California law allows persons to recover damages for intentional fraud as well as negligent misrepresentations if certain elements are sufficiently plead and proved.
There are specific elements that a party is required to prove in order to successfully recover damages suffered due to the fraud or misrepresentation. A false misrepresentation lawyer near you should be able to provide you with legal assistance for your situation.
Fraud is using deceit or dishonest means for the purpose of depriving another of money, property or a legal right.
Intentional Fraud/ Deceit occurs when the defrauder uses deceit or false important facts to convince the victim to rely on the false facts. Then the victim reasonably relied on and was harmed by the deceit.
Promissory Fraud occurs when the defrauded makes a promise that is important to the transaction that he or she never intends to, nor never performs, in order to induce the victim to rely victim rely on the promise. Then the victim must reasonably rely on and be harmed by the false promise. “An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 973-974; Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30.)
Concealment Fraud occurs when there is a fiduciary or other relationship between the parties where there is a duty of full disclosure. The concealing person, with an intention to deceive, does not disclose important facts that the concealing person knows but the victim does not and could not know. Further, the victim reasonably relied on and was harmed by the concealment.
Constructive Fraud or Negligent Misrepresentation occurs when the perpetrator misrepresents to the victim that an important false fact is true. However, the defrauder may have honestly believed that the false representation is true. Yet, the defrauder had no reasonable grounds for believing the representation was true when he or she made it; and he or she intends that victim rely on the representation. The victim must reasonably rely on and be harmed by the false representation.
In proving intentional fraud in California it requires all of the following elements be proved:
“An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 973-974; Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30.)
Negligent misrepresentation often times referred to as constructive fraud requires that all of the following elements be proved:
California Fraud and Misrepresentation Laws Video
Our misrepresentation and fraud attorney in Los Angeles has experience in complex fraud and misrepresentation cases. If you are an individual victimized by a corporation's commercial deception we welcome you to call to us at (310) 943-1171. Our proven litigators and investigators at KAASS Law will help you with your corporate fraud case.
California Non-Disclosure Agreements
In the modern, competitive workplace, maintaining an edge over your competitors’ ideas and innovations has never been more important to the success and longevity of your enterprise. For this reason alone, non-disclosure agreements have become ubiquitous and commonplace across many industries. The fear of secrets, designs, and upcoming ideas or trends leaking out is so prevalent that many companies struggle to contain their own in-house secrets and methods from their competitors without subjecting their own workers to intense scrutiny. However, this is where some of the advantages that come with non-disclosure agreements shine through.
Think of it this way: when a business hires a new employee, the very last thing they want out of their new member is for another company to swoop in with a more lucrative offer to steal the employee...especially if the new employee has had some time to learn about the company’s trade secrets and confidential information. Having a key employee or asset leave your company and work for a competitor can be disastrous because of the secret information the worker may have had access to while they worked for you. If they manage to share those secrets with a competitor, then you may very well risk losing your competitive edge in your industry.
A promissory note is a legally binding agreement in which the issuer promises in writing to pay a set amount of money to the payee at a determined point in the future.
In effect, a promissory note is a fancy way of promising to pay someone back. It’s a type of document that is found commonly in many aspects of financial transactions. Sometimes, promissory notes are also called loan agreements or IOUs.
If you are loaning or borrowing money, a promissory note is extremely useful to establish because it clearly outlines the terms of the arrangement, including payment details, interest, late fees, collateral, and timeframes and deadlines.
Another reason you would want to use a promissory note is that it is a legally enforceable document as it creates a legal obligation to repay the loan within the specified time. It can be used for mortgages, student loans, car loans, business and personal loans. In short, you’ll want to use a promissory note if:
Okay, so you received a cease and desist letter, huh? Well, first thing’s first. Don’t panic! A cease and desist letter does not automatically mean that you’re being sued, or that a lawsuit is pending. It is merely a clear warning that you have been partaking in illegal actions and it further informs you that if you do not stop that behavior, further consequences may follow. Typically, if you receive a cease and desist letter, it means that you have infringed upon the rights and properties of someone else. Some ways that you may have violated the intellectual property of others would be to:
On the other hand, if you feel someone else is doing these things against you, the first step you should take to begin addressing the issue is to send a cease and desist letter. The letter puts the person or company that is violating your rights on notice that they have engaged in illegal and unsanctioned use of property. It advises them to stop doing so immediately, otherwise further action will take place. Essentially, a cease and desist letter is a formal letter warning someone to stop their illegal activity.
