Contract

How Do You Know if your New York Contract is Valid?

by Fred Abramson on August 1, 2013 · 0 comments

If you run a  business, you may enter into contracts more often than they may expect. Whenever you or your company agree to take some action or make a payment in exchange for anything of value, a legal contract has been created.

How do you know if the agreement that you entered into is a valid contract? For a contract to be valid, it must meet the following criteria:

Mutual agreement –  There must be an express or implied agreement. The essential requirement is that there be evidence that the parties had a “meeting of the minds.”

Consideration: There must be consideration given by all the parties, meaning that every party is conferring a benefit on the other party or himself sustaining a recognizable detriment, such as a reduction of the party’s alternative courses of action where the party would otherwise be free to act with respect to the subject matter without any limitation. Usually money is exchanged for either goods or service

There are two common theories for consideration. The first is the “benefit-detriment theory”, in which a contract must be either to the benefit of the promisor or to the detriment of the promisee to constitute consideration. The second is the “bargain theory”,   in which a contract must be either to the benefit of the promisor or to the detriment of the promisee to constitute consideration.

Competent Parties: Both parties must have the capacity to understand the terms of the contract they are entering into, and the consequences of the promises they make. Minor children, mentally disabled individuals do not have the capacity to form a contract, and any contracts with them will be considered void by New York Courts.. Corporations are  are considered persons under the law, and therefor able to engage in contracts. However, unlike an individual, a corporation needs to be represented by counsel in court.

Mutual Obligation to Perform: Both Parties must have some obligation to fulfill to the other.

Proper Subject Matter: The contract must be legal. A contract to purchase cocaine in exchange for money will not be enforced by the New York Courts.

Mutual Right to Remedy: Both parties must have an equal right to remedy upon breach of the terms by the other party.

Where one party does not perform their obligations as per the contract they commit a breach of contract. A breach of contract is technically a failure to perform the contract in accordance with the strict terms. The non-breaching party should place the breaching party on written notice of any breach of contract before issuing court proceedings.

 

 

 

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Is an Email Contract Binding?

by Fred Abramson on October 15, 2012 · 8 comments

We all use email. Perhaps due to its ubiquity, we often feel safe sending business messages via e-mail. The Atlantic recently noted that most sharing is accomplished through Dark Social means that are difficult to measure because they are “private.” But don’t be fooled, communicating through email can have dire consequences.

As a business lawyer, the two most frequent questions regarding emails are the following:

  1. Am I  contractually bound  by what is written in an e-mail?
  2. Can I rely on an exchange of e-mails as evidence of a contract?

It has become increasingly clear as courts are relying on electronic transaction legislation, applying rules of contract formation, and finding that e-mails create binding contracts. As a result, you need to be aware of what you state in e-mails to avoid an accidental contract.

The Legal Framework 
  • Laws passed more than a decade ago by both New York State and Congress provide that contracts will not be denied legal effect solely because they are created or stored electronically. Paper contracts are not a requirement.
  • Courts then look to basic contract formation law to find out whether a number of e-mails creates a binding contract. In doing so, courts look to see if one party made an offer, whether that offer was accepted by the other party, and whether there was intent to be bound by the e-mailing parties, which the courts call a “meeting of the minds.” If a court finds that those elements are present within a series of e-mails and concludes that the terms of the agreement are reasonably certain, the court is likely to hold that the e-mail exchange is a binding contract.

I recently litigated a case where a series of e-mails constituted a change to a sales agreement even though the agreement included a section requiring all changes to be in writing and signed by the parties. The court decided that the series of e-mails exchanged between the parties constituted the requirement that the changes be in writing, and by both parties typing their names at the bottom of their respective e-mails, the changes was signed by both parties as required under the contract.

Be aware that simply because e-mails can satisfy the requirement under the statute of frauds that all contracts over $500 must be in writing, other contract formation rules must be applied. For example, if there is no evidence of a “meeting of the minds,” then there may not be a contract.

What to keep in mind before you hit send
  • Think about whether the series of e-mails contains the necessary contract formation rules. Was there an offer? Did someone accept the offer? Was there any money exchanged?
  • If you do not intend to be bound, use qualifying language in your e-mails, such as this is not a binding contract.
Conclusion 

It is vital to be aware that e-mail can create or change an agreement.

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5 Post Labor Day Legal Goals

by Fred Abramson on September 8, 2011 · 0 comments

Steve Jobs shows off iPhone 4 at the 2010 Worl...

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Summertime has come and passed. It was a busy August in terms of news, with Hurricane Irene soaking the New York area, Steve Jobs relinquishing the CEO position at Apple and an ugly jobs report.  Hopefully you escaped to a sunny destination or traveled to a far off land.

Since we are all back at work, now is an ideal time to look at what is really important for your business. If you are starting a new business you need to have goals.  Goals are a vital to the success of any business. A goal is an outcome that you wish for that is measurable, actionable and specific.

If your goal is to have the best business in the world, you know that you need a first class product, great design and productive employees. A world class company also has their legal house in order. Do you?

  1. REVIEW YOUR INTELLECTUAL PROPERTY. Is the name of your company trademarked? If you created a YouTube video did you copyright it?
  2. REVIEW YOUR CONTRACTS. I have drafted many agreements for my clients that they use over and over again. Since laws change, your contracts may be outdated. If the services you have provided have changed, an inaccurate description in your agreement can cause headaches down the road.
  3. EMPLOYMENT LAW REVIEW.  If you recently increased the hours of your tech consultant to over 30 hours, she may be considered an employee rather than an independent contractor. How about OSHA regulations, employment taxes?
  4. IS YOUR ADVERTISING IN COMPLIANCE WITH THE LAW? If you have an ongoing advertising campaign, be aware that there are rules you need to comply with. Under the FTC act
    • Advertising must be truthful and non-deceptive;
    • Advertisers must have evidence to back up their claims; and
    • Advertisements cannot be unfair.
  5. BUSINESS SUCCESSION PLANS.  Whether you run your business alone or have partners, you need to have a business succession plan in place. What happens to your business if you become incapacitated? If you have a business partner, what happens if she wants to leave the company?

