Category: Business

You can’t just get out of your contract because you want to. Rather, you can ask several questions to help determine whether there are valid legal arguments for you to defend against, rescind, or terminate a contract. Here are ten questions to consider if you’re wondering how to get out of your New York contract. 

1. Is there really a contract?

Offer, acceptance, and consideration are needed; the parties must come to an understanding, or in legal terms “a meeting of the minds.” Lilibet LLC offers to sell bracelets for $5 each; you counteroffer for $3 each. There’s no contract yet because you didn’t accept the offer. 

2. Is there an agreement to terminate?

The parties can agree to terminate the original agreement. However, the operative word here is “agree.” This means that the agreement must be mutual. Typically, this occurs in the early stages when neither party has relied on the other. However, it can occur at any time as long as both parties decide that they want termination. 

3. Is there a condition that wasn’t fulfilled?

If the parties base the contract conditionally on a certain event occurring (for example, a real estate purchaser acquiring financing) and that event hasn’t happened, then the other party doesn’t have an obligation to move forward. Whether a condition exists in the contract depends on the specific language and interpretation and that a condition can be waived, allowing the contract to continue. 

4. Is there fraud?

If fraud exists, the nonfraudulent party may move to void the contract. This means that it is treated as if the contract never existed. 

5. Is the contract legal?

If a contract is in violation of the law or against public policy, then it’s unenforceable, such as you can’t enforce a contract for the sale of stolen property. You may save a legal portion of the contract if it can be separated from the rest of the contract. 

6. Was there a mistake?

If the parties mistakenly assumed important information about the contract, or if one of the parties knew or should have known about the other party’s wrong belief, then the court can treat this as the contract is void. 

7. Is duress involved?

Duress occurs when an individual is pressured to enter the contract and they wouldn’t have agreed to the contract if it weren’t for the pressure. If the court rules that there was indeed duress, then you may get out of the contract. However, financial hardship is not typically considered duress. 

8. Is there a material breach?

If a party has materially breached the contract, then the other party doesn’t have to perform their part. It’s something that hits so thoroughly at the crux of the contract that it defeats the point of having the contract, such as your contract specifies the purchase of pool tables, and you receive dart boards instead. 

9. Is there lack of capacity?

The parties should have the legal capacity, meaning they can satisfy elements to enter the agreement. If a minor signs a contract to purchase a motorcycle, they can decide to either void the contract or enforce the deal because you usually have to have reached the age of majority. 

10. Can impossibility be used as a defense?

If a party can raise impossibility as a defense when an event makes it impossible to perform, then it works as an excuse for the non-performance. This is true as long as neither party assumed the risk of the impossibility.  

Consult with a Business Lawyer About Your Contract

There are many ways to avoid contractual claims. But it will depend on the facts of your case. Speak with an experienced business lawyer with your questions. You can reach one of our skilled MOWK Law attorneys right away to learn of possible options. Contact us now for details.

When your business hires employees or those who work on your behalf, you want them to behave in a way that suits your interests and is complementary to the company. When this doesn’t happen, not only is it a disappointment, but it may also be a violation of the law. An example of this is when there’s a breach of a fiduciary duty. Read on to find out information about how to recognize a breach of fiduciary duty and what you need to show if you’re going to sue. 

What is a Fiduciary Duty?

First, you should understand what a fiduciary is before you can understand their duty. This is simple enough: If an individual has a certain type of relationship with another (the principle) where they act on their behalf and in their interests, they can be considered a “fiduciary.” This includes employees of the principles. In their role as a fiduciary, they take on responsibilities, including the duty of loyalty and the duty of care, the duty of disclosure, and confidentiality.

How Do You Prove that There’s a Breach of Fiduciary Duties in NY?