Service agreements are legal documents between a service provider and a client, in which the service provider agrees to perform certain services for a client. These services can range from small, individual services like babysitting or dog walking, to much larger scale, more professional services such as accounting or consulting. Regardless of the scale or difficulty of the service that is to be provided, the service agreement acts as a clear outline for the expectations and agreements between provider and client. Independent contractors, freelancers, and consultants, and, they typically involve one party agreeing to pay the other party a set amount of money for a specific service.
While it can be extremely tempting to simply operate by word of mouth or by the honor system, it’s inadvisable to do so. In fact, it’s always a great idea to establish your understanding with the other party in writing. While this is more formal, it also ensures that both parties are very explicit and clear about the expectation from the other and, most importantly, it establishes a clear paper trail indicating the assent of both party to those terms. So while the temptation to simply operate on a handshake or verbal agreement can be very great, especially when working with a small business or a family-owned company, it’s always best to take the time to draft up an agreement in writing. This simply solidifies the responsibilities of both sides and ensures that the service will perform at a fair price.
Who is liable if a director, officer, agent, or employee of an unincorporated association harms me during their scope of duty or course of employment? Under California Corporate Code § 18250, "Except as otherwise provided by law, an unincorporated association is liable for its act or omission and for the act or omission of its director, officer, agent, or employee, acting within the scope of the office, agency, or employment, to the same extent as if the association were a natural person." This essentially means that the unincorporated association is responsible for whatever its personnel (director, officer, agent, or employee) does, if it is within the scope of the duties that the personnel is in with the association or during the course of employment. For example, usually unincorporated associations are clubs or teams, such as a recreational soccer team. If a director of a soccer club, registered with the California Secretary of State as a unincorporated association, is involved in a automobile accident while driving a bus full of weekend worrier dad's and mom's to a soccer match, than the association is liable. Thus, if the director is liable for the accident within the scope of duty to the association, than under California Corporate Code § 18250, essentially a codified version of the Doctrine of the association is likely liable for the director's acts. However, the situation is different if the personnel is not within the scope of duty. For example, committing a unrelated and unforeseeable crime while beyond the scope of duty.
A business’s intellectual property has the potential to be its most important asset, granting it a huge competitive edge over competitors across industries. This is because intellectual property is uniquely created by creativity and innovation and it ought to be protected as such.
Intellectual property rights can be broadly grouped into four categories which are trademarks, copyrights, patents, and trade secrets. As an initial gesture of protection, a business should protect its intellectual property rights by registering a trademark or filing for a patent application. These are examples of the first, but by no means last, steps involved in protecting a business’s valuable and intangible assets.
Once registered, a business should remain aware and continue to monitor its intellectual property in order to identify and put a stop to infringement and unfair use. In fact, taking the time to review both proactive and protective measures is essential to securing your intellectual property; it’s best to think of this time spent as a crucial investment to ensure your company’s competitive standing and financial success. A common misconception is that once intellectual property rights and protections are granted, no one will dare to infringe upon your work. The reality couldn’t be any more different. Nobody is going to look for copyright violations or trademark infringement on your behalf: it’s always up to you to actively protect your work. Trademarks, copyrights, and patents merely make it so that in the event of a lawsuit, you will have a far more compelling case on your side since the government acknowledged your intellectual property.
A design patent acts as a form of legal protection given to an ornamental design of a functional item. In practice, what this means is that a design patent prevents others from using, selling, or copying an object with a design that is substantially similar to the design you claimed in the patent. As a result, you have exclusive rights over ownership and distribution of the design. This is a tremendous right to have, particularly since you put in a lot of hard work and effort into creating the design. Some examples of patentable designs include jewelry, furniture, containers, and computer icons.
It goes without saying that there exist different categories, or types, of patents. In the United States, there are three which occur most frequently and which offer the most utility and practicality. The first type is a utility patent, which covers new inventions and creations. The second is a plant patent, which enables an applicant to patent new strains of plants, and finally, the last type of patent is for design. This is the one you will want to apply for if what you created is a style, form factor, or design that has a practical utility to it. Fortunately, due to the vague wording regarding US patent law, there are lots of design creations that can be covered.
