Legal entities can file lawsuits and can also file lawsuits against them. Some businesses are being sued because they are unable to pay their bills or don't fulfill their duties. However, others may commit minor offenses or even crimes. Meanwhile, corporations are separate legal entities from their owners and agents. However, in some circumstances, the people with liabilities for the wrongdoing of the business may be responsible by the parties in question.
The section 325 paragraph (a), (b) of the Corporate Law of Delaware defines actions against corporations directors, officers or stockholders. Corporation’s officers, directors or shareholders are legally obliged to pay the corporations debts or a portion of the latter. If this is the case, any creditor to whom they owe money may bring legal action against one or more of these individuals. The complaint shall include the details of the claim against the corporation and the ground on which the plaintiff intends to hold the defendants personally liable. However, the creditor must first acquire a judgment against the corporation for the debt and attempt to execute it in vain before taking legal action against an officer, director, or stockholder. This means that the creditor must try to collect the debt from the corporation before attempting to collect it from any individual officer, director or stockholder.
The section provides a possibility for creditors to sue the officers, directors or stockholders for the debts of the corporation. This is in case they have a liability by the provisions set forth in the General Corporation Law of Delaware for paying debts of the corporation. In such cases, the creditor must show that the individuals were responsible for the corporations failure to pay the debt. That may be either because they engaged in wrongful conduct or because they failed to fulfill their legal obligations.
The requirement is that the plaintiff shall first address the complaint to the corporation itself. Along with the justifications for wanting to hold the people accountable on a personal level, it should be in discussion. To begin with, the clause only applies to corporations formed under Delaware law. It does not apply on the relations, liabilities and remedies of stockholders incorporated under the legislation of other states. Overall, the debts and legal obligations should arise under the Delaware general corporation law. Second, it's important to keep in mind that stockholders, executives, and directors could all face legal consequences. The suit would be for the debts of the corporation in case a judgment against a failed execution of the corporation. Executed unsuccessfully - the corporation is unable to pay its debts, and its total debts exceed its total assets.
Give our office a call at 310.943.1171 if you have any questions regarding a similar matter. Visit our other website for more information on our other practices.
In the dynamic and often unpredictable economic landscape of California, businesses and individuals can sometimes find themselves facing overwhelming debt. While the term "bankruptcy" often conjures images of complete financial collapse, the reality is that the US Bankruptcy Code offers powerful tools for reorganization and debt management, providing a pathway toward a fresh start or a sustainable future. At KAASS LAW, we understand the complexities and anxieties in relation to financial distress, and we would like to dedicate in guiding individuals and businesses through the processes of bankruptcy reorganizations and arrangements in California.
Chapter 11 of the US Bankruptcy Code is usually falls under as a "reorganization" bankruptcy. Bankruptcy reorganization occurs when a corporation is unable to pay its outstanding debts or a company's passives exceed actives. As such, bankruptcy proceedings are likely to be initiate. These proceedings are all under the federal bankruptcy court. In the framework of bankruptcy reorganization, the insolvent corporation has a possible chance to draft and submit a reorganization plan to the court. The latter is aiming towards the financial recovery of a corporation. If the given reorganization plan is approved by the court, the corporation can continue its business activity since the payment of debts impeding corporate operations is adjourned.
The first step in starting a business is to gain a business formation. In general, there are four types of business formation in Californian. They include:
A corporation is an organization through which a business is conducted. It is a legal entity incorporated in certain jurisdictions by its founders. Like a physical person, a corporation has its rights and obligations. However, the latter shall not be attributed to the owner(s) of a corporation, since they are distinct from each other.
Corporations as a rule have several of distinctive characteristics that altogether separate them from the other types of legal entities and help to obtain certain rights and obligations. Many specialists in the field of corporate/business law distinguish characteristics of corporations that overlap one with the other. Many lawyers believe that the central attributes of the corporations are:
According to the Corporation Code of California, the types of corporate structure within Californian jurisdiction are divided into two broad categories:
The persons who have formed partnerships are known as partners, while shareholders are persons who own one of the shares of a corporation. Therefore, the differences arising among the partners/shareholders within partnership/corporation are referred to as partnership and shareholder disputes.
When the business involves two or more people, sooner or later the disagreements between them become inevitable. Partners/shareholders usually succeed in ironing out the differences based on mutual understanding given the common business interest. Unlike it, sometimes disagreements have deep roots full of possible grave consequences for the business. Such disagreements may refer to many different circumstances in connection with the collision of business interests, opposite ideas, breaches, etc.