If you want to show that there’s a breach of fiduciary duties in New York, you must establish the following:

• The existence of a fiduciary relationship
• Misconduct by the fiduciary
• Your damages were directly caused by the fiduciary’s misconduct

Existence of a Fiduciary Relationship

If you’re a plaintiff suing a defendant for a breach of fiduciary duty, you first need to prove that there’s a fiduciary relationship between the two of you in the first place. In cases of employee/employer, that’s typically a given that there’s a relationship based on trust, good faith, and loyalty, which qualifies under the law.

Misconduct by the Fiduciary

Misconduct may occur when an employee doesn’t fulfill one of these duties. For example, if the employee/fiduciary makes a transaction where they will make their own money that goes against their employer/principal. More specifically, this could be viewed as a breach of the duty of loyalty. Or the employee might breach the duty of confidentiality if they post the company’s trade secrets on a social media platform.  

Damages Directly Caused by the Misconduct

Finally, you must show that your harm or damages were the direct result of the fiduciary’s misconduct. Using the above examples, an employer is harmed when the employee makes their own money from a deal because they are taking away compensation from the employer; when the employee discloses trade secrets, the employer suffers damages because the public knows something that they weren’t supposed to know, which could damage reputation or make it harder to compete in business.  

Contact an Experienced NY Business Lawyer about Breach of Fiduciary Duty

You expect your employers and those that work on your behalf to work in the best interests of your business. When they breach their fiduciary duties, you may be able to recover compensation for any harm that they’ve brought to you. Discuss your case with a skilled NY lawyer who understands the ins and outs of business law. Our Mowk Law attorneys are ready to hear your side of the story. Contact us today. 

Dissolving a business is not as easy as simply closing your doors and calling it a day; there are various legal steps that you must take to wind up and close your business. When you don’t formally dissolve your business, you could be responsible for annual fees and taxes. Read on to learn how to properly dissolve your New York business. 

The initial step, of course is to make the choice to close. Naturally, you have already contemplated filing for bankruptcy, selling or transferring ownership before you decide to close. 

Step 1: Get approval

If you’re a sole proprietor and are ready to cease operations, then you can close all on your own. However, if you’re another type of entity, such as a partnership, you must obtain approval from the business owners or members to dissolve the business. Additionally, with an LLC or corporation, you will be responsible for annual fees, and filing and paying taxes; failure to dissolve the company subjects you to every creditor, making you vulnerable to potential litigation. 

Step 2: Prepare dissolution documents 

After gaining approval, the next step is to prepare the dissolution documents and file them with the state. This includes a certificate of dissolution, that you should file in all states where you are registered to do business. Whether it’s a NY State corporation, a Foreign Business Corporation, or a NY State Non-For-Profit Corporation will determine the type of documentation involved. This may include a Certificate of Dissolution with the New York Department of State, a Certificate of Surrender of Authority to Collect Sales Tax. Also, contact the IRS to inform them that you have dissolved your business.

Step 3: Resolve obligations 

This includes settling debts with creditors, who have a limited time to file claims and collect debts, resolving financial obligations to landlords and customers and informing suppliers and vendors of the impending closure. You must also resolve all taxes, including filing a final business tax return. 

Step 4: Prepare cancellations

Making certain cancellations (such as seller’s permits, business licenses, dba statements, and fictitious names) will help to protect your company’s reputation and finances after you close the business. 

Step 5: Check local, state, and federal labor/employment/business laws

Ensure that you’re in compliance with all your local, state, and federal labor and employment laws. For instance, you might have a legal duty to inform employees if the dissolution will result in layoffs. And check for laws that specify the requirements for maintaining records that can help shield you from future audits and litigation.   

Step 6: Distribute the assets to the owners/members

Give business assets to the appropriate owners or members. Each owner/member is legally entitled to their share after the creditors have been paid.

Reach Out to a NY Business Attorney Today

While it may be simple enough to take steps to dissolve your business, you may need the guidance of a skilled business attorney to assist with the process. Maybe there’s disagreement with owners about what they should receive or there are problems with your creditors. A MOWK Law attorney can work with you to help resolve the issues. Get a handle on your New York business law needs, and contact us today.

