The following are some sample forms you can use in your debt collection process. Every business really should have a well vetted debt collection process primarily to ensure there are no evidentiary issues if you end up having to sue a client or customer. The following are intended for educational purposes only.
Below is a link to a memorandum prepared for brokers looking to find out their rights for collecting their commissions. This is intended for educational purposes only. A consultation with an attorney is always recommended.
A Guide to Earning Your Commission – A Guide to Getting You Your Commission.
Below are some sample business contracts intended for educational purposes only. One-size does not fit all, although these contracts are an excellent starting point for just about any business. A consultation with an attorney is always recommended. Contact us with any questions you have about these forms.
Below are some sample business construction contracts intended for educational purposes only. One-size does not fit all, although these contracts are an excellent starting point for just about any business. Consultation with an attorney is recommended. Contact us with any questions you have about these forms.
Rider for Subcontractor Agreement
Below are some sample business governance contracts intended for educational purposes only. One-size does not fit all, although these contracts are an excellent starting point for just about any business. Contact us with any questions you have about these forms.
FOR LIMITED LIABILITY COMPANIES
Below are some sample employment contracts intended for educational purposes only. One-size does not fit all, although these contracts are an excellent starting point for just about any business. Contact us with any questions you have about these forms.
The following are sample forms you will want to consider in the hiring process. Timing is critical when it comes to employment agreements. Also properly documenting compensation, benefits, etc. are important so you avoid baseless employee claims.
The following are sample forms you will want to consider for firing any employee. Documenting the basis for termination and obtaining a release from the employee are critical in avoiding a very expensive and frivolous lawsuit from a disgruntled employee. Remember, employment firms use little discretion in trying to squeeze a dollar from small businesses.
Splitting up from your business partner is discussed in a few other posts on this website. First we discuss the friendly break up, then we address some of the aspects of the not-so-friendly divorce. The following is another look at your options for either splitting with your business partner or leaving the business altogether. These options assume a two-partner business i.e. a closely held company.
Option 1: You buy out your business partner
Option 1 is to buy out your business partner. This option is simple and in many ways ideal. It allows you to continue your business with no restrictions. You would have sole ownership of the Company provided that you satisfy the payment terms of the buy-out agreement.
Option 2: You sell your shares in the Company to your business partner (or 3rd party).
Option 2 is to sell your shares of the business to your business partner in which case your business partner will continue under the current business name/entity.
Here, if your business partner agrees to purchase your shares then it will likely be subject to a buy-out agreement which will typically come with restrictive covenants such as non-competition provisions and non-solicitation provisions.
The result is, you may be able to establish a competing business but your activities may be extremely limited.
Option 3: You gift (transfer without receiving any money) your shares in the Company to your business partner (or 3rd Party) and start your own competing business venture.
Option 3 is to gift your shares in the Company to your business partner. In this case, you receive no money for your shares.
The problem aside from not getting paid for your shares is that while you can start a competing business, you will not be able to directly solicit your prior clients without subjecting yourself and your new company to liability under a theory of tortious interference with contractual/prospective business relations.
This option assumes there are no restrictions on transfers either in an operating agreement or a buy-sell agreement.
Option 4: You dissociate from the Company (Voluntary Dissociation)
Option 4 is to dissociate from the Company. The decision to dissociate from the Company permits a dissatisfied business owner to extricate him/herself from the business and cut off any obligations he/she might have for future endeavors, subject only to the terms of a relevant shareholder/operating agreement.
The freedom to dissociate from a Company may come at a steep price however, particularly where neither the statute (Business Corporation law, Limited Liability Company Law, or Partnership Law) nor the relevant “shareholder agreement” compels the repurchase of the dissociating business partner’s shares in the Company.
Therefore, while you may seek to dissociate from the Company, absent something in a written agreement between the business partners, there is no requirement that the Company or your business partner purchase your shares. So, if you dissociate you may not receive any money for your shares.
The other problem aside from not getting paid for your shares is that you will not be able to directly solicit your prior clients without subjecting yourself and your new company to liability under a theory of tortious interference with contractual/prospective business relations.
Option 5: You and your business partner agree to dissolve the business
Option 5 is you both agree to dissolve the business (hence “voluntary” dissolution) and you go your separate ways, probably splitting the clients and assets after you paid the Company debts. After the business is effectively dissolved, you can start another business and solicit previous clients without concern about interference with contractual relations issues.
Dissolution is the most common means of effecting a split between business partners. Dissolution happens in one of two ways. (1) Voluntary Dissolution or (2) Involuntary Dissolution.
Voluntary Dissolution, as described here, refers to the situation where the parties voluntarily agreed to dissolve the business and essentially go their separate ways. Dissolution must comply with statutory requirements and procedure. After the parties agreed to dissolve the business, the company enters what is called the winding up Winding up basically refers to the process where in general, a company winding up without court supervision must discharge its debts before it can distribute anything to its stockholders. Therefore, in order to wind up the company in most instances the company must pay off its debts first before distributing assets to the business partners.