A stock purchase agreement, or an SPA for short, is an agreement that a company or its shareholders and buyers sign whenever shares of a company or corporation get bought or sold. Stock Purchase Agreements are used most often by smaller corporations when selling their stock publicly to create a certain amount of trust and security between buyer and seller. Both the company itself or its respective shareholders can sell stock to potential buyers. That’s where Stock Purchase Agreements come in very handy as their purpose is to protect you, regardless of whether you’re the buyer or the seller.
It’s important to know that a stock purchase agreement is not the same things as an asset purchase agreement, or an APG. The main difference is that stock purchase agreements only sell shares of a company in order to raise money or to transfer ownership of shares while asset purchase agreements aim to finalize company asset sales. Namely, the stock purchase agreement will outline several key points:
In the previous article, we went over what a limited liability company, or LLC, is and why you may want one. It offers various lucrative advantages to its member-owners and it comes with relatively few strings attached. Such an idyllic scenario is very rare to stumble upon in the corporate realm, which is why many businesses aim to achieve LLC status. However, to establish an LLC there are some key requirements you must complete in order for the state of California to grant recognition of your company as an LLC. Firstly, you’ll need to select a business name, then you’ll have to file the necessary documentation to the state of California, and you will have to come to an agreement with the other members of the LLC as to how everything will be run. Let’s start with that first part.
To start, you’ll want to decide upon a name for your LLC. But the trick is that you’re not the one that’s going to do the final deciding. That’s reserved for the state to decide and grant. As a general rule, you’ll want to ensure that the name you’ve settled on is:
On that note, non-disclosure agreements can help business and prevent this whole situation from ever arising by simply preventing your workers from disclosing or even talking about company secrets and confidential information. However, generic non-disclosure agreements are of little use to most businesses, because each company has its own niche and thus, its own secret information. As such, the best non-disclosure agreements are the ones which are specifically tailored to a company’s needs by an attentive business lawyer. That way, you can be sure that the non-disclosure agreement touches upon all of the relevant points for your company.
As far as non-disclosure agreements go, it’s always very important to be particular with what you outline in the contract. Tailoring the agreement to your needs is key to an enforceable and successful agreement that can hold up well in court. So, before making your employee sign your non-disclosure agreement, you’ll want to take a closer look at the contents of the agreement first. Make sure that your agreement mentions:
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At KAASS LAW, our business law lawyers believe in our clients’ abilities to innovate within their industries. We stand by our clients by helping them draft up specific, tailored non-disclosure agreements to maximize the benefits that it can offer. Ensuring our clients’ commercial success is key for us and we demonstrate this by being with you every step of the way. Even in the event that information gets illegally leaked, we are here to make sure our clients get their due compensation in court. We invite you to give us a toll free call at (310) 943-1171 to speak to our California business attorneys today to see how we can help protect the most valuable assets of your business.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
Crucially, a promissory note states all of the relevant terms of the loan. Some of the important information to include in a promissory note would be:
It’s worth noting that which information and details you need to include in your promissory note are going to vary depending on your specific transaction.
For instance, a simple promissory note may be for a lump sum repayment on a certain date. Let’s say you lent your friend some money and they agree to repay you by the beginning of next month. In that agreement, the full amount is due on that date, and there is no payment schedule to worry about. As for interest, there may or may not be interest involved in the transaction, depending on what agreement you both came to.
A demand promissory note, on the other hand, requires repayment of the loan when the lender asks for the money back, however, typically a reasonable amount of notice is needed.
Even with a promissory note, there is no guarantee that the person or entity will actually pay you back. However, with a promissory note, you do have several options and courses of actions that you can take to get your money back.
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At KAASS LAW, we understand accountability and mutual respect with business partners. It can be hard to mix friends and business but it’s always a good idea to keep emotions out of business transactions.
If you or a loved one need help writing a promissory note, or following up to get your payment from the promissory note, our Glendale business lawyers are here to help. We back all of our clients and we invite you to give us a toll free call at (310) 943-1171 to speak to our experienced business lawyers today.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
The primary difference between a cease and desist letter and a cease and desist order is legality and authority. Letters have virtually no legal standing or backing. Order, however, most certainly do. This is because a cease and desist order is granted by a court, not an individual. It functions much like a temporary injunction. The party that gets the order must stop whatever it is that they are doing until a trial is held, at which point, a permanent injunction may get ordered. Libel and defamation are two of the most common reason why you would want to request a cease and desist order from a court of law. Libel is when you are attacked in print. Defamation is when you and your reputation are attacked verbally.