When your business partner breaches a contract, it can feel like you’ve been stabbed in the back. Taking the emotion out of this, the way to handle a partner’s breach of contract largely depends on the relationship between the partners, the severity of the breach, terms of the partnership agreement, and the possible options available to resolve the issue. 

Since the partnership agreement is the main source for dealing with breaches of contract, it’s critical that everything is clearly spelled out. When the agreement is too broad or ambiguous, it paves the way for a partner to shriek their responsibilities and not fulfill their role as a partner, it can lead to breaches and disputes. 

Here are some of the ways to handle the partner’s breach:

1. File a Lawsuit:  You may sue a partner who breaches the partnership agreement, regardless of whether you expel them from the partnership. A certain kind of breach, including misappropriation of partnership assets, allows you to sue the breaching partner for compensatory damages. Typically, the amount of damages will be the partner’s actual damages minus the departing partner’s investment stake in the partnership. This could be an attractive option, depending on the size of your business. 

2. Negotiate a Settlement: Under some circumstances, you may want to forge ahead with the partnership despite the partner’s breach. However, you might require some type of restitution for their breach, and a settlement is a possible way to achieve this. A negotiated settlement allows the possibility of retaining the business relationship between you and the partner. Although you may have to compromise with your partner to obtain their agreement for settlement, you can avoid the costs and time that it takes for a legal battle in court. However, you can also consider filing a lawsuit against your partner and then offer to settle based on terms favorable to you.  

3. Seek Liquidated Damages from the Partner: Some partnership agreements contain liquidated damages clauses, which provide a certain amount of monetary damages to any partner damages by another’s breach. Courts will only enforce liquidated damages when they are reasonable compared to actual or anticipated damages in partnership lawsuit cases. For instance, courts may not enforce a liquidated damages clause that provides for dissolution of the partnership and compensation to any partner in an amount less than that partner’s investment stake in the partnership. If the court deems a liquidated damages clause as invalid, they may award compensatory damages instead. The winning party must seek to enforce the judgment awarded by the court, which isn’t easy to do.

4. Expel the Partner from the Partnership: The breach could be damaging enough for you to want to expel your partner from the company and break off with them completely. However, it is significant to know whether your partnership agreement allows the expulsion of one partner or whether you must dissolve the partnership completely. 

Get Help from a New York Business Law Attorney

If your partnership agreement doesn’t explicitly say what should happen in the event of a breach or a dispute, then you should consider the assistance of a business attorney who can help with exploring your options. Or to prevent complex litigation after a breach of contract, a lawyer can help draft an agreement to avoid future problems. Get in touch with a skilled MOWK Law attorney right away to get started.

Before committing to a contract or deal with another company, you likely want to protect your New York business entity by preparing and negotiating. Part of the conversation may include the expectations of duties and responsibilities when it comes to contract drafting. This can take a major turn if one party is not candid about what they can deliver and perform. Misrepresentation can play a major role in your New York business dispute. Read on to learn about the various forms of misrepresentation.

What is a Misrepresentation?

Misrepresentation in its basic form is the act of providing a false or misleading account. It can come in various forms, with each having the possibility of triggering highly contentious business disputes.  

Fraudulent Misrepresentation

A typical fraudulent misrepresentation has one party making a false statement to the other party, which results in the deal or agreement between the parties to be based on an untruth, or false premise. This means that the contract would be invalid if the falsehood has a material effect on the agreement. For instance, you only agree to make a deal for a company to be your café’s vegetable supplier because they have assured you that the produce is organic. Later, you learn that the company rep lied, and the vegetables aren’t organic.  

The fraudulent misrepresentation can be made via something that the party said to the other, wrote to the other, or can even be through nonverbal action such as a gesture; silence can even be considered as a misrepresentation. 