The practice shows that more frequently the factors described below do cause or at least contribute to such disputes:
The Terms and Conditions of Use and Why You Really Should Have One
You’ve seen it. Pretty much every website or online service you use makes you agree to it. Yet, even though it’s everywhere on the internet, many misconceptions still exist. We’re talking, of course, about the Terms and Conditions of Use that you agree to every time you do pretty much anything online. Seeing as how Terms and Conditions exist on every platform, you stand to benefit greatly by understanding why it is so important that every site has their own version of it.
Contrary to popular belief, while the Terms and Conditions of Use agreement is greatly recommended to have for your website or online platform, you are not required by law to have this agreement. From a legal standpoint, only policies regarding user privacy are required to be displayed publicly, and that’s only if you gather personal data from users of your service or platform. Data can refer to such things as email addresses, names, physical addresses, gender, age, telephone numbers and other pieces of personal information. Terms and Conditions of Use can also be called Terms and Conditions or Terms of Service or even just Terms of Use.
Independent Contractor Agreements are an effective way to clearly detail the scope of a project and services rendered, payment schedules and deadline expectations of both parties in a freelance arrangement. These types of agreements are legally binding and they serve the important purpose of specifying the details of a service so that both sides are shown to be aware of the agreement. This allows for both sides to be held accountable for their actions and their respective responsibilities. Independent Contractor Agreements are also sometimes referred to as Freelancer Contractor Agreements, Contract Labor Forms, or Independent Contractor Contracts, but they all amount to the same thing from a legal perspective.
You’ll want to utilize an Independent Contractor Agreement if:
By far, the most significant and noteworthy distinguishing factor about these types of contracts and agreements is that they are NOT for employees. It is instead specifically for drafting up an agreement between you–or your company–and an independent or freelance worker. An example of this would be paying a handyman to fix some stuff in the office, or hiring a freelance IT person to optimize your website or office space, or even taking on a consultant to get another expert opinion or counsel on a business move that you are considering.
Intellectual property (IP) has become a bit of a buzzword in the legal world. The thing is that even though most people have some idea about the concept of intellectual property, they may not fully understand what it exactly it includes. In its simplest form, intellectual property is basically anything that is not tangible property. In other words, while tangible property would be things like your car, house, or jewelry, intellectual property instead covers art, photos, videos, poetry, inventions, music, films, designs, software, logos, graphics, designs, brands, and secrets.
Naturally, establishing ownership over those types of intangible assets is just as important as having ownership over tangible ones, if not even more valuable. As an example, take into consideration the value of the Apple logo and branding, the copyrights and respective royalties of Game of Thrones, and the many patents that go into making a new product for consumer use. All of these instances involve invaluable intellectual property that must be protected to ensure profitability and ownership. In fact, intellectual property just gets more and more crucial to our economy, especially with the boom of mobile tech and software.
The reason copyright registration exists is to establish a formal, verifiable record of the date of creation and the contents of a work, so that, in case of a lawsuit, infringement, or plagiarism, the copyright owner can point to an official government source. The idea is that having the government officially document and recognize your work will add legal credibility should the issue ever surface in court. However, helping to resolve legal disputes is just one reason why someone may want to copyright their work. There are many motivations one may have for it, but first, it’s a good idea to understand what exactly a copyright entails.
Copyrights protect intellectual works, both published and unpublished, tangible and intangible. Copyrights can be used to protect everything from literary works, to songs, to computer programs, to photographs and films. Because of how broadly copyrights can apply, it would be a nightmare to have to manually copyright every new creation or work. Fortunately, that no longer is the case. In most countries across the world, copyright gets granted automatically at the moment of ‘fixation’, or the moment in which the work is fixed in some tangible medium. This is largely thanks to the international Berne convention, which provides rights at a global level without a need for national registration. Therefore, it is also important to avoid confusing copyright registration with the mere granting of copyright. The granting of copyright happens automatically once a work undergoes ‘fixation’, while copyright registration is a formal process that must be completed by filing a request through your government. The U.S. still does provide certain legal advantages for registering works of U.S. origin through the formal copyright registration process. For instance, having a registered copyright is still a prerequisite to filing an infringement lawsuit. Furthermore, other important remedies rely on prompt registration and verification, such as attorney fees and statutory damages. Therefore, for most people in the U.S. it is still extremely beneficial to have your work undergo the copyright registration. Also noteworthy to consider is that under U.S. copyright law, the protection that is granted to the owner of the work allows them exclusive rights to make and distribute copies of the work, to perform or display the work publicly, to produce derivative or iterative works such as translations, sequels, or adaptations, and to digitally transmit recordings of the copyrighted material.
