanding a customer’s situation. For example, you can arrange a meeting or a call with the customer to discuss the payment. It is not uncommon for customers and other businesses to face financial troubles, especially in today’s market. If this is the case, you could establish a payment plan that will work for both parties. 3. OBTAIN HELP If there is no response to any reminders or offers to negotiate, then you can and should explore the other options to obtain payment. This could involve working with a collections agency to recover the debt owed. However, it is also critical to speak with a knowledgeable California attorney to ensure you understand your rights, as well as the customer’s rights. 4. REVIEW YOUR PROCEDURES Small businesses new and old work hard to gain customers. You may want to protect the relationships you build with them. However, you must also protect your business. It will often help to take another look at your payment policies. Perhaps you make them stricter, to prevent the risk of non-payment issues. A business attorney can also help craft policies to secure finances and the business’s future.

It is important to be selective when choosing a business partner. You want a partner who is diligent, reliable and honest with a good business sense. However, even if your business partner is your closest friend, family member or spouse, you could run into challenges as you operate and grow your small business. If you face a partnership dispute, you do not want to put your business (or your interest in it) at risk. DETERMINE: WHAT IS THE REASON FOR THE DISPUTE? It is axiomatic that the key to finding an effective solution is to discover the core reason for the dispute. It is important to consider that if you have a personal relationship with your business partner in addition to your professional relationship, the reason may not even be business-related. For example, if you run a business with your spouse, it is not uncommon for marital issues to influence disputes over business operations. Personal matters can have a surprisingly large effect on the success of business partnerships. In fact, a majority of the common reasons partnerships fail stem from personal matters. After all, personal matters can affect the trust in your relationship, and it is critical to trust your partner. However, it is possible that the reason behind the dispute has both professional and personal connotations to it as well. It is common for business partners to have conflicts if: They have different values They have different visions of the business’s future Their personalities clash too much RESOLVE: TAILOR TO THE IDENTIFIED REASON Once you discover the true reason behind the dispute you face, you can move forward with a resolution strategy that targets this issue and troubleshoots future issues. You may wish to keep this an internal matter. Even so, it is often still important to obtain dispute resolution services or consult a California business attorney to protect your business interests while you navigate the dispute. While litigation is the last thing business owners often want to add to their plate, it might be necessary in some cases, and the sooner you seek assistance the better the chances for a positive result. Otherwise, you may need to resort to litigation if this particular issue: Cannot be resolved internally Involves financial damages to your business, such as fraud, embezzlement or other self-dealing Involves a breach of the partnership agreement Due to the nuances of personal and professional relationships, partnership disputes can be difficult to manage, particularly if there in not a partnership agreement in place. Guidance from a business attorney may be helpful in clarifying differences and finding solutions from business, personal and legal perspectives.

Concerns about inflation are leading to financial stress for nearly everyone across the country – including small business owners. It can already be difficult to strike a balance between running a business and efficiently managing finances, and the current circumstances are weighing heavily on business owners. Financial stress can escalate quickly. This is especially true considering that claims of unpaid wages are some of the most common lawsuits small business owners face. So, what must small business owners consider in these cases? THREE ASPECTS OF WAGE CLAIMS TO UNDERSTAND As a small business owner, because payroll should be a top priority, it is important to be aware of how to handle employee claims. Make sure employees report to you: It is likely that your employees will speak to you first if they encounter a wage issue. However, you can help to ensure this by establishing a clear complaint process in your company policies or employee handbook. That way, you remain aware of any issues within your business – and can resolve them quickly. Then, you should also have a plan in place for how you will handle any complaints. Know the process: It is also important to understand the process your employees might engage in if they file a claim or lawsuit to recover unpaid wages. This knowledge allows you to prepare and protect yourself before a claim is filed. Know the law: You should also take time to understand federal and state wage laws as you first establish your business, and be aware of California’s penalties for unpaid wages and employees’ waiting time. Speak to an attorney: The moment you are notified of a claim or lawsuit, you should contact your attorney, or an employment attorney to counsel you on your next move. The more you delay, the harder it will be to defend your position. As we have stated in previous blog posts, being proactive is highly beneficial. Even if you do not face a wage dispute, you can take steps now to prevent issues in the future. YOU MAY HAVE TO REEVALUATE FINANCES If you face financial stress, it might be necessary to reevaluate your business operations and expenses – at least temporarily – to manage current wage issues or avoid future ones. Current events may create challenges for small business owners, but being prepared and actively addressing these concerns can help you effectively handle disputes and litigation that may arise.