There are many situations that may lead someone to issue a cease and desist, including:
Lastly, you should be aware that a cease and desist can be used to stop contributory infringement. This is when a person knowingly contributes to infringement, but does not actively participate in it. It’s also referred to as contributory liability or secondary liability.
As previously mentioned, the three major ways of protecting your intellectual property are to register trademarks, copyrights, and patents. Trademarks and copyrights usually come into effect the moment you create a work, or when you begin to use a specific phrase or brand in association with your professional work. It is entirely optional to file official paperwork to get them recognized by the government, however, it is worth doing so because they get far more protection when they are registered. Patents, on the other hand, must be registered for protection and the process for their registration is much more convoluted. It calls for protection for inventions, physical creations, and their processes.
You’ll want to send a cease and desist notice if you want to formally warn someone to stop doing something. This includes utilizing your property, harassing you, or illegally using your content. It also serves the important role of being a step to begin further legal processes, should the need arise. Another compelling reason to send a cease and desist is that it’s a lot quicker than formal legal proceedings; oftentimes, it can stop the problematic actions and behaviors without needing to go through the long and costly process of trial.
To start, make sure you are clear in what it is you want to stop and include as many details of the violation as possible when sending a cease and desist letter. You’ll want to include:
If the cease and desist is regarding copyright, trademark, or patent infringement, include details about:
Technically, a cease and desist letter has no legal backing or authority behind it; for all intensive purposes, it is merely a letter requesting that someone stop doing something. However, it does serve an important function in the legal process. This is because it establishes that you have made the offender aware of their violation and have tried to get them to stop, which is crucial because they no longer can claim to be unaware of the violation. Effectively, a cease and desist letter places an informal injunction on the actions of whoever is in violation of your rights, to which they can then choose to:
In the event that the letter is legitimate but gets challenged, the next step is a formal hearing to review the validity of the claims and the demands in the letter. A judge will say whether the defendant needs to stop their actions and behavior. After that, failing to comply is punishable by law.
The catch with all of this is that sending out a cease and desist letter can backfire on the sender in some situations. For instance, if there are threats in the letter, then that can be seen as extortion, blackmail, and other crimes. Additionally, if the violations and accusations turn out to be untrue, then the party who received the letter can counter-sue for judgement and damages. They can do so by declaring that there is no violation and treat the cease and desist letter as its own defamation attempt. So, basically, just be very careful with what you are saying in your letter.
It’s worth mentioning that you can file a civil suit without ever having to write up and send a cease and desist letter. In other words, a cease and desist letter is not a prerequisite to suing someone. However, there are some key advantages to sending the letter as it can begin negotiations to settle the issue without a drawn out court battle. Also, most importantly, it puts the violator on notice. This makes it hard very for them to claim ignorance should the situation escalate to a lawsuit. It’s more difficult to sue someone for something if they were never made aware that what they were doing was illegal. By sending the letter and requiring signature upon delivery, you can at the very least demonstrate that you made attempts to reach out and inform the violator that they are infringing upon your rights.
When you get a cease and desist letter, you do still have several options, including:
Regardless of what you end up doing, here are some essential pieces of advice if you have received a cease and desist letter:
You don't necessarily need a lawyer to write a cease and desist letter for you. You can write it yourself, since these letters aren’t legal orders. However, don’t ever send a threatening letter as that can harm your case and seek legal counsel if you have any doubts.
If you received a cease and desist order you do need an intellectual property lawyer because a cease and desist order is the first step in a lawsuit. Thus, a court of law must grant an order and there is no one better equipped to handle that process than a lawyer.
You will need to hire a lawyer when dealing with cease and desist orders because lawsuits are incredibly complex and you probably don’t know all of the ins and outs that are associated with intellectual property and civil law. This is where an attorney is invaluable because they can pen an effective cease and desist letter as well as advising you about your claim. In short, having a good lawyer on your side greatly increases your odds of succeeding.
At KAASS LAW, we understand the importance of smart legal advice and action. Often, one can take steps preemptively to ensure their rights are not being infringed or violated. However, in the event that it does happen, we are always there to guide our clients. We know how to write an effective letter that will achieve its purpose, and we also know how to help our clients who have been presented with a cease and desist letter as well. If you need help getting someone to stop using your property, to stop harassing you, or to respond effectively to a letter, we invite you to give us a toll free call at (310) 943-1171 to speak to our experienced civil and intellectual property lawyers today.