Option 6: You dissolve the business by judicial dissolution
Option 6, Judicial Dissolution, is also referred to as Involuntary Dissolution. Involuntary Dissolution of a Company occurs where the parties cannot agree on whether/how to dissolve the business. As a result one party (the petitioner) files a petition with the Court seeking to dissolve the business on some statutory grounds. Those statutory grounds will vary but basically they are either:
- deadlock between the parties or
- some oppressive conduct from your business partner(s)
These are the possible outcomes of a petition for dissolution:
- the court denies your petition – in which case your business proceeds.
- the court grants your petition and the business gets dissolved and the assets/clients get split
- the court allows your partner to buy you out at “fair value”
The result will depend on the basis for seeking dissolution and other facts and circumstances which are difficult to ascertain at this time.
NOTE: “Fair value” may not be what you have in mind. Therefore it is a risk to put “fair value” in the hands of the Court to determine.
The following are Not Viable Options:
You expel your business partner out of the business (Involuntary Dissociation). This may be an option in some states but in New York it is not a viable option.
On a Breach of Contract cause of action you have to show the following:
- That you had an agreement.
- That you performed that agreement
- That the defendant breached the agreement (usually by not paying the money due)
- And that you have been damaged as a result in the total sum as per the agreement
A valid agreement exists when:
- There is an offer which contains all of the material and specific terms
- That offer was accepted by the defendant and
- There is valid consideration for the agreement.
A Breach of Contract claim may fail for numerous reasons such as:
- There was not an actual agreement on the price of services rendered.
- There was not an actual agreement on quantity
- There was not an actual agreement on the scope of services
- There was not an actual agreement on the term of the agreement
- You cannot prove your damages or your damages are not directly (proximately) caused by the defendant’s alleged conduct
- You cannot show that a modification to an agreement was in writing.
- You cannot show that the defendant specifically authorized your services
- You don’t have a signed contract
- There was no legal consideration for the contract/agreement
However, all hope isn’t lost if your Breach of Contract claim fails. You have at least two other options:
Unjust Enrichment Claim: This is an equitable claim. It says that even if there wasn’t a formal agreement (say because the price was not agreed to, or some other material term might have been missing that makes a Breach of Contract claim unsuccessful) you should still get paid for the reasonable value of your services because the defendant requested services from you, you relied upon that request, the defendant knew you were performing services and the defendant has retained the benefit of those services without paying you, and as such as been unjustly enriched at your expense. Unlike in a Breach of Contract claim, with Unjust Enrichment you have to show the reasonable value of the services performed. This means showing that your price and time spent were both reasonable under the circumstances. This is a more difficult task than a breach of contract claim but not impossible.
An Account Stated Claim: In NY, if you send someone invoices over a period of months, and they do not contest (or event admit) the invoices, you have an account stated claim which means you are entitled to the sum as stated in those invoices.
Conclusion: The key to any successful claim for money owed on a breach of an agreement, is organization. Making sure your claim is organized is critical. Having all the proper documentation including (1) signed contracts (2) invoices (3) written demands for payment (4) written admissions that money is owed or you will get paid (5) supportive email/written correspondence, and (6) any other information showing you properly performed the services agreed upon will help to ensure your success.
Not all construction contracts are created equal. That’s because every construction project is different. There are however two underlying themes (which arguably are necessarily intertwined) from the attorney’s perspective and that is (a) proper risk allocation and of course, (b) getting paid.
However, before allocating risk one must first understand the specific risks in the given project. Risks become apparent when taking into account site conditions, accessibility, safety, scheduling, and other project specifications. These conditions all dictate how the contractor will perform its work which in turn effects the liabilities the contractor has assumed.
There are various provisions in a construction contract which specifically address risk and they include (without being an exhaustive list): (1) scope of work (2) scheduling (3) changes to the scope of work (4) delay and damage provisions (5) insurance (6) standard of care, (7) storage of materials and risk of loss and (8) express warranties of the work performed.
An effectively negotiated contract protects the contractor, owner or subcontractor (depending on the client) from potentially devastating disputes by consistently ensuring the fairest and legally enforceable provisions when it comes to risk allocation. The same is true whether we are talking about a simple job or a complex project. Simple contracts quite frankly make me nervous. They make me nervous because they don’t address all of the different possible circumstances that may impose risk or liability on the contractor or business owner. As an attorney, simplicity can be frightening, if not frustrating, because that means when the time comes for a dispute between the owner and contractor, matters of risk allocation are left for interpretation by the Court i.e. expensive litigation.
As mentioned before, attorneys (and their clients) are not only concerned with risk allocation but are (or should be) very concerned with getting the client paid if the client is the contractor or subcontractor. This is where it is important to review and understand (1) any conditions to getting paid, (2) procedures that need to be followed in order to get paid (3) strict procedures for any change orders or extra work and (4) the timelines that limit one’s right to bring a lawsuit to enforce a debt. Each of the foregoing can critically effect your ability to get paid and as such it is imperative that you have a properly drafted contract which sufficiently and fairly addresses the process of getting paid for your services, labor, and materials. Although conditions to getting paid or enforcing a debt may be strict, that doesn’t necessarily make them enforceable. Therefore, if your attorney cannot assist you in negotiating more favorable terms, your attorney can at the very least assist you in understanding the critical payment-related provisions of the contract and help you structure an effective contract management process.