This is an opportunity for you to make a difference in your entire life. You don’t need to be hit by a Honda Accord in order to focus on what is legally important for your business. Each time that you  implement just one of the above legal goals, you will make a difference in your business.

The Law Office of Frederic R. Abramson represents businesses in New York. You can reach me at 212-233-0666

 

 

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It’s 5:00 on Friday and your boss calls you into her office.  You probably noticed that business has not been going well.  A long time customer has left and there is simply not enough work to go around.  Your boss, tearing a bit, breaks the news and offers you a severance package. Should you take it?

Believe it our not, you can negotiate a severance agreement.

  1. Understand that your emotions while be on high after you are initially handed the agreement.  The worst thing that you can do is let your boss “have it.” Be cordial and ask for time to review the agreement.  You have the legal right to do so.
  2. Don’t sign anything immediately. Your boss may ask you sign a waiver, which could release any future rights that you may have in the event of a potential lawsuit. So if you a fired while you are pregnant, waive your discrimination case goodbye.
  3. Be aware that your employer cannot withhold your wages if you fail to sign the agreement.
  4. Have you been paid all over your benefits? Review your employee handbook or employment contract to see if you are owed any vacation time.
  5. How is the severance payment being disbursed? In a lump sum or over a period of time.  There could be tax benefits for choosing one form of payment over another.
  6. What health insurance is being offered?  Look into possible of extension of your Cobra benefits.
  7. Your employer may want you to sign a non-compete agreement or non-disclosure agreement.  If you sign a non-compete agreement, you may have trouble seeking new employment if the terms are not analyzed.  A non-disclosure agreement may prohibit you from disclosing trade secrets to a potential new employer.
  8. Do you have any stock options?
  9. In some cases, your employee handbook or agreement may provide that your employer will pay your legal expenses for an attorney review your severance package.
  10. You can negotiate with your employer and agree to the language of your recommendation.

Don’t negotiate your severance agreement alone. The Law Office of Frederic R. Abramson reviews, drafts and negotiates severance agreements.  Call me at 212-233-0666 for a free consultation.

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What you need to know about Supplier Agreements

by Fred Abramson on July 12, 2010 · 0 comments

A good supplier agreement is to designed to keep you out of court. It can also help you win a lawsuit if there is a dispute. If you have an ongoing relationship with a supplier, a well-drafted agreement is crucial. One especially thorny issue is creating a way to easily end a contract.  If you have an arrangement with a  supplier, there is normally an umbrella agreement which is succeeded by purchase orders.

Here is what you need to know when drafting an umbrella agreement:

  • Gauge the volume and frequency of the supplies you will require. You should specifically identify the goods that are to be delivered.  You should also leave room for anticipated problems, such as a downturn in the economy which could limit your ability to purchase goods.
  • Is the contract exclusive or non-exclusive? Suppliers usually favor exclusive agreements.
  • Negotiate a  termination clause.
  • Negotiate a  way to limit liability. If you are supplying goods like food, you don’t want to be held liable for damages for lost profits if you fail to make a delivery on time.
  • Term of the agreement. You should be wary of entering into an agreement for over 3 years.  Who knows what your business will look like a decade later?
  • Confidentiality. You probably don’t want your competitors to know the terms of your agreement.  Any information gleaned from a supplier agreement can be used for competitive advantage.

PURCHASE ORDERS

  • Identify each order and state that it is subject to the umbrella contract.
  • Create a purchase order that you can re-use.  It is best to leave time and quantity blank.
  • Date the purchase order.

Be aware that problems with supplier agreements is a major source of litigation.  I recently litigated a case between a supplier and a franchisee which was a result of a poorly drafted umbrella agreement that cost the franchisee $250,000.00.

If you questions regarding supplier agreements, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

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Construction Litigation: When is it time for the owner to plan on it?

March 10, 2010

The constuction industry is subject to more than its fair share of litigation. This not because the people who you work with are bad people (even though there a few bad apples). It is because industry itself if very complex. There are many factors of what makes a project sucessful.  A successful project may not have […]

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How To Avoid Using Best Efforts in a Contract

January 4, 2010

Many contracts have either no provision directed at performance or have a provision requiring someone to use its best efforts or reasonable efforts. However, there is a big problem because there is no objective way in judging whether someone has performed his best efforts One way to tackle this problem is by including specific performance […]

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Free NY Website Development Agreement

October 19, 2009

Developing websites and other multimedia products is unique. Even though it is similar to movie production and software development, there are certain issues that must be addressed in a Development Agreement. Below is a checklist to guide you on the important matters that need to be address prior to entering into a Development Agreement: Who are the parties? […]

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Who Should Produce the First Draft of a Contract?

September 29, 2009

People are always looking to save a buck.  One way that business owners try to save money is by waiting for the other lawyer to draft the contract on the premise that it will save legal fees.  This view is simply not sophisticated and could get you in trouble.  Here’s why: THE LAWYER WHO MAKES THE FIRST DRAFT […]

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Breach of Contract Lawsuit in New York: Quick guide to steps

May 18, 2009

The web designer that you hired failed to deliver the new web 2.0 apps on your website as agreed to in your written contract. In the alternative, you have been sued by a customer because they were not happy with the materials that you supplied. Should you call a lawyer and either start or defend a lawsuit? Below, is quick guide that summarizes the basic steps, legal process and expenses to breach of contract lawsuit.

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