Simply having an agreement in writing is meaningless if the agreement does not touch on the most important aspects of the business transaction in question. Therefore, it is crucial to hammer out and clearly state the important details of the service, such as:
In general, the more specific and detailed your agreement is, the better for both parties. Specificity brings with it more clarity regarding the transaction and the expectations involved on both sides. Be sure to include details surrounding the hows, whats, and when of the service and payment. Stating all of these details in the agreement is essential in case anything goes wrong as that will give you more leverage and assurance.
At KAASS LAW, we understand the importance of a clear and simple agreement. We work closely with many clients who need service agreements due to the nature of their freelance work. If you are considering drafting a service agreement for your business or to have a service provider be accountable for their work, we invite you to give us a toll free call at (310) 943-1171 to speak to our experienced contract lawyers today. We always stand by our clients so even in the unlikely event that your service provider or client breaches your agreement, we will work closely with you to explore your legal options. Our goal is to ensure our clients get paid their fair share of compensation for their work and nothing less. Get in touch with us to see what solutions we can provide you.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office.
KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda.
While registering your work isn’t a guarantee of protection, it is still the best thing to do first and foremost. To review, the protections and benefits granted by each type of registration are:
You will want to ensure you maintain your protective measures, too. This means taking the time to do some basic upkeep, such as documenting your first use to make it easier to defend in court, should the need arise, and renewing your trademarks on time, using them continuously and filing any paperwork needed to document its use. Bear in mind also that if you choose to begin marketing or otherwise disclose your invention publicly before filing for patent protection, remember that you have to file your patent application within one year of disclosure and you must be the first to file, or you will lose the right to protection. For this reason, you may wish to consider starting with a provisional patent application to protect your rights.
If you intend on marketing your invention, product, or design in other countries, then you may want to look into registering your intellectual property in those countries, as well. This will ensure maximum protection and profit for your company. Fortunately, the U.S. has several treaties and conventions which make it easier for U.S. citizens and businesses to register patents and trademarks in multiple countries with one application. You’ll still have to follow each country’s law, though. For instance:
Many foreign countries also have agreements with the United States to recognize your copyright registration automatically. Check to see if the countries you’re interested in have this type of agreement, and if they do not, look into what the requirements are for you to register.
Oftentimes, the best way of protecting your intellectual property is simply by keeping quiet about it. This is especially the case if your work isn’t patentable or if you plan to protect it by using the trade secrets law. In those cases, you definitely want to limit the amount of people you tell about it. Whenever possible, get your partners and investors to sign off on non-disclosure agreements and make sure to specify in those agreements what exactly must be kept confidential and for how long. As another measure, you might want to still keep quiet about your idea even after filing a patent application since in most cases protection only begins once the United States Patents and Trademark Office actually grants your patent.
All of the laws and registrations we discussed offer you legal avenues for remedies after your work has been infringed or used illegally, but they do not actually prevent your work from being stolen in the first place. This is because some people may not be aware of the law and others just may not care. Sometimes, even a thorough patent or trademark search misses something. As such, it is your job to keep an eye on your industry trends and developments. In particular, you will want to keep a close eye on your industry developments:
When Push Comes to Shove...Pushback! At the worst case scenario, you would locate instances of actual infringement and it is at this point that you must stand up for yourself by taking action. What you ought to do in each case will vary, contingent upon a few circumstances, like:
In these types of strenuous situations, experienced intellectual property lawyers can make all the difference. At KAASS LAW, we have helped many clients manage and defend their patents, trademarks, and copyrights. We believe in the spirit of innovation and originality and we go out of our way to protect our clients’ work and property. We can help you to evaluate and determine which protections are best for your case as well as deciding upon which avenues to take to uphold and defend your rights. We invite you to give us a toll free call at (310) 943-1171 to speak to our experienced Los Angeles intellectual property attorney today.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
Another way that U.S. design patents stand out from others, is that they allow for the applicant’s work to remain hidden or secret. This can be particularly vital if the design is for a new, revolutionary product or software. With more and more emphasis being placed on smart technology, innovation in the field is going to rely more and more on intelligently designed products to captive consumer interest and to garner positive feedback to an ever-increasing amount of press outlets. For the competitive edge alone, having a guarantee that a design patent application will remain secret and not be published until after it is granted can be massive for both large companies and small, independent businesses and startups.
