California Injury Attorney Blog

What exactly is a surety bond and why should small business owners care?
A lot of people like to sum up a surety bond as insurance, but in reality, surety bonds are a financial guarantee. They are a part of the insurance industry but they serve as a financial guarantee for the obligee (or person requiring the bond which is usually the state)

How do I know if my business/start-up needs a bond?
Almost every small business is required or can utilize a surety bond in some way. For instance, many states require a sales tax bond for stores to operate. Almost every business that requires a license to operate in the state will be required to post a surety bond. Some of the more common industries include car dealers, mortgage brokers, and even insurance brokers. If you aren't required to post a bond to operate, many companies look into getting a fidelity bond or a dishonesty bond which protect the owner against employee theft.

How do I obtain one?
Most of the time, it's a simple process. If the bond required is $25,000 or less, often just submitting an application is all that is necessary. With the application process there is a credit check and depending on how the credit check comes back, they may or may not need to submit and any sort of financial data or bank letter of credit. For most people with a good credit background, they only need to submit an application and they will be on their way with a bond in hand. This process usually takes anywhere from 24 to 48 hours. If there is a cosigner, letter of credit or collateral needed, or you want to do a premium financing surety bond then the process will usually take a little longer to complete.

One thing to consider before you get a surety bond that will save you time in the long run is that when you first submit an application, if there is another partner (or anyone with more than 10% share) in the company, they also need to be underwritten on the bond. So if there are three partners, there need to be three applications with three signatures.

What do surety bonds cost?
The cost is determined by examining the credit of the person needing the bond and what type of bond it is. A person with good credit will normally get standard rates that can range anywhere from .05% to 5% of the full bond amount. If the person has sub-standard credit, then they normally have to pay anywhere from 5% to 15% of the total bond amount.

Do I have to get a new one every year?
Most license and permit bonds are required to be renewed every year. There are thousands of types so it really depends on the specific bond that your company needs and the requirements that the obligee puts on the bond.

This guest post was written by Kevin Kaiser of Surety Bonds .com[link:http://www.suretybonds.com]. If you want to learn more about how surety bonds are involved in small business check out our podcast with David B. Willis on Texas Small Business Law[link:http://davidwillislaw.com/texassmallbusinesslaw/surety-bonds-for-small-businesses/] or visit the Surety Bond Education Center[link:http://www.suretybonds.com/edu/].

Arbitration, in the law, is a legal alternative to the courts whereby the parties to a dispute agree to submit their respective positions (through agreement or hearing) to a neutral third party (the arbitrator(s)) for resolution.
Since arbitration is based either upon contract law or, in the case of international arbitration, the law of treaties, the agreement between the parties to submit their dispute to arbitration is usually a legally binding contract. All arbitral decisions are usually considered to be "final and binding." This does not, however, void the requirements of law. Any dispute not excluded from arbitration by virtue of law (e.g. criminal proceedings) may be submitted to arbitration.

Arbitration exists under both domestic and international law, and arbitration can be carried out between private individuals, between states, or between states and private individuals. In the case of arbitration between states, or between states and individuals,
Various bodies of rules have been developed that can be used for arbitration proceedings.

When arbitration occurs under state of federal law, either party to an arbitration may appeal the arbitrator's decision to a court, however the court will generally not change the arbitrator's findings of fact but will decide only whether the arbitrator was guilty of malfeasance, bias, or whether the arbitrator exceeded the limits of his or her authority in the arbitral award. Some jurisdictions have instituted a limited grace period during which an arbitral decision may be appealed, but after which there can be no appeal. In the case of arbitration under international law, a right of appeal does not in general exist, although one may be provided for by the arbitration agreement, provided a court exists capable of hearing the appeal.

Some domestic jurisdictions have stipulated that judges may require either arbitration or mediation of certain disputes as a first step toward resolution, familiy law (particularly child custody) being a prime example.

Arbitrators are not bound by precedent and have great leeway in such matters as: active participation in the proceedings, accepting evidence, questioning witnesses, and deciding appropriate remedies. Arbitrators may visit sites outside the hearing room, call expert witnesses, seek out additional evidence, decide whether or not the parties may be represented by legal counsel, and perform many other actions not normally within the purview of a court. It is this great flexibility of action which, combined with costs usually far below those of traditional litigation, makes arbitration so attractive, although very risky as you are deprived of the constitutional right to Trial by Jury.

No definitive statement can be made concerning the credentials or experience levels of arbitrators, although some jurisdictions have elected to establish standards for arbitrators in certain fields. Several independent organizations offer arbitrator training programs, such as the American Arbitration Association, and thus in effect, credentials. Generally speaking, however, the credibility of an arbitrator rests upon reputation, experience level in arbitrating particular issues, or expertise/experience in a particular field. Arbitrators are generally not required to be members of the legal profession.

