Corporations

Drafting Website Terms of Use – Part I

February 17, 2017 | Structure Law Group, LLP

The Terms of Use for a website is critical to maintaining control of how users access and use the information on the website, and in limiting liability for unapproved uses. Regardless of whether users actually read the Terms of Use – many don’t because it typically contains complex legal jargon – the Terms of Use binds users to its terms by virtue of their use of the website. The Terms of Use constitutes a contract between the business and the customer. That legal jargon protects from liability from users and allows control over the information contained on the website.

Businesses with an online presence — whether it be social media, e-commerce, mobile, static or interactive site — should always craft a carefully written Terms of Use. These terms are written to include a variety of different subjects relating to the business, the customer, information that is exchanged, information received and how that same information may be used.

Avoid Using Boilerplate or “One Size Fits All”

The Basics of Crowdfunding – Part 1

February 3, 2017 | Mark Figueiredo

What is Crowdfunding?

Crowdfunding refers to entrepreneurs seeking relatively insignificant financial contributions from a large number of people, often via social media or other internet networks, to fund the start or growth of a business venture. According to one report, more than 600 crowdfunding sites exist and raised billions of dollars for various types of businesses in 2015 alone, worldwide.

Types of Crowdfunding

Alter Ego Liability in California

January 13, 2017 | Katya Mezek

One of the primary benefits of incorporating your business and complying with corporate governance laws is that a corporation provides personal liability protections for its owners from the debts and liabilities of the corporation. These protections exist because a corporation is viewed as an entity that exists separate from its owners and this creates a “corporate veil” which is intended to protect the shareholders from personal liability. However, there are some circumstances in which an injured party may hold shareholders personally responsible for the debts or actions of the corporation. This is commonly referred to as either “alter ego liability” or “piercing the corporate veil.”

Generally speaking, when a party sues a corporation, that party seeks money from the corporation and not from shareholders as individuals. In some situations, however, owners may simply be using a corporation as an “alter ego” for themselves and they do not actually treat the corporation as a separate legal entity. In such cases, a party suing the corporation may pierce the corporate veil and try to hold the owners personally liable as well. While successful alter ego liability is rare, it does occur and all corporate owners should take steps to avoid it whenever possible.

Signs of “Alter Ego” Corporations

What is an REIT?

December 16, 2016 | Structure Law Group, LLP

There are many different types of businesses in which you can invest and earn profits, many of which that involve real estate. One important investment opportunity is a real estate investment trust, or REIT. This type of investment was created by Congress to give stockholders the opportunity to reap benefits from income-producing real property without having to go through the entire process of purchasing the property. There are different types of REITs and also many regulatory requirements for this potentially lucrative business endeavor.

Types of REITs

There are three main types of Real Estate Investment Trusts and the following is a brief description of each:

How To Prevent Competitors From Invading Your Workforce

December 9, 2016 | Jaclyn Ford

Many people will say that your business is only as good as your best employees. In fact, you may have one or more top employees who are absolutely integral in building and maintaining the success of your company. While having talented employees is a benefit to any business owner, it also tends to draw the attention of your competitors.

Identify the most important employees.

Your company may have some employees who could leave with only minimal interruptions to your business operations. On the other hand, there may be a select few whose absence may substantially harm your bottom line. Identify the top performers in your company through performance reviews and other tools and focus on keeping them satisfied. After all, your competitors will not be actively seeking your “benchwarmer” employees – they will be looking to take your Stephen Curry.

Tips to Avoid Business Litigation

November 11, 2016 | Jaclyn Ford

Going to court is expensive and can take your focus away from running your business for a significant period of time. In order to avoid the added cost and stress of litigation whenever possible, include these steps in your business practices.

Have effective and enforceable contracts

Every business relationship should be memorialized in a written contract. This includes between owners, with clients and customers, with employees, with vendors, and more. Having a contract that is properly drafted to best govern the specific relationship and responsibilities at hand can help avoid disagreements down the road. Each party will know his or her obligations and expectations because it is in writing and the contract can help dictate how disputes will be resolved out of court.

Shareholder Lawsuits in California – Explained

November 4, 2016 | Mark Figueiredo

When a shareholder of a corporation believes that he or she has been wronged, the shareholder generally has two options to file a lawsuit. The shareholder may either bring a direct action or a derivative action, depending on the facts of the case. In many instances, it is only appropriate for the shareholder to bring one of these two types of actions against the company. Below is a general explanation of how a corporation is set up, and a discussion of the differences between the two types of shareholder actions.

