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.