What Do You Have to Prove for Fraudulent Misrepresentation?

In order to prevail, a plaintiff must show the following:

• That the false representation was made 
• That the representation was known to be false at the time it was made or that it was made recklessly without knowledge of its truth
• That the representation was made with the intention that the other party would rely on it
• The other party did in fact rely on the representation 
• That the plaintiff suffered damages as a result of the reliance on the representation

Negligent Misrepresentation

Negligent misrepresentation occurs when an individual makes a statement or issues a certificate, with knowledge that this is necessary for a specific aim. The individual also knows that others are relying on the accuracy of the statement (to their detriment) and then the individual fails to take reasonable care to ensure that the statement is accurate, causing harm to the others.  

This differs from a fraudulent misrepresentation in that, it does not require proving malicious intent. Rather, the plaintiff needs to show the following:

• That the other party was aware that the statement was going to be used for a particular purpose
• Some conduct by the wrongdoer linking them to the plaintiff and some showing that they knew about the reliance 
• The wrongdoer’s statements exaggerated or misstated facts
• That the misstatements resulted from the wrongdoer’s negligence and/or lack of due diligence 
• That the plaintiff relied on the misstatements
• That the plaintiff suffered damages as a result

Innocent Misrepresentation

This occurs by a mistake when a party makes a false statement, but they believe that the information that they have given is accurate and true. 

Talk to a New York Attorney about Misrepresentations
When business dealings are impacted by allegations of misrepresentations, all the affected parties may wonder about what to do to protect their interest. This is when it makes sense to turn to an experienced business law attorney. You can depend on the expertise of a MOWK Law attorney who can assess your situation and provide viable options, regardless of the type of misrepresentation involved. Get in contact with us today.

The SBA Loan Program offers loans to help small businesses. While the loans are guaranteed by the U.S. Small Business Administration, they are issued by a traditional lender, such as a bank. These loans can offer more flexibility and lower interest rates compared to other lending options, making them a good way to help finance your business. However, they require very different procedures than what is expected in a traditional loan or mortgage. This is where you can gain insight and assistance from a MOWK Law attorney who is well acquainted with SBA loans. Read on to learn about the SBA program, and how our attorneys can help borrowers navigate the process.

What is the SBA Loan Program?

The SBA loan program is a government small business loan that isn’t funded directly by the Small Business Administration, but it is backed by the federal government and issued by a private lender. 

A borrower applies for an SBA loan through a lending institution, such as a bank or credit union. Next, that lender applies to the SBA for a loan guarantee. This means that the SBA will repay a part of the loan if the business defaults on payments. Additionally, the Small Business Administration requires an unconditional personal guarantee from everyone with at least 20% ownership in the company. This puts you and your assets up for grabs for payment if your business can’t make them.  

Why Hire a Lawyer for the SBA Loan Process?

When you’re preoccupied with the daily demands of running your business, it is difficult to navigate the loan process. A good way for borrowers to have a positive loan experience is by working with a knowledgeable commercial attorney. Not only can you benefit from a successful outcome, but you can also benefit from a lawyer’s guidance at different phases and to assist with various tasks, including:

• Loan Requirements and Qualifications: There are various types of SBA loans – each with its own terms and requirements. The kind of loan that works best for is determined by what you want to use the money for. This is where our Mowk Law attorneys can help; they can match you up with loan that is most appropriate for your particular situation. 

• Due Diligence Issues: Part of the process includes providing necessary due diligence to the lender. You want to ensure that you’re meeting all of the requirements and consulting with an attorney can help with this. For example, they can provide insight about the appropriate entities to form and can draft accompanying documents such as operating agreements and leases. In general, your lawyer can inform you of all the details of your transactions, including your rights, responsibilities, and risks.   

• Loan Closing: It can be beneficial when a borrower is represented by a lawyer when the closing actually occurs. They can review the loan documents and go over them with the borrower and provide copies of all executed transactional documents required by the lender from the closing.  