A growing trend among employers whose employees are not represented by a labor union is to establish an organizational problem-solving process, the final step of which consists of arbitration of the issue at point by an independent arbitrator. Most collective bargaining agreements in organizations where employees are represented by a labor organization stipulate that the final step of any grievance procedure shall consist of arbitration.

To ensure effective arbitration and to increase the general credibility of the arbitral process, arbitrators will sometimes sit as a panel, usually consisting of three arbitrators. Often the three consist of an expert in the legal area within which the dispute falls (such as contract law in the case of a dispute over the terms and conditions of a contract), an expert in the industry within which the dispute falls (such as the construction industry, in the case of a dispute between a homeowner and his general contractor), and an experienced arbitrator.

Critics of arbitration argue that arbitration can be unfair to the individual when faced with a dispute with a corporation. In these cases, the choice of arbiter may be spelled out in a contract in which the individual has no power to negotiate. The arbitration panel may contain industry experts who may be more sympathetic to the industry than to the individual. Also, some have argued that the fact that an arbitration company may handle many cases for a corporation while an individual rarely goes through arbitration twice may bias the arbitrators in favor of the company. The fact that most arbitral procedures are not public, and that there may be no provision for an individual to be represented by counsel, may also work to the disadvantage of the individual. These potential disadvantages make the ethics and professionalism of arbitrators even more important.

Continue reading "Arbitration: A Practical Overview" »

Fiduciary duty is one of the duties that corporate directors and officers have towards a corporation, as well as the duties that partners have to a partnership and trustees have to a trust.
Broadly speaking, fiduciary duties can be grouped into three categories:

Duty of Loyalty. A fiduciary must act in accordance with the interests of the beneficiary, and not his own interests.

Duty of Candor. A fiduciary must not withhold information from the beneficiary, particularly with respect to the fiduciary's dealings with the beneficiary.

Duty of Care. A fiduciary must act with some degree of care with respect to the beneficiary. This is usually formulated as a duty to take the care that an ordinarily prudent person would in similar circumstances.

A variety of other duties, and legal doctrines, are subsumed in these three duties. For example, the duty of care includes a duty of confidentiality, i.e. that the fiduciary will not disclose the beneficiary's information. The duty of loyalty includes the corporate opportunity doctrine. Fiduciary duties take into account the nature of the relationship in which they are formed, and, in some circumstances (such as in limited liability companies) may be modified by contract.
Also related is the Business Judgement Rule which provides that the decisions of a corporation's board of directors will not be second-guessed unless a decision is self-interested (a violation of the duty of loyalty) or (more rarely) the board acted in an imprudent manner (a violation of the duty of care).

Continue reading "Fiduciary Duty" »

A standard form contract (sometimes referred to as an adhesion contract or boilerplate contract) is a contract between two parties that does not allow for negotiation, i.e. take it or leave it. It is often a contract that is entered into between unequal bargaining partners, such as when an individual is given a contract by the salesperson of a multinational corporation. The customer in no position to negotiate the standard terms of such contracts and the company's representative often does not have the autonomy to do so. While adhesion contracts, in and of themselves, are not illegal per se, there exists a very real possibility for unconscionability says California Business Lawyer Steven C. Peck.

Standard form contracts are rarely read
Lengthy boilerplate terms are often in fine print and written in complicated legal language which often seems irrelevant. The prospect of a buyer finding any useful information from reading such terms is correspondingly low. Even if such information is discovered, the consumer is in no position to bargain as the contract is presented on a "take it or leave it" basis. Coupled with the often large amount of time needed to read the terms, the expected payoff from reading the contract is low and few people would be expected to read it. Sometimes a standard form contract may literally be dispensed from a vending machine to drivers sitting in line to enter a parking garage, which means that stopping to read the contract risks provoking road rage.
Access to the full terms may be difficult or impossible before acceptance
Often the document being signed is not the full contract; the purchaser is told that the rest of the terms are in another location. This reduces the likelihood of the terms being read and in some situations, such as software license agreements, can only be read after they have been notionally accepted by purchasing the good and opening the box. These contracts are typically not enforced, since common law dictates that all terms of a contract must be disclosed before the contract is executed.

Continue reading "Carefully Read Standard Form Business Contracts" »

Something interesting is happening in California. Anthem Insurance Company is delaying its massive insurance rate increase. Anthem insurance company has been under fire this week because they are going to invoke an average price increase of 25 percent on about 700,000 insurance customers who purchase their own coverage. For some it would be as high as 39 percent. Anthem is getting grief all the way up to the White House.