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:
When establishing a company, one of the first and most important decisions you will have to make is whether to form the company as a corporation, an LLC, or any of the other common forms of business organization. Each of them offer various advantages and drawbacks to their ownership and, as such, it is up to you to look into which one will most effectively fit the needs of your business. To help with that crucial decision, we have several articles which go over the different pros and cons of each method of business organization.
Should you choose to go with making a corporation, you will then be faced with having to more rigorously document certain proceedings as a result of how California law interacts with corporations. Some view these more specific details as a nuisance that corporations simply must contend with. We, however, believe that many aspects of the extra bookkeeping that you must track and report are actually very strong indicators of the strength of corporations. By viewing these requirements from that perspective, we can greatly simplify and empower the role that the bookkeeping tasks serve.
The reorganization plan must include all the necessary measures deemed necessary to decrease costs and increase the income of the corporation. The measures may refer to:
If a reorganization plan is rejected by the court, the corporation is doomed to liquidation. That said, its assets will be sold to satisfy the claims of the creditors.
Pursuant to Corporation Code of California section 1400 of the trustee or trustees of a corporation appointed in the reorganization proceeding are vested the authority to exercise a reorganization plan or court orders without further consent by the corporation board or shareholders.
The powers of trustees, among other things, may include:
If the reorganization does not succeed, or the trustees have elected to dissolve, the corporation should elect to "wind up" the corporation. As such, the trustees would file a certificate of dissolution with the Secretary of State.
To start, the trustees sign and verify the certificate of dissolution when the corporation is completely up and ready. It shall state the following:
Navigating the complexities of bankruptcy reorganization and arrangements requires experienced legal counsel. At KAASS LAW, we offer:
If you are struggling with a financial hurdle that you cannot jump across, don't deal with this problem alone. As a result, with our services, we can overcome and achieve in helping you with your overwhelming debt. Finally, contact KAASS LAW today for a confidential consultation. We are here to provide the expert legal guidance and support you need to explore your options and take the first step towards a brighter financial future. Additionally, our firm offers expert business guidance through a scheduled consultation service. For instance, we can offer and navigate any opportunity to buy out your business partner.
In most states, it has become a conventional practice when the companies are incorporated without having a temporary existence limitation and only in exceptional cases do the founders/shareholders of the companies decide to have an ending date. If the shareholders decide, at the moment of registration, that the company should have a specified ending date, then the defined date shall be considered as an automated end of the corporation if prescribed in the charter of the company. However, in the prevailing number of cases, the founders of the corporations do not specify an ending date, which means that the corporation can have an ending date only if:
The characteristic of perpetual existence of the corporation gives the shareholders a sense of comfort meaning that the corporation is easily manageable, safer and a stable place to make investments, expect returns without having to worry about the sudden changes. Likewise, this characteristic eliminates any extra expenses the corporation may have taken for the regular updates/addendums in the state registration body. Alternatively, corporations can carry the information as initially prescribed in the charter without spending additional efforts to file any other documents.
A legal personality in the case of companies is decided by the specific types of business organizations, which own separate property and assets (tangible, intangible) and the liability of the latter extends to the assets and investments it committed. The legal persons can acquire and exercise property and non-property rights, carry on responsibilities, act as plaintiffs and/or defendants in courts.
Limited liability is a fundamental doctrine of corporate law. There are many benefits of a limited liability company. The rule of limited liability implies that the investors who make contributions to the equity capital of the company/corporation bear the risks only to the extent of the initial investments and the assets the company possesses. For example, if A and B persons, each owning 50% of the shares in the company, jointly organized, invested 200$ in total to the charter capital of the company, then each of them risks only 100$ and not more than the investment if no other assets are transferred under the property entitlement of the company.
If you need help in forming a corporation in California we invite you to contact our Los Angeles Business lawyer at (310) 943-1171.