Businesses must be open to change. It is essential to survive in the business world, regardless of the industry. This goes hand-in-hand with the necessity to change along with consumer needs and values as well. With the increasing emphasis on sustainability across industries, many businesses have had to make their processes and products more environmentally friendly. However, in terms of real estate construction, there are some challenges. SUSTAINABILITY IN NEW CONSTRUCTION IS NOW A MATTER OF LAW – NOT JUST A PREFERENCE The push to become greener comes from many fronts. Property owners, potential buyers and even lawmakers all expect the real estate industry to go greener. For example, homeowners and businesses often want their properties to meet their personal values of sustainability. Indeed, the emphasis on going green is nothing new for the real estate construction industry. In fact, the American Institute of Architects highlights sustainability as a focus – and responsibility – for architects. Additionally, California design and real estate firms must comply with CALGreen rules for new construction. Lawmakers made this change in the building code in 2019. MAINTAINING SUSTAINABILITY COMES WITH NEW CHALLENGES EVERY DAY Ecological matters affect almost all levels of real estate development. For example, it impacts: The sourcing of materials How companies obtain materials with continued supply chain issues Design and building innovations The changing market In turn, this affects the success of development projects, which can also disrupt the overall success of the business. Another challenge is the urgency behind these efforts. Concerns about the climate are only increasing. Consumers expect businesses to share those concerns and reflect them in their practices as well. However, business owners can face serious legal risks if they make promises or advertise green efforts without adhering to those claims.

It is not uncommon to hear about class-action lawsuits against big companies in the news. The video-sharing platform TikTok is just one of the latest businesses facing an onslaught of headlines regarding a class action. While many might believe that the larger the business, the greater the risk of litigation, class-actions could pose a risk to businesses of all sizes. MYTH: ONLY BIG BUSINESSES COULD FACE CLASS-ACTION LAWSUITS Bigger companies could very well face a larger risk of class-action lawsuits simply because they have a greater range of interaction with customers and employees. However, the increasing digitization of the business world is quickly undermining that. Businesses of all sizes take advantage of social media and online platforms to grow their business and gain exposure. In turn, this could increase their exposure to risk. Additionally, a class-action lawsuit does not require several plaintiffs – such as the cases that reach national news headlines often do. It only takes one or more individuals to file a claim in representation of a larger group who suffered similar damages. Therefore, even small businesses could face the risk of class-action lawsuits. WHAT IS THE BIGGEST RISK SMALL BUSINESSES FACE? It is most common for businesses to face class-action lawsuits from: Employees or former employees Consumers Other businesses, namely vendors or suppliers Class-action lawsuits brought by employees are likely the most common risks for smaller businesses. For example, payroll mistakes or claims of discrimination could affect several employees, leading to widespread complaints and legal action. These issues may not necessarily result in a class-action lawsuit, but it does include the general factors that make up such a lawsuit. WHAT SHOULD BUSINESSES DO? These lawsuits require business owners to strike a delicate balance between: Addressing the dispute effectively Managing public relations Protecting the product, service and the business This requires a proactive, aggressive but intelligent approach. Facing complicated lawsuits might be common in the business world, but that is precisely why smaller businesses must take creative steps to secure the future of their business and avoid the threats these lawsuits could pose.