A great example of design patents playing a huge role in modern day product placement and marketing is how it can be a decisive factor in lawsuits. For example, in Apple v. Samsung, the pre-emptive design patents that Apple had applied for turned out to be the huge ace card in the dilemma, winning Apple the lawsuit and millions of dollars from Samsung. A great of relating utility and design patents is by considering Apple’s iPhone: the way it works is the result of many utility patents and the way it looks and displays information is the result of many design patents. As technology changes and adapts, the role of product design will continue to blur function and ergonomics, making novel designs more and more valuable.
Prior to thinking about how to file your design patent application, you’ll want to ensure that your design is, indeed, novel. For this, you’ll have to search through prior art and this step is one of the most grueling as the archive is very expansive and it can feel overwhelming to search through such a huge amount of patents. You’ll want to look closely for the combination of design elements that you wish to protect with your patent to make sure it hasn’t already been claimed. Even down to the font that you use can be subject to a design patent.
This is where you will need to put together all of your findings to present to the USPTO in your application. Here, you’ll want to mention what sets your design apart from others, highlighting its novel features. Further, you should include drawings and diagrams demonstrating this. Putting everything together, you’ll have everything you need to file your design patent application...but why go through all of that headache alone? At KAASS LAW, we are constantly inspired by the beautiful and innovative designs and creations of artists and visionaries. We have years of experience in filing for design patents. We work directly with you to document, record, gather, and showcase all of the novel features of your product design so that the application process is quick and successful. We invite you to give us a call at (310) 943-1171 to speak to our Trademark and Patent lawyers today. KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office. KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda.
Finally, prior to reaching a lasting agreement, a letter of intent, or LOI, must be produced by the seller, explaining the proposed sale at length. It’s up to the buyer to have the presence of mind to make sure that the purchase agreement contains the same terms as the LOI does to avoid any future discrepancies which may arise.
Stock purchase agreements get broken up into several sections that aim to define what certain terminologies mean and to describe how the transaction process works. The contents of a stock purchase agreement will typically resemble the following:
The first part of a stock purchase agreement is called the preamble. In it, the agreement is formalized and the respective parties are identified as well as the date of the contract and purchase. Typically, parties are referred to as either “seller” or “purchaser”. After these key points of information get stated in the preamble, the next section begins and it is normally called the Recital. This part serves as the main meat and bones of the agreement outline.
The definitions section is the first article on most stock purchase agreements as it defines certain key terminologies and phrases which will get used all throughout the agreement. All of the relevant terminology that gets defined will be either boldfaced or capitalized and they will usually be listed in alphabetical order. The attention to detail with the terminology definitions is very crucial, because while it can be very tempting to skip through this section, understanding exactly what these terms mean in the context of the purchase agreement is key since it can drastically impact the meaning of the agreement. Therefore, you really should take the time to read through the whole section so as to familiarize yourself with the wording and its meanings within the agreement. In particular, words such as “liabilities”, “material adverse effect”, and “seller’s knowledge” can all have huge effects on the contract just depending on how they are defined in a particular context.
In this part of the agreement, the exact terms of the sale will be outlined at length. It will contain a part that refers to the seller transferring ownership or selling to the purchaser or the buyer acquiring from the seller some specified amount of shares. Further, the purchase price and any adjustments made to it will be clearly shown here, including:
In this segment, the seller’s warranties are stated expressly and get defined. Untruthful or incorrect representations of warranties can result in the liability of whichever side made the statements. This may include statements concerning past and future facts related to the business, such as:
For the most part, this part of the agreement is identical in function to the previous section, except that it focuses on the warranties and representations from the buyer’s side. Oftentimes, these two sections mirror each other quite closely. Since the buyer usually pays cash for the stock, their warranties may be more limited than the seller’s.
Most deals have a set time frame from when the parties agree to sign off and the actual closing. Because of this limitation, the covenants segment of the agreement outlines things that each party should avoid doing during that time frame. Typically, this translates into a long list of actions that need to happen during that time period in addition to some actions which are outright prohibited until the closing of the arrangement.
This part of the agreement is comprised of terms and conditions that either need to be met or waived prior to the time that the arrangement closes. These conditions often include both sides carrying out their pre-closing covenants and ensuring that all terms are fulfilled.