In some cases, there are laws aimed at resolving shareholder disputes within the legal procedure. For instance, in the process of voluntary dissolution of a corporation, the minority shareholder’s rights may be violated while distributing corporation assets to the shareholders entitled thereto, so they may fight it by the legal tools vested by the Corporation Code of California. In particular, according to the latter, upon the petition of shareholders who hold shares representing 5 percent the court may take jurisdiction over the voluntary winding-up proceeding if that appears necessary for the protection of any parties. The court, if it assumes jurisdiction, may make such orders as to any matters concerning the winding up of the affairs of the corporation and for the protection of its shareholders. In short, the shareholder dispute described above could be resolved by the interference of a court for the protection of the shareholder rights.
There is a range of methods to resolve such disputes. Among others, they may include:
We believe that the most effective and practical way would be entrusting an attorney to reach a settlement in conditions best for your interests.
If you need legal assistance when you find settling such disputes is beyond your powers, we invite you to contact an attorney at KAASS LAW at (310) 943-1171 and speak to our Glendale business attorney to assist with the process.
Regardless of what you want to call it, a Terms of Use Agreement is a series of rules and conditions to which users must give their consent and understanding in order to utilize a service or product. In short, it is an agreement that establishes the rules that users must agree to if they want to use your website. While you aren’t legally obligated to have a Terms of Use, there are many advantageous reasons why you should include one on your site.
The Terms of Use Agreement serves as a legally binding contract between you and your users. Specifically, the agreement establishes the rules and protocols that users have to follow and abide by if they want to utilize your website or application. On the other hand, a Privacy Policy agreement serves to let your users know about the kinds of data you may collect as they make use of your site, as well as what you plan to do with that collected data. It’s in this agreement that you would write several sections talking about the rules and guidelines that come with using your site, and what the consequences of breaking those rules or abusing them are. Different users can exploit or abuse your site in different ways but some common examples of abusive actions are: spamming other users, posting defamatory content, or using your content in a way that is unintended, etc. However, you can include a clause within your Terms of Use Agreement that outlines that certain actions will not be tolerated, such as harmful language or hate speech, constantly posting spam, and harassing other users. As a consequence for engaging in those forbidden actions, you can ban users who abuse your site.
Since you are the owner of your platform, be that a website, an app, or a brand, you have the ability to call the shots with how your stuff can get used. In particular, your branding designs, logos, videos, articles, and software are yours to decide how to use and share, if at all. Moreover, you can let your users know that you are the owner of that content and that your content is protected by international copyright laws. This is a crucial clause to add in your Terms of Use Agreement and it most often gets referred to as the Intellectual Property Clause. Having this clause can really make or break your platform because it directly informs users as to how they can and can’t use your intellectual property without infringing on your original creations. As such, be sure to include a well-written Intellectual Property Clause in your Terms of Use Agreement, or it just might come back to haunt you later down the line.
Terms of Use can also provides a way to end the abusers. Besides helping you deal with abusive users and owning your content, the Terms of Use can also provide a nifty way to permanently end the accounts of particularly problematic users. Specifically, you’ll want to include a clause in the Terms of Use called the Termination Clause.
It lets users know that abusive accounts which violate the Terms of Use can be subject to termination and may get banned from using the service. This clause is especially good for sites, apps, and services that require their users to register an account before being able to use the service because you can outright terminate, disable, or even ban abusive users on the basis of the illicit activity tied to their accounts. Thus, you always an option for dealing with misbehaving users, even in worst case scenarios.
Another important perk that comes along with having a Terms of Use on your site is that such agreements often include a disclaimer which serves to limit the owner’s (i.e. your) liability, in the event that errors, misinformation, or mistakes are found in the contents of your website. Essentially, the Limited Liability Clause lets users know that there are limitations to how liable or responsible the owner can be for any harm that may come to the user because of incomplete, inaccurate, or untrue information. Thus, the content of your website gets even more protection since the degree of liability you would be accountable for much smaller.
The interesting part of international and online commerce is that our entire economies are becoming ever-increasingly interconnected and linked. Many avenues of business and commerce have bled over into other countries, despite them originating from another country entirely. A great example of this would be Amazon, which serves customers from many parts of the world, but is ultimately based in the United States. This is where the Governing Law clause of your Terms of Use Agreements comes into play. In short, it establishes the jurisdiction which is relevant to the terms outlined in your agreement. Basically, the Governing Law clause states that your agreement is bound by the law of the land in which your company, business, service, or application is headquartered. This clause serves to identify the home country and region that your company is registered in, effectively establishing the kinds of laws and rules that it has to follow. As an example, if your company is headquartered in San Francisco, your Governing Law clause should state that your site is operated by a registered business in the state of California in the United States. That will ensure that your users are aware that your site works in accordance to California and to U.S. federal laws.