Anthem has agreed to delay implementing their rate increase from March 1 to May 1.

Insurance Commissioner of California Steve Poizner has been working with Anthem Insurance to determine if they are living up to a law that was passed in 2006. This says that an insurance company must spend 70 cents of every premium dollar on medical care.

I personally think that is whimsical says Los Angeles Business Attorney Steven C. Peck. That means your expenses and administration come out of 30 cents on the dollar. Companies can do that if the expenses go down after the first year but I sincerely doubt that 70 cents on the dollar is realistic. And that can cause this type of problem.

The commissioner has brought in an outside firm to examine the summations of Anthem. He is skeptical that they have come to the right conclusions.

If they did not live up to the law then the Commissioner can make the company reduce the rates at risk of losing their license to sell in the state.
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Continue reading "Anthem Insurance Company Delaying Price Increase" »

In what could be some of the most significant set of changes in the history of U.S. credit cards, aspects of President Barack Obama's Credit Card Accountability, Responsibility and Disclosure Act of 2009 that most affect college-aged students are set to kick in on Monday February 22, 2010.

"With this new law, consumers will have the strong and reliable protections they deserve," Obama said on May 22, 2009, the day he signed the bill into law. "We will continue to press for reform that is built on transparency, accountability, and mutual responsibility - values fundamental to the new foundation we seek to build for our economy."

Starting Monday February 22, 2010,, credit card companies will no longer be able to market to people on college campuses with free offers, food and merchandise, or through direct mail campaigns, says California Business lawyer Steven C. Peck. Credit card companies will also have to publicly disclose any marketing agreements with colleges and universities.

"(Credit card companies) try to offer students credit cards (saying) it's good for them," Peck says. "But they end up spending too much on it."

Among the most significant changes, people under the age of 21 will no longer be able to take out credit cards under their own names unless they have co-signers, such as their parents. Another provision calls for setting monthly due dates at the same day each month. As of now, credit balance due dates are set from 14 to 21 days after a previous payment has been made.

"It's hard to keep track of the payment day," Peck indicates. "It's a great idea (so) new credit card holders never miss the date."

Currently, anyone over the age of 18 may apply for a credit card, and each credit card company determines verifying a cardholder's ability to pay back the credit.

Under the new guidelines, anyone younger than 21 must get written permission from a parent, guardian or spouse to increase the credit line of an existing account, or to get a new account. They will also need a co-signer to assume the liability on the card if they are unable to pay the bill, unless they can prove their financial ability to pay back the card balance on their own states California Business Lawyer Steven C. Peck.

A growing source of revenue for banks - fees - will be reduced, according to the law. The new law will limit up-front fees to 25 percent of the cardholder's credit limit during his or her first year on the new account. Card companies will also be limited in when they can increase interest rates on existing balances. If cardholders pay their bills on time and do not exceed the credit limit, they may get their interest rates reduced after six months.

"It's a new day in credit cards - both for consumers as well as banks and credit card issuers," Peck says.

Continue reading "New Credit Card Accountability Act Signed Into Law" »

Reliance-based estoppels--These involve one party relying on something the other party has done or said. The party who did/said the act is the one who is estopped. Under English law, this class includes estoppel by representation of fact, promissory estoppel and proprietary estoppel Although some authorities have used language to suggest reliance-based estoppels are mere rules of evidence, they are rules of substantive law.

Equitable Estoppels:

Estoppel by record--This frequently arises as issue/cause of action estoppel or judicial estoppel where the orders or judgments made in previous legal proceedings prevent the parties from relitigating the same issues or causes of action,
Estoppel by deed (often regarded as technical or formal estoppels)--Where rules of evidence prevent a litigant from denying the truth of what was said or done
Estoppel by silence--Estoppel that prevents a person from asserting something when he had the right and opportunity to do so earlier, and such silence put another person at a disadvantage.
Laches--estoppel in equity by delay. Laches has been considered both a reliance-based estoppel, and a sui generis estoppel.

Reliance-based estoppels

Reliance-based estoppels by representation of fact, where one person asserts the truth of a set of facts to another;promissory estoppel, where one person makes a promise to another, but there is no enforceable contract; and
proprietary estoppel, where the parties are litigating the title to land.
These three estoppels collectively known as estoppels by representation. More simply, one party must say or do something and see the other party rely on what is said or done to change behavior.