Article seven aims to clarify indemnification rights by stating the terms whereby the other party gets compensated just in case one party breaches their contract. It will also typically include a section discussing the losses that may arise from specific cases. You can expect this section to talk about:
In the eighth article, you’ll encounter details about each party’s right to terminate the contract. This will typically cover some of the follow reasons for termination:
The final section of an agreement will always end with a section that goes over any miscellaneous provisions. These provisions touch base on several subjects, like:
Stock Purchase Agreements matter because they articulate the terms of a sale and they put it into writing. They can prevent arguments or misunderstandings that would otherwise end up in court. Furthermore, the agreement also gives the buyer more faith in the transaction since the seller has the chance to describe why they are selling. Lastly, it also details other important details, such as warranties, dispute resolution means, and covering costs when unexpected problems cause loss.
Admittedly, there are few situations where having a Stock Purchase Agreement wouldn’t be useful, such as:
Even then, however, an SPA can only help, never hinder you.
There are a few instance as to why a Stock Purchase Agreement is crucial to use, which may include the following situations:
Some common mistakes that people make is thinking they don’t need to make a Stock Purchase Agreement because the person they’re selling to is someone known. That decision affects your whole company, so there’s no room to leave things to chance or faith. Similarly, simply filling out a pre-made stock purchase agreement template from the internet is probably not a great idea either as it likely won’t contain all of the relevant clauses needed for your business. It’s always best to have legal professionals craft your document after meeting with you to assess the individual needs and interests of your business. That’s where we can help you.
We have extensive experience with drafting and filing Stock Purchase Agreements for our clients. We invite you to give us a call at (310) 943-1171 to speak to a California corporate attorney today. Our lawyers in Glendale, Los Angeles County, California, will ensure that your transactions are always in your best interest.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office. KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda. Get Directions on Google Maps
Lastly, it’s also definitely worth making sure that your chosen LLC name doesn’t infringe upon any potential copyright issues. If your name is too similar to another LLC’s name, then you may be held in contempt of copyright violation.
This second step is arguably the most important one on the list. You will have to create and file Articles of Organization. These are important documents which outline and affirm the initial statements required of you to form an LLC. The Articles of Organization will be filed to the state secretary’s office and, once approved, they establish the LLC as a registered business entity within the state.
The information that is required typically includes the name of the LLC, its registered address, the names of the owners and their roles, as well as a few more key points of information about the LLC. These documents are used by the state government to keep track of which LLCs are claimed and who their registered agents are. Registered agents must be designated in order for your LLC to get formed because that person will have legal authority to respond to any legal documents that your LLC may receive.
Lastly, you’ll want to draft up an Operating Agreement. This is an extremely important part of the LLC creation process because it plainly establishes the business’ financial and operational decisions, the processes for arriving at those decisions, the protocols and chain of command, as well as many other rules, regulations, or provisions. The main reason you’d want to spend quite a bit of time working on the specifics of an Operating Agreement is that it outlines and governs the internal operations of your business in such a way that is most suitable to the specific needs of the business owners. Therefore, by investing time in writing it out now, you will save a lot of frustration, confusion, and time later down the line.
Do note that once signed by the member-owners of the LLC, the Operating Agreement acts as an official contract which binds them to its terms and conditions. The legal significance of this document is yet another reason to spend time on it–should any legal disputes or issues arise between the owners of the LLC, the operating agreement is one of the first things the courts will point to. As such, you’ll generally want your operating agreement to mention:
Also, bear in mind that the Operating Agreement must be completely transparent and agreed upon by all members of the LLC. You will all have to sign the document affirming your assent to its terms and rules.
There are many points to make sure you get down in just right way while filing the documents for forming your LLC. In particular, the Articles of Organization and the Operating Agreement are so crucial to get right that the future of your business depends on it. That’s a very tall order to ask of anyone to complete on their own. That’s where we come in; you do not have to go through that process alone. We can help you with the filing of these documents so that you can focus more on your business and worry less about the details. Give our office a call today at (310) 943-1171 to speak to our experienced California business lawyers. We will make the process as smooth as can be.
KAASS LAW is authorized to practice law in California. Our lawyers in Glendale, Los Angeles County, California specialize in offering services for multiple practice areas. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office. KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda. Get Directions on Google Maps