Any website, online service, software, or application, should have a dedicated Terms and Conditions of Use section. While it may be the most skipped over section in your site, it is imperative to have users of your service consent to the terms presented in the agreement, as that gives you the opportunity to write in some very helpful clauses. Those clauses will limit your liability, protect your original content, allow for banning and termination of abusive users, and establish your governing law by which you conduct your services. By providing all of this information and requiring your users to consent to the presented terms, you give yourself a lot more wiggle room should any situation ever escalate into a legal issue.
At KAASS LAW, our Los Angeles business lawyers do all that we can do help our clients build sustainable, safe, and profitable businesses. We recognize the hard work and dedication that goes into delivering a final finished product and we stand by our clients to make sure they have as simple and smooth an experience as possible, especially when they initially set up their business. We invite you to give us a toll free call at (310) 943-1171 to speak to our business lawyers and to see how we can help your business grow 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.
Importantly, all of these examples are regarding independent workers and because they are not your employees, the freelancers themselves are responsible for their taxes. However, since they are not your employees, you cannot have as much control over their actions. For instance, you can’t stop them from taking on other clients while they are working with you, nor can you dictate their day-to-day schedules or tell them how to do their job. In other words, they have far more freedom than your employees because they don’t express work for you, rather they work with you on a specific issue or situation.
The first and most obvious reason is that the agreement will help to protect your business and financial interests while you are doing work with a freelancer. The contract will detail exactly what work needs to get done, when it has to be completed by, and how much you are going to pay for that work. Another reason is that protects you from liability issues and helps to shield your personal assets. Also, should you ever go to court, you will have the signed agreement to easily show the judge what your expectations were for the service.
On the other hand, if you are the freelancer, having the agreement can help you get paid properly should you end up in a disagreement with the client over the payment. You also appear far more professional by providing a contract for your clients to review and sign. Lastly, the agreement demonstrates your willingness and commitment to work and get your job done with high quality, which can be very reassuring to the client.
As we alluded to, there are several key advantages to hiring an independent contractor, such as:
Here’s the thing. If the person you have contracted to work for you is entirely self-employed, then you will need to make sure that they complete a W-9 Form and you will need to fill out a 1099-MISC form, both of which can be electronically downloaded from the IRS website. You’ll want the W-9 form to gather your freelancer’s contact information and tax ID number, while the 1099 form is how they will report income their unique tax return. You are required to do this if you pay them more than $600 in a fiscal year. Your deadline is to submit those documents to the IRS and the contract worker by January 31st on the following year from when you hired them.
Bear in mind that the burden of proof is on you since the IRS typically assumes that someone is an employee, unless shown proof otherwise. Therefore, it is wise to keep all of those records and documentation in the event that the IRS asks for further proof that the contracted worker was not an employee of yours. This is for your own benefit as it results in your own protection from any audits or inquires from the IRS.
Freelance workers are becoming increasingly commonplace and the future for most small business is one in which preference will probably be given to simply take on independent contractors and freelancers instead of a full team of employees. More and more small businesses are going along with this model of having only a few core employees and many other freelance workers for their business. This is a lucrative model, especially for smaller businesses, because it is far more cost efficient and flexible. Therefore, it is in your best interest to look and see what kinds of reviews your freelancer worker has prior to signing into an agreement with them; having an idea of what previous companies have said regarding their work ethic is like having references during an interview with an employee–it can definitely help you to make the right decision as to who to hire for the job. Furthermore, by building positive and friendly relations with freelancers, you are setting yourself up for many good working relations for years to come, especially since those workers may also have other freelancer friends that they can refer you to if you ever need some extra work done in a pinch.
At KAASS LAW, our Glendale business lawyers are all about building long-lasting and meaningful relations with our clients and their associates. We believe in the ever-changing and evolving models of the future of business and we are here to make sure our clients have the smoothest experiences going forward with their brands and ideas. Whether you are a business looking to hire some freelancers and independent contractors, or whether you are a freelance worker who is self-employed, we are here to guide you along your financial journey. We have years of experience with connecting the right people for the job, and always stand by our clients. If you are thinking of drafting up an Independent Contractor Agreement, we definitely do not want you to go through that process alone. Contract law is a very complex area of law and we can greatly simplify your business by helping you with your goals. We work with small businesses and freelancers alike to ensure that effective contracts and agreements are written and agreed upon. We invite you to give us a toll free call at (310) 943-1171 to speak to our experienced contract lawyers today and to see just how much we can help your business out. So that way, you can keep doing more of what you love: stress-free.
