Zehra Mahid Law Firm

10/23/2019

08/06/2019

05/12/2018

I’ve got good news for freelancers who can’t afford an attorney. Drafting something yourself is better than nothing. Whether your work involves web

05/05/2018

So What Exactly is an Acceleration Clause and Why Should It Matter To You? You want to know whether the contract in front of you contains an

05/04/2018

So What Exactly is an Acceleration Clause and Why Should It Matter To You?

You want to know whether the contract in front of you contains an acceleration clause. Why? Because an acceleration clause allows a non-breaching party to demand full performance immediately from a breaching party. Acceleration clauses can appear in a variety of contracts. They will either help your position a great deal or hurt you badly depending upon which seat of the transaction table you happen to occupy.

When Should You Include Them in the Contract?

I regularly advise my small business clients to include an acceleration clause in their boilerplate sales contracts if they allow their customers to make installment payments for goods and/or services over a period of time. That way, if a customer fails to make a payment on time, my client can demand full payment immediately under the acceleration clause of the agreement.

If you are a residential or commercial landlord, it is in your best interest to include an acceleration clause in your standard lease template. The acceleration clause will protect you by ensuring you can demand full and immediate payment of rent in the event of early termination. You don't want to be left scrambling if a tenant breaks their lease early, and loss of a security deposit plus a month of rent may not actually be enough to make you whole.

When Should You Strike Them From the Contract Before You Sign?

Watch out for an acceleration clause if you are about to sign up for a software license or other type of subscription agreement (such as a gym membership). Software service providers in particular love them, so there is a pretty good chance they are buried within all that small font boilerplate language that your business signed off on a long time ago. What does that mean for your business? Well, if you are a physician practice looking to switch your billing software vendor, you will want to check your existing vendor agreement to see if early termination (without cause) would trigger an acceleration clause that requires you to immediately pay all fees due for the entire term. If so, get on the phone with your vendor and see what it would take for them to waive it. If you don't have success getting it waived, see if the new company you want to use will offer some sort of discounted initial pricing or other perk to make up for the loss you will incur by switching to them. Don't be afraid to get creative with what you ask for. This may not work, but it is certainly worth the time and trouble of trying. And of course, if you are the tenant rather than the landlord, you want to steer clear of an acceleration clause if at all possible before you sign on the dotted line. Otherwise, you could be obligated to pay rent for the full term of the lease if you break it early.

05/02/2018

Warranties are an important area for small business owners to think through before they (or their advertisers) put things in writing. Your warranties are your promise that you'll make things right if they happen to go wrong. Warranties set customer expectations around the costs you are willing to assume for repairs, replacements and returns. The last thing you want to do is put things in writing that you can't actually pay for.

There are two types of warranties: express warranties and implied warranties. Express warranties are specific warranties that you give your customer. An automobile parts seller may provide a 180 day warranty on a non-moving part. Implied warranties are not expressly stated but they can be reasonably assumed. For example, when a customer orders noodles at a restaurant, those noodles come with an implied warranty that they are safe to eat.

When your warranties are breached, expect to be on the hook for costs.

If you have a contract with your customer, make sure you include language that places reasonable limits around your warranties. Most states have laws about warranties for the sale of goods. The most common warranties are the implied warranty for merchantability (your product works the way it is supposed to), fitness for a particular purpose (your product will do something specific such as hold a certain amount of weight), title (you have clear title to sell your product), and non infringement (either your product is made up of original work or you have already obtained all necessary IP rights to be able to sell it that product infringing on somebody else's rights). All of these warranties can be waived through the use of waiver clauses.

Good warranties can help avoid a lot of costs and legal headaches. You want to provide your customers with warranties that give them enough comfort to do business with you without creating unanticipated or unmanageable costs. Pay attention to your promises so you can stick to them.

04/30/2018

By and large the most common type of agreement that all of my small business clients should be using (but far too often either aren't using or aren't reading) is a supplier agreement. Your suppliers are critical to your business. For restaurants, it may be your food and alcohol suppliers. For medical practices, it may be your medical equipment suppliers or lab service providers. For car dealerships, it may be the mechanics working on your cars. Regardless of what type of business you are engaged in, your supplier agreements contain key terms that are critical for you to understand. Important provisions include payment terms (fees, expenses, late charges, invoice process, payment due dates), quantities of goods or types of services, acceptance criteria, (how are the goods or services being evaluated to see if they are satisfactory? what if they aren't?) the term of the agreement (one time buy? renewals?), and the names or position titles of the key point(s) of contact for the buyer and the seller. Many disputes can be avoided through the ex*****on of agreements that make sense for both sides. I never advise my clients to sign boilerplate provisions unless they understand exactly what they are agreeing to. A good deal is not a deal where one side steamrolls the other. A good deal is a deal where both sides feel they were treated fairly and wish to maintain a long term relationship that is productive and profitable.

04/30/2018

How can you protect your business from having its confidential and proprietary information disclosed by employees and independent contractors?

The best way to protect your confidential and proprietary business information from disclosure is to have your employees and contractors sign an employment or consultant agreement with confidentiality provisions. Such an agreement should contain a definition of "confidential information" that is broad enough to cover the business interests that you want to protect. These may include customer lists, business practices, market research, sales strategies and even training methods and content. Ideally, you should have employees and independent contractors sign the agreement at the beginning of the relationship in order to set expectations. Preventative measures always cost less that cleaning up after the fact, particularly when clean up involves messy legal disputes and fees.

04/26/2018

Let's talk about Operating Agreements...

What is an Operating Agreement?
An Operating Agreement ("OA") is an agreement between business partners about how the business will be run. There are plenty of form templates available online that can serve as a frame for your particular picture.

So exactly how important is an OA for small business owners?

Critically important. Many of the disputes that arise between business partners can be avoided through the utilization of a comprehensive and current OA.

What types of clauses should a OA contain?

Naturally, different businesses require different clauses; however, there are some basic provisions that you should include in yours to reduce your chances of having to deal with messy disputes. These "basics" include capital expenditures, buy-out provisions, the division of debts and profits, and the process of adding in new members.

How often do I have to update my OA?
Make sure your OA is current and correctly reflects both ownership interests and core business operations. Anytime there is a material change in your business, check your OA and update it as appropriate.

A good OA can go a long way in saving time and money on disputes and legal costs.

04/24/2018

Several of my clients have asked me what the most important clause in any contract is. I would say that if you don't have time to read an entire document and understand it before you sign on the dotted line, make sure you read and understand the "Termination Clause" of the contract. Termination rights are a frequent pain point when any business relationship comes to an end. Make sure you understand whether one side is required to give the other advance notice of their intent to terminate, how that notice must be given (written? oral? via US mail? email?), whether a party can terminate "without cause" or is obligated to "show cause", and whether there are any fees and penalties associated with terminating the contract.

07/11/2017