Tuesday, February 5, 2013


You always want to use a written contract.  Especially in Real Estate, because it is required.  Where people screw up, is trying to orally modify the contract--especially where there is a standard modification clause that says no oral modifications are effective.  So, WHEN IN DOUBT, WRITE IT OUT!

Tuesday, January 8, 2013


One of the standard "boilerplate" clauses in contracts is known as the "indemnification/hold harmless" clause. Basically this seeks to protect the party that doesn't screw something up from expenses, legal fees and damages caused by the party that did screw something up. BUT, BUT, BUT you have to be careful when reviewing this clause. Even though the jerk on the other side will say something like "it's just the standard boilerplate clause" DON'T YOU BELIEVE IT. Many times the drafter of the contract will try to pull something like the other guy "will indemnify and hold xyz harmless from any and all claims, lawsuits, proceedings, assessments, etc. and the resulting expenses, damages, judgments, costs, fines, surcharges and legal fees, arising directly or indirectly out of this agreement..." or some such bullshit.
NO, NO, NO!  Indemnification should be based upon ADJUDICATED negligence/breach/intentional screwup. Not just anything arising directly or indirectly out of this agreement type stuff.  What happens if some jerk sues you and the other guy for a frivolous action. Do you have to indemnify and hold the other guy harmless when it is eventually judged that you did nothing wrong?  Trust me you won't get a warm and fuzzy feeling from doing so.
So the moral of today's story is have your freakin' lawyer C A R E F U L L Y review any indemnification and hold harmless clause, and make sure that you are only stuck with paying when you were the one that has been ADJUDICATED to have screwed up.

Wednesday, January 2, 2013


Many contracts deal with parties that are either LLCs or corporations.  A contract is only paper and evidence in a lawsuit when somebody breaches the contract.  But you don't want a hollow victory in court, you want one that has money behind it.  Ergo, it is often wise to at least attempt to get personal guarantees of the members/shareholders of the entities that are parties to the contract.  When they balk at doing this, you can have a decent idea about the bona fides of the party--they ain't all that bona.
If it's a lease agreement and you can't get a PG, then take some extra months rent security.  In other situations, where you can't get a PG, try to get some kind of hard assets to back up the party's financial obligations.
Protect yourself with a PG whenever possible.

Tuesday, October 23, 2012


Many contracts have standard "boilerplate" provisions in them, which serve the purpose of detailing rights and obligations common to most contractual situations, and also justify the big firms in sending you a four thousand page contract when you want to sell your bicycle to one of their high paying clients.

One of the common boilerplate provisions, is what is known as the "Force Majeure" clause, which you may think of as hey it ain't our fault that a war broke out during the earthquake which occured during the power failure while the electromagnetic pulse weapon went off.

The clause excludes contractual liability of a party (actually it should be the parties) in the situation of the occurence of CERTAIN unforseen events BEYOND THE PARTY'S CONTROL. Terrorist attacks for example. War. (One of the reasons they quickly shut up George W. during the first days after 9/11 when he kept saying "act of war" was it might exempt insurance companies from paying off under a force majueure clause. But he never was accused of being overly bright).

So think of the evil wicked kind of stuff that happens when either Mother Nature or Human Nature gets really pissed of at us and brings war, flood, planes crashing into your bedroom, earthquakes, flying saucers abducting your poodle--stuff like that for force majeure.

You want to BE CAREFUL when negotiating this clause--in fact many knuckleheads out there just glance through it with the idea of "what the Hell, it's just boilerplate."

First, make sure it applies to both sides. Next, make sure it doesn't deal with the financial condition or negligence of a party. Not labor, computer, software, or distributor problems either.

Let's take an example. You order one thousand widgets from Wonder Widget Inc.  Before they ship from the plant, the plant is destroyed by the Purple Death Ray launched by Emperor Ming from the planet Mongo. Okay, that's force majeure, and WWI gets off.  But if Wonder has a problem where the gloppeta gloppeta machine broke down and they can't manufacture the widgets--too bad Wonder, that's your problem, your machine, not any kind of deus ex machina type stuff.

Bottom line:  Boilerplate provisions can and should be modified by an intelligent businessman and his attorney. The old line "it's just boilerplate" is just some much business bullshit.

Monday, September 17, 2012


Depending on the job, you may want to have your new employee sign a non-compete non-disclosure agreement.  Are they enforceable? Depends on the terms, depends on the state you are in, and depends on how effing stupid the judge is you get when you are trying to enforce it. HOWEVER, it is still a good idea to have one, as it increases the chances of enforcement when there is something in existence to enforce. You may be exposing the new employee to secret formulae, hard to get customer lists, marketing methods, the secret of your grandmother's egg salad recipe--something that you don't want your competitors to have. Have them sign what is called in the biz the NDA--the non-disclosure agreement.  If they turn rat, they turn judgment debtor and have to pay up and with a properly drafted agreement, they also have to shut up, or face contempt of court charges which could have them living in a gated community sans golf course--if you catch my drift. FURTHERMORE, you may be spending a ton training the new guy on the block, and you don't want him going to school on you then setting up shop on his own or with a competitor--so you need the non compete agreement.  Facing a situation like this? If you are in New York, get a hold of me and we'll talk.

Tuesday, September 11, 2012


I have found in 31 years of practice, that even seasoned entrepreneurs are more open to bringing in a partner or a shareholder or a member, when needing a certain skill set under their control from a person who is not likely to be satisfied being an employee. I tell them all don't do it.  If you need that certain skill set, make them an independent contractor, or at worst, create a joint venture.  To offer ownership in your enterprise is to offer a whole set of legal rights you might not want to give up.  In short, instead of buying the person, lease him/her.

Thursday, June 28, 2012


What does it mean to the small business owner? If your business has less than 25 full time employees and pays at least 1/2 of your employees' health insuranc premiums, you can get a tax credit equal to 35% of contributions. In 2014 it goes up to 50%. If you have 50 or more full time employees and don't provide health insurance coverage for them, you pay a penalty of $2,000 for each full time employee in excess of 30 ful time employees.  (Hey, that's cheaper than health insurance, isn't it?)  So, Creeping Socialism creeps on in this administration.  How about we all do our part to have Obama become unemployed next year?