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.
If you created and own intellectual property, you’ll want to protect and profit from it. There are two primary ways of achieving that. One way is by making use of the intellectual property yourself; for example, you could manufacture a patented product or sell original copyrighted products you have ownership of. Alternatively, you can choose to license the intellectual property to another entity, effectively granting them the right to manufacture your patented product or make use of your copyrighted material in some way. That’s exactly where licenses come into play. They are basically contracts which help you regulate, manage, protect, and profit from your intellectual property and creations.
A licensing agreement permits an intellectual property rights holder (AKA the licensor) to make profit from an invention, creation, or novel work by charging a user (AKA the licensee) for the product’s use, distribution, or commercialization. Licenses also serve to protect proprietary rights in other related fields, like software development and other OS or virtual products. Importantly, you should know that you have the ability to use licenses to give someone permission to utilize your intellectual property in a certain way for a specific period of time for a particular price.
For the most part, all kinds of intellectual property that you will encounter fall nicely into one of the following four categories.
Since intellectual property law is one of the most complex areas of law, requiring tons of cross referencing with both state, federal and international law, it’s in your best interest to ensure you have an intellectual property lawyer in place to safeguard your rights and creations. Outside of that, the US Patent and Trademark Office (USPTO) and the US Copyright Office also offer invaluable information about the intellectual property registration process. A few intellectual property safety measures, such as copyrights, happen automatically in certain scenarios but even those should get formally registered with the government. Several other protective measures, like patents and trademarks, are granted by the USPTO and for those the application process is even more convoluted. As for trade secrets, those often don’t get “registered” formally at all, but they can still be subject to some protective measures in place through a variety of state and federal laws.
Despite all those intricacies, licensing agreements do not always have to be so long and hard to understand. If you think about it, an effective agreement is one that is upfront and transparent because it is more likely to be agreed upon and respected by both parties, and, ultimately, it’s more likely to be upheld and enforced by the courts. As such, there are certain terms, condition, and factors that you’ll always want to address in the majority of licensing agreements surrounding intellectual property.
The first major issue you’ll want to address is the scope of the license. For example, do you want the licensee to have unlimited use of your intellectual property, or do you want the licensee to only use your intellectual property in specific ways for a limited period of time? In this sense, you can think of licensing as assigning limited use rights for property to the leaser. The rights that the agreement provides should be broad enough so the buyer is interested in their stake in the deal, but narrow enough that you do not relinquish permanent, uncontrollable power over your valuable creation or asset. Imagine that you created a great song track that a company wants to use in the intro and outro of their latest ad campaign. You’d want to draft up a licensing agreement that limits the edits that the company can make to your original track, sets a time limit for how long the track can be utilized by the company, and ensures that the company provides credit to you somewhere in the ad or the website so that viewers can be aware of your work and your name.
Besides the scope, drafting up terms that describe and regulate the profits and revenue that your creation will generate is crucial. Some license agreements will simply work by having a one-time licensing fee, paid out in full. In this version of the deal, the licensor will immediately pay you some agreed upon amount and then they will be able to use your creation for a fixed period of time. Another way it could go down, is through recurring payments and profits such as royalties or monthly leases. In this scenario, the licensor has to pay you quarterly payments over over the course of the entire leasing period. It’s up to you to think about which of those arrangements would work best for your given needs and situation.
While the scope and revenue aspects are arguably the two most relevant parts of any licensing agreement, there is a plethora of other factors to consider mentioning as well. These can include:
Problems can always emerge in the realm of intellectual property and even after a licensing agreement is signed, sometimes the licensor may use your creation in a way that violates the terms of your agreement. They can breach the contract if they fail to compensate you fairly as per the agreed upon terms in the licensing agreement, by sub-licensing your property elsewhere against your agreement, or by any number of other means that can violate your terms. In these scenarios, you have the right to file a lawsuit against the party that committed the breach of your agreement in an attempt to enforce your intellectual property rights. You can seek remedies through damages, losses, or other harm that you may have sustained as a result of the licensee breaking your agreement.