Talk to an Experienced Lawyer about SBA Loans

It can be challenging to navigate the SBA loan process. However, you don’t want to lose valuable time to apply and then receive these significant funds to help operate your small business. You may find the process intimidating, but don’t underestimate how much a skilled lawyer can help. Our MOWK Law attorneys are ready and willing to assist you with taking advantage of your available legal options. Contact us today for more information.  

After deciding to purchase a business, you will investigate specific businesses to buy. You can find them through the internet, various brokers, or via your own personal and professional connections. Once you’ve settled on a target, you will have to go through a series of actions to complete the sale. Read on to learn how to buy a small business in New York. 

Investigating the Business

You want to know that you’re getting a fair price for the business; you also want to know every facet about the business if some unknown factor could have a negative impact. Therefore, any buyer will perform due diligence before proceeding. This involves heavy investigation, including checking on tax returns, liens, leases, asset lists, permits and licenses. Looking into the employees, any violations or lawsuits should also be part of the process. 

Negotiating the Terms

This is dealt with primarily in the “term sheet” or letter of intent, which puts in writing the basic terms of the deal before the drafting and negotiating of the sale agreement. The term sheet:

• Shows intent; it lets the seller know that you’re serious about purchasing the business. 
• Avoids future negotiation impasses about major issues when the parties have already spent much time and money on the transaction.
• Acts as a guide for the attorney when they draft the sales agreement.

Documentation of the Deal

These are key documents when transferring the business to the seller: 

• Sales Agreement: Sets forth the major terms and conditions of the transaction and is often executed days or even weeks before the closing.
• Promissory Note: Sets forth the purchase price owed, the dates for the remaining payments, interest on any outstanding payments, and makes it easier for the seller to collect from you if you default a payment.
• Security Agreement: Seller may ask for a security interest in the assets being sold to you. Then, the seller may foreclose on the business assets in case you default on payment. 
• Bill of Sale: Transfers ownership of the tangible assets of the business from the seller to the buyer, including furniture, supplies, inventory, equipment.

The Closing

It’s time for everything to culminate in the closing. This is the end of the process of the purchase when the parties and their attorneys come together to exchange money and property and complete the remaining documentation. Typically, the when and where of the closing is set forth in the sales agreement. It’s best if the closing goes on without incident, but there may be last-minute issues. Perhaps some closing conditions haven’t been met, or there are changes to the documents that need to be addressed, but hopefully the parties are fine with going ahead with the transaction regardless. 

Get Help with Buying a Small Business in New York

Many closings will go off without a hitch due to careful planning and willing cooperation between the parties. You will need an experienced attorney at every stage of the process when you make your small business purchase. They can help you handle barriers that arise in the due diligence process, prepare the paperwork, and deal with last-minute negotiations that occur during closing. Act in your best interest and connect with one of our skilled MOWK Law attorneys. Contact us today. 

As you prepare to start a new business, you will be inundated with many things to consider and many decisions to be made. One of the most basic, but significant choices that you have to make is what type of business structure is best for your New York business. A popular choice for many is to form an LLC (limited liability company). Read on to learn about how to form an LLC in New York. 

Other Business Types

In New York, you have a couple of different options when it comes to types of business structures. Each one comes with its own sets of pros and cons. When you decide on a corporation, you are protected from the personal liability that comes from starting a sole proprietorship, which is the easiest structure to form. However, forming a corporation involves completing complex paperwork that must be submitted to the state government. An LLC combines elements of a corporation with elements of a sole proprietorship: It shields you from personal liability and contains less formalities than a corporation. For some, this is the best of both worlds, making it a popular option for small business owners. 