General Corporate Organization

Let’s say that you decide to open a lemonade stand by yourself as a simple business. In a simple business, you would own the lemonade stand. If the lemonade stand did well, you would make more money, and if it did badly, you would not. In addition to being the owner, you would also run the lemonade stand. You would make day-to-day decisions about the lemonade stand, like how where to order to the lemons from, what equipment to use, and how much customers should pay for the lemonade. To sum up, you alone would both own and run everything.

Agency Relationships In The Workplace

October 28, 2016 | Mark Figueiredo

What is an Agency Relationship?

“Agency” is a term that defines a legal relationship between two parties: the principal and the agent. An agency relationship is established once the agent has the legal authority to act as the legal representative on behalf of the principal, which may be an entity or a person. The agent will only have legal authority to act on behalf of the principal so long both parties are in agreement to create the agency relationship and the principal must have the necessary legal capacity (must be of legal age and of sound mind, etc.) to enter into a contract.

How Do Agency Relationships Affect Workplace Settings?

Implied Consumer Warranties

October 7, 2016 | Katya Mezek

The State of California protects consumers of retail goods by limiting warranty disclaimers on products sold in the state. California’s warranty protection extends to manufacturers, distributors, and retailers alike. The warranties apply to both the sale and lease of consumer goods. The seller can disclaim the warranties by following very specific and highly detailed statutory requirements. Failing which, the seller cannot disclaim the warranties implied in every consumer sale. The sale of a service contract at the time of or within 90 days of the sale of the goods adds another aspect to the seller’s ability to protect themselves after the sale. San Jose’s preeminent business attorneys at Structure Law Group, LLP possess a high level of experience and skill drafting warranty disclaimers for businesses.

The implied warranty of merchantability protects consumers in every sale of goods in California. Specifically, the implied warranty of merchantability extends to the retailer, distributor, and manufacturer of goods. The retailer is indemnified by the manufacturer for the full amount of liability. Merchantable goods must either conform to the contract description or be of acceptable quality in the trade or business. In addition, the goods must be fit for their ordinary use, rather than for a specific purpose. The goods must also be identified, labeled and packaged appropriately. Lastly, the goods must conform to the promises made on the label or packaging. Goods are non-conforming if the goods fail to satisfy any one of the necessary requirements set forth above.

A second implied warranty arises in specific circumstances. This warranty is the implied warranty of fitness for a particular purpose. The warranty of fitness for a particular purpose attaches to the sale of goods when the retailer, distributor or manufacturer knows or has reason to know that the consumer is relying on the goods to perform a very specific purpose. Additionally, the buyer is relying on the seller’s expertise and advice that the goods purchased are sufficient to satisfy the particular purpose. Additionally, the seller must know or have reason to know that the buyer is relying on the seller’s expertise and judgment. The goods must conform to the seller’s expectations, i.e. the particular reason the consumer purchased the goods.

What Are Fiduciary Duties?

September 30, 2016 | Katya Mezek

Corporate officers, partners in a partnership, and members of a limited liability company owe a fiduciary duty to the principal, i.e., the business entity, to act in the best interest of the organization. Failure to act in the principal’s best interest or actively competing against the principal to which a fiduciary duty is owed exposes the fiduciary, the agent of the principal, to civil liability. Care must be taken by the fiduciary not to compete against the organization to which they owe their duty of loyalty. The Silicon Valley Business Attorneys’s at Structure Law Group, LLP are highly experienced in preventing and resolving corporate disputes that may arise from a breach of fiduciary duty.

The foundational tenet of agency law is the duty of loyalty owed by the agent, or fiduciary, to the principal or business entity. The duty of loyalty obligates the fiduciary to act in the best interests of the principal. The duty of loyalty extends to “all matters connected with the fiduciary relationship.” Thus, the duty of loyalty prohibits fiduciaries from obtaining a benefit from others as a result of the fiduciary relationship. This prohibition extends to all dealings in which the fiduciary is involved on behalf of the principal. The duty to act with loyalty is not limited to financial matters.

The fiduciary’s duty of loyalty encompasses situations involving parties adverse to the principal. The fiduciary has an absolute duty not to act on behalf of a third party whose interests are adverse to those of the principal. The fiduciary is duty-bound not to compete, either personally or on behalf of, another entity. The agent’s obligations last for the entire duration, and in some instances depending on contract language, last beyond the termination of the fiduciary’s relationship with the principal. However, agency law does provide for the fiduciary to plan and prepare to leave the principal, even to then compete with the principal. Notwithstanding, the action taken by the fiduciary must not violate any other duty owed to the principal.