All reliance-based estoppels require the victimised party to show both inducement and detrimental reliance, i.e.:there must be evidence to show that the representor actually intended the victim to act on the representation or promise, or the victim must satisfy the court that it was reasonable for him or her to act on the relevant representation or promise, andwhat the victim did must either have been reasonable, or the victim did what the representor intended, and the victim would suffer a loss or detriment if the representor was allowed to deny what was said or done -- detriment is measured at the time when the representor proposes to deny the representation or withdraw the promise, not at the time when either was made, and in all the circumstances, the behavior of the representor is such that it would be "unconscionable" to allow him or her to resile.
Estoppel by representation of fact and promissory estoppel are mutually exclusive: the former is based on a representation of existing fact (or of mixed fact and law), while the latter is based on a promise not to enforce some pre-existing right (i.e. it expresses an intention as to the future). A proprietary estoppel operates only between parties who, at the time of the representation, were in an existing relationship, while this is not a requirement for estoppel by representation of fact.

The test for unconscionability takes many factors into account, including the behavior, state of mind and circumstances of the parties. Generally, the following eight factors are determinative says California Business Lawyer Steven C. Peck.

How the promise/representation and reliance upon it were induced;
The content of the promise/representation;
The relative knowledge of the parties;
The parties' relative interest in the relevant activities in reliance;
The nature and context of the parties' relationship;
The steps, if any, taken by the promisor/representor to ensure he has not caused preventable harm.

Continue reading "Estoppel: Definitions" »

Estoppel in its broadest sense is a legal term referring to a series of legal and equitable doctrines that preclude "a person from denying or asserting anything to the contrary of that which has, in contemplation of law, been established as the truth, either by the acts of judicial or legislative officers, or by his own deed, acts, or representations, either express or implied indicates California Business Law Attorney Steven C. Peck

This term appears to come from the French estoupail (or a variation), which meant "stopper plug", referring to placing a halt on the imbalance of the situation. The term is related to the verb "estop" which comes from the Old French term estopper, meaning "stop up, impede".

Where a court finds that a party has done something warranting a form of estoppel, that party is said to be "estopped" from making certain related arguments or claiming certain related rights. The defendant is said to be "estopped" from presenting the related defense, or the plaintiff is said to be "estopped" from making the related argument against the defendant.

Because estoppel is so factually dependant, it is perhaps best understood by considering specific examples.

Estoppel is closely related to the doctrines of waiver, variation, and election and is applied in many areas of law, including insurance, banking, employment, international trade, etc. In English law, the concept of legitimate expectation in the realm of administrative law and judicial review is estoppel's counterpart in public law, although subtle but important differences exist. The main species of estoppel shall be discussed in our next blog.

Continue reading "The Doctrine of Estoppel" »

As with a general partnership, a limited liability partnership requires an agreement so that each partner's role, protections and expectations are clearly defined. The limited liability partnership (LLP) has been an ever-growing form of business organization in recent years. It protects a partnership in much the same way as a limited liability corporation protects the business. It is important, however, to check with your state before forming an LLP and signing an agreement, because not all states recognize this type of organization suggests Steven C. Peck a California Business Lawyer located in Van Nuys, California.

If your state does recognize an LLP, then an agreement of this type is essential if the goal of the partnership is to form individual protections. The limited liability partnership agreement sets forth terms designed to protect a general partner's assets from liability claims against the partnership. Generally, this agreement protects against liability arising from the negligence, wrongful acts, or misconduct committed in the ordinary course of business by any other partner, employee, agent, or representative. The exception to this agreement would be if the partner created the liability himself or herself. In that instance, their personal assets would most likely be in jeopardy. As in any other partnership, the LLP agreement should define a joint liability for contracts and liability for normal business debts of the partnership. In some states, once an LLP agreement is utilized, liability insurance may be required. It is always important to check local laws before determining this is the appropriate agreement for your partnership, but to protect each partner from the liability of other partners, this type of agreement is a very wise choice.

Continue reading "Limited Liability Partnership Requires a Written Agreement Defining Each Partners' Roles and Expectations" »

When you make a monetary loan, it is always a good idea to have a promissory note setting forth the terms of the loan suggests Los Angeles Business Lawyer Steven C. Peck. A promissory note is also used in real estate transactions.

A personal promissory note for a loan has many parts. It will set forth the full names and addresses of both the lender and the borrower. The amount of the loan will be stated, along with any terms of interest and the length of the loan. Payment terms will give the amount of each month/weekly/yearly payment until the loan is considered paid in full. The promissory note will also spell out remedies and actions should the loan be defaulted upon or if payments are late. Without this type of formal agreement, there is no guarantee that loaned money will be repaid to you on time, or even at all. Promissory notes protect everyone involved. They not only assure the lender a legal recourse if the loan is defaulted upon, but they protect the borrower should the lender decide to change or alter verbal terms throughout the life of the loan. Once this form is completed and endorsed, there should be no questions, confusion and difficulty with the performance of either party. Lastly, as with any other legal forms, all signatures must be notarized and/or witnessed.