As we have seen, intellectual property law is unfairly complex and tricky to navigate–especially on your own. This is because licensing agreements and intellectual property management requires specialized knowledge of state and federal laws pertaining to your rights as well as a strong awareness of business practices and judgements. To make sure you have the best experience with your new creation and to honor the integrity of your intellectual property, it is vital that you have access to skilled Glendale intellectual property lawyers in this particular field of law. We at KAASS LAW believe in your ability to produce meaningful novel works of art and innovation and we fight to ensure our clients receive the correct treatment and compensation for their intellectual and artistic property. If you or a loved one need legal counseling or help surrounding an issue regarding intellectual property, licensing, trademarking, or copyrighting, then do not hesitate to contact us. We invite you 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.
Copyrights can be bought, sold, or given away to others. A transfer of copyright or an exclusive grant or license to utilize the work is possible only if it is conveyed in writing from the original owner of the copyrighted material. Also, copyrights do not protect the underlying ideas or concepts in the creator’s work. The legal terminology here gets a bit vague but basically ideas, facts, methods, titles, discoveries, works which do not have original authorship, and works with expired copyrights are not protected under U.S. copyright law. Bear in mind also that copyright law is intrinsically territorial and the information which we have talked about only applies to U.S. copyrights, which themselves are granted only to works of U.S. origin. The final aspect of copyrights that we should discuss is their length, or period of effect. The law regarding the length of copyright says the following for:
As previously mentioned, nearly all original works created after 1978 have some form of automatic copyright protection. To recap the important points, bear in mind that any original work automatically gets copyright protection once it is ‘fixed’, however, formally registering your copyright with the U.S. Copyrights Office still offers certain lucrative advantages, such as unlimited and exclusive control and ownership of the work, allowing for increased security and easier time dealing with any potential legal matters in the future, should the need ever arise.
At KAASS LAW, we believe in the spirit of genuine creativity. For that reason, protecting your original works is something we treat very seriously. If you or a loved one have created an original work, we invite you to call us at (310) 943-1171 to speak to one of our intellectual property lawyers today. Our team will ensure your works get registered with the U.S. Copyrights Office in the quickest and most efficient way possible so that you can keep creating beautiful works.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
Our lawyers in Glendale, Los Angeles, California, at KAASS LAW are 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.
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
The whole reason that corporations have to deal with a detailed and pesky bookkeeping record is because California law requires it. According to California Corporation Code 1500, every corporation must maintain a detailed and accurate record of accounts and outlines of the time that the executives and owners spend on meetings. In fact, even shareholder, board, and committee meetings and decisions must be documented and housed in the executive headquarters. Further, all shareholder names, addresses, and amounts of shares owned must also be accounted for in the report. For smaller corporations, this is already a nightmare to contend with, but the larger your corporation grows, the more annoying and tedious this law becomes.
The other part of this dilemma to consider is how exactly all of that information is going to be stored. Clearly, the records must account for information that is not only sensitive but also deeply personal and intimate with respect to the company and its shareholders. All of those people are going to be relying on the corporation to ensure the safety of their credentials and information. To that end, there are a few methods of bookkeeping that are worth discussing. The law only goes so far as to specify that the records must be kept either in written form or in some other form that is capable of being converted into a clear, legible, tangible form, or any combination of the aforementioned. Therefore, you actually have some wiggle room here in terms of deciding how to store the necessary information. You can, of course, choose to go the traditional route of simply keeping all the information on hand in paper form. The upside is that you will always have the original paper copy of the records, but the obvious downside is that those records are susceptible to being permanently lost or damaged. The alternative would be to store those records digitally, by uploading them onto your corporation’s secure server from the beginning by means of software. The pro in these situations is that you are unlikely to ever completely lose all of your important bookkeeping records, but the drawback is that now all of that sensitive information is potentially vulnerable to online attack. In these situations, cybersecurity becomes a major concern.
As we have seen there is no one method that manages to avoid all risk, and that’s a large part of the reason why California Corporate Code 1500 can be such a hassle for corporations to deal with. However, we can help. Our firm has extensive experience with helping businesses through the issues that may arise from record keeping as per California Corporate Code 1500. We invite you to us a call at (310) 943-1171 to speak with our California corporate lawyers today. Our lawyers in Glendale, Los Angeles, California, are dedicating to providing our clients with the highest quality services possible. 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