Steps to Take When Forming a New York LLC

Just like every state, New York has specific requirements that must be completed before an entity can become an LLC. One preliminary requirement is that the principle must be a resident of New York. Here are the next steps to forming your New York LLC:

• Business Name: You will need to pick a business name for your LLC. The name can’t be a name already used in New York and it must contain “LLC”, “L.L.C.”, or “Limited Liability Company.”   
• Articles of Incorporation: File Articles of Incorporation with the state and pay the required filing fee.  
• Registered Agent: Appoint a registered agent. A registered agent (or RA, also known as an agent for process of service) is specified by the business for the purpose of receiving official legal documents, including lawsuit documents, subpoenas, wage garnishments, and other official legal documentation. 
• Operating Agreement: Create and adopt an operating agreement for your LLC. This the key document within your company that sets up the powers, duties liabilities, rights and responsibilities of the members of the LLC to each other and to the LLC. Because it’s an internal document, you don’t have to file this with the state.
• Publishing Requirement: Within 120 days of forming the LLC, you must publish a notice in two general circulation newspapers (one daily, one weekly) in the county where the LLC was formed.
• License and Permit Requirements: Depending on the type of business activities, you may have to obtain license or permits from local or state governments. 

Get Help Forming your New York LLC from an Experienced Attorney

While New York doesn’t require the use of a lawyer to form an LLC, the Articles and Operating Agreement create enforceable rights and responsibilities and there are many tax considerations to contemplate. Consider using a skilled MOWK Law attorney to help you with your formation so that nothing is overlooked. We will work hard to represent your best interests. Contact us today to learn more and to get started. 

Should your New York business agreement always be in writing? In general, the answer to this question is “yes.” However, there are specific rules to inform us when a type of contract must be in the written form. Read on to learn about when New York contracts are required to be in writing. 

The New York Statute of Frauds

The law that requires certain New York contracts to be in writing to be enforceable is referred to as “The Statute of Frauds.” 

There are several types of contracts that must be in writing, including the following: 

• Any Contract that May Take More than a Year to Perform: Under the New York General Obligations Law, contracts that will take the parties more than one year to perform must be in writing. This does include employment contracts, but employment with no specific terms, (which is also known as “at will” employment) is not required to be in writing since this type of employment can be terminated at any time. 

• The Sale or Lease of Real Estate: Under the New York General Obligations Law, any sale of real property and lease in New York that lasting longer that one year in duration must be in writing. 

• Negotiating Services for Loan/ Real Estate Brokerage: All New York real estate transactions and transactions related to loans in New York must be in writing unless the individual providing the services is a licensed real estate broker or a New York attorney, per the New York General Obligations Law. 

• Sale of Goods Contracts: The Statue of Frauds in New York requires all contracts in New York for the price of $500 or more to be in writing in order for the contract to be enforceable, unless there is some writing sufficient to indicate that a contract was made. To meet this requirement, there doesn’t need to be a formal long-form contract; there only needs to be some sort of writing necessary to show that there is a contract. 

• Guaranty to Pay the Debts of Another: Under the New York General Obligations Law, any contract that assumes responsibility for the financial obligations of another individual or entity must be in writing. 

 “Promissory Estoppel” Exception

New York recognizes an exception to the writing requirement for contracts called “promissory estoppel.” Promissory estoppel will apply if the party trying to enforce an oral agreement can show all of the following elements:

• A clear and unambiguous promise
• Reasonable and foreseeable reliance 
• An injury (the party must act in reliance on the promise)

Even when all of the elements for promissory estoppel are present, it will only allow an individual to avoid the writing requirement of the contract under certain conditions. This is when the failure to enforce the promise would be unconscionable, not merely unfair or unjust. Obviously, this can be a high bar to meet. 

Get Legal Help with Enforcing or Drafting your New York Contract

While the law requires only certain types of contracts must be written, in any type of business contract, you should get your contracts in writing. If you need help with drafting a contract or enforcing an oral agreement, getting in touch with a skilled legal professional is the way to go.  Contact us here at MOWK Law where an experienced attorney can work on your behalf to ensure that your interests are protected.