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Good morning!
January is a good time for what I call
"housekeeping" reminders, those little prods to
make sure your business compliance efforts are in
place and up to date. This year, identity theft and
data security are on the table and, although the
government keeps moving the goal post, the
Massachusetts data security rules are currently
scheduled to go into effect on March 1, 2010.
As
for compliance with the so-called "red flag"
Federal rules of identity theft, this has been moved out
… again … to June 1, 2010.
Massachusetts Office of Consumer Affairs and
Business Regulation has provided some
guidelines for producing your written plan to
prevent data security violations. In the interest of
not re-inventing the wheel, it's a good place to start to
build your own data security plan. Follow this link for more
information.
See you over coffee tomorrow morning at SBANE's monthly
breakfast … it's a great way to start a new
year!
Cordially,
Marijo McCarthy, Esq.
President, Widett and McCarthy, P.C.
A Small Business Law Firm
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| Is There a "Legal" Way to Get Out of a Contract? |
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The short answer is "Yes" — a well-drafted
contract protects the parties from a variety of situations
where it is advisable for one or both parties to end the
relationship [lack of payment for services
rendered being the most obvious]. Of course, the
"right" answer to this question often depends on which
side of the table you find yourself!
Have you ever been asked to sign a contract
which included a "force majeure" clause? Does
the average business owner even know what that
means or, more importantly, understand the
implications of the clause?!
Black's Law Dictionary defines
"force majeure" as an event or effect that can be
neither anticipated nor controlled. The term
includes both acts of nature (e.g., floods and
hurricanes) and acts of people (e.g., riots, strikes, and
wars). In simple English, force majeure is an
unexpected and disruptive event that may operate to
excuse a party from performance under a
contract.
However, it is the substance of what's
included in
the clause which can be the show-stopper…
and should require serious review and consideration.
The party from whom performance is
expected wants a simple force majeure provision
which excuses performance due to a litany of excuses.
For example:
Force Majeure. Consultant shall not be
liable for any failure or delay in its performance under
this Agreement due to causes beyond its reasonable
control including, without limitation, labor strikes or
shortages, riots, insurrection, fires, flood, storm,
explosions, acts of God, war, domestic or foreign
terrorism, governmental action, labor conditions,
earthquakes and material shortages.
On the other hand, the party who is looking to
another for performance wants to be much
more specific on how, when and why this excuse can
be enforced. For example:
Force Majeure shall mean any
circumstance that is not within the reasonable control,
directly or indirectly, of the Party affected, but only if
and to the extent that (i) such circumstance, despite
the exercise of reasonable diligence, cannot be (or be
caused to be) prevented, avoided, or removed by such
Party or Person, (ii) such event materially adversely
affects the ability of such Party to perform its
obligations under this Agreement, and such Party has
taken all reasonable precautions, due care and
reasonable alternative measures in order to avoid the
effect of such event on such Party's ability to perform
its obligations under this Agreement and to mitigate
the consequences thereof, and (iii) such event is not
the direct or indirect result of the failure of such Party
to perform any of its obligations hereunder; provided,
however, that Force Majeure shall not include:
the late payment of money;
the unavailability of labor or the late delivery of
contractor's equipment;
the late performance by the Party claiming Force
Majeure caused by such Party's failure to strictly
comply with the requirements of this Agreement;
submission of documents and/or drawings for
approval by the engineer at such a time that does not
leave sufficient time to permit review thereof within the
time periods provided for in this Agreement; or
delays resulting from reasonably foreseeable
unfavorable weather or reasonably foreseeable
unsuitable ground or sea conditions or other similar
reasonably foreseeable adverse conditions.
Bottom line? Don't sign off on the so-called
"boilerplate" until you know what it means and how it
affects you. It could have substantial positive or
negative consequences when that "force majeure"
hits.
Remember, being able to legally "get out of a contract"
works both ways, so give that some thought as you
consider force majeure provisions.
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| Contract Tidbits |
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Last month I shared
some thoughts on the mechanics
of signing a contract, but left out a very important
reminder: Always, always, always sign a contract
with
your official title [President or Treasurer of a
corporation, Manager of an LLC, etc.].
Do not sign as "owner" or "principal" or "Chief
Penguin," as clever a marketing note as that may be.
A company owner – unless you do business
as a sole proprietorship – has a title
recognized by law as binding the corporation, not the
individual. So use it. You never want to find
yourself in
the position of having the other party believe they have
received your personal signature for a business
obligation … simple as that!
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| About Us |
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Widett and McCarthy specializes in advising small
business owners in the area of contracts.
Whether
reviewing a contract for services with your customer,
negotiating a lease with your landlord or finalizing
financing documents with your lender, we make sure
your best interests are protected.
In addition, and for
those clients whose successful growth requires a
more comprehensive relationship, we act as "general
counsel:" On-call when you need us as a sounding
board, legal advisor and strong right hand.
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Free Audio Download |
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Some of my best ideas come from my clients!
A
new client e-mailed to thank me for the CD on
Contracts I had sent to him ("Contract Essentials
for
Small Business Owners") and asked if he could
find it
on my web site.
Well, now he can and I invite you as
well to visit, listen and learn some useful tips on best
practices developed during 25+ years of helping
clients get the most out of their contracts.
Follow
this link
to the free download
on our
home
page.
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Widett and McCarthy, P.C.
1075 Washington Street
West Newton, MA 02465
Telephone: 617.964.5559
Facsimile: 617.964.5529
Email
Us | Visit Our Website
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