Continue reading "Monetary Loan: Have a Promissory Note Drawn Up Setting Forth Its Terms" »

If you have a business partnership with one or more persons and someone wants to leave the partnership, a formal agreement is truly necessary to protect everyone involved. The technical term for this type of agreement is a dissolution, which is the change in the relationship of the partners caused by any partner ceasing to be associated with the business, and distinguishes it from the dissolution of the business itself. states California Business Lawyer Steven C. Peck.

Any time a partner leaves a business, the partnership is, in essence, dissolved. However, the remaining partner or partners may carry on business as usual after the agreement is signed. The partnership dissolution agreement should set forth terms under which the partner is leaving. It should state any property of the business which the partner is taking with him, the rights of the business to retain present customers, any monetary terms agreed upon, the right to the name of the business, and any other important key points which would allow the business to continue. It should be noted that no one can be forced to remain as a partner in the business against his or her own wishes and has the power to withdraw at any time if there is an agreement. If no agreement can be reached, the partner may not have the right to withdraw until a formal partnership dissolution agreement can be redesigned to everyone's satisfaction. Therefore, utilizing a dissolution agreement form is the best choice, so that all important areas are covered and no legal issues arise down the road indicates Los Angeles Business Attorney Steven C. Peck.

Continue reading "A Formal Agreement is Truly Necessary To Protect Everyone in a Partnership Business Dissolution" »

There are times when a business or entrepreneur would benefit from sharing confidential and valuable information with a third party. Yet, some business owners and entrepreneurs hesitate because they are concerned about what the third party will do with the information. They do not want the confidential information shared with others or used by the third party for that party's own benefit. The law recognizes the important business interest of keeping certain information confidential and the need to consult with third parties in order to make a business more profitable or to allow a new idea to be implemented. A confidentiality or nondisclosure agreement can allow the business or entrepreneur to share information with a third party and be confident that it the information will remain classified.

When to Use a Confidentiality Agreement or Nondisclosure Agreement:
Confidentiality and nondisclosure agreements can be used in many business situations. Some common situations where these types of agreements may be useful include when:
You are soliciting investors, partners or contractors for an invention or new business idea; You are negotiating with a potential buyer of your business, invention or idea; or
A contractor or employee will have access to confidential data that could be financially detrimental to your business should it be disclosed.

What to Include in a Confidentiality or Nondisclosure Agreement:
There are two types of confidentiality or nondisclosure agreements. One type is called a unilateral agreement where the party presenting the agreement is requesting that the other party keep the information confidential but does not require itself to maintain confidentiality. The other type is called a mutual agreement where both sides agree to maintain confidentiality.
In order to enforce a confidentiality or nondisclosure agreement it is important that the agreement be in writing. When you are drafting your agreement, it is useful to consider whether the following elements should be included:

A description of the confidential information so that both parties understand the scope of the agreement;

A description of why the confidential information is being shared in this case and how it may be used. Generally, parties receiving confidential information must use it only for the limited purpose of the contract and not in any other way;

An agreement by the parties that the information will not be disclosed during the term of the contract; and
Other provisions as are necessary to the needs of the parties to the confidentiality or nondisclosure agreement.

Most confidentiality and nondisclosure agreements are in writing, dated and signed by both parties. While state law may allow for oral contracts, it is important for business contracts to be in writing in case of a future dispute. It is particularly important in narrowly drafted confidentiality agreements.

Continue reading "The Business of Confidentiality & Non-Disclosure Agreements" »

Many Americans experience a time when their financial obligations become overwhelming and they are unable to pay all of their outstanding obligations on time. A debtor who defaults on a secured loan may face the threat of property repossession. A creditor can repossess property only if the creditor has a valid security interest in that property and if the creditor follows the proper legal procedures for repossessing the property says California Business Lawyer Steven C. Peck.

The specific laws regarding property repossession vary from state to state but generally include:

· The Creditor Must Have a Valid Security Interest in the Property: that means that the security interest must have been created in compliance with all state laws. In order to enforce a security interest, the creditor must not only enter a binding loan contract creating the security interest but also file, or record, the security interest with the state in order to retain a priority interest in the secured property.

· You Must be in Default on the Loan or Fail to Pay the Accelerated Loan: your loan document explains when you are in default on the loan and when the creditor may demand that you pay the remainder of the loan. If you have been making your regular payments on time then you are likely not in default on the loan and the creditor probably does not have the right to repossess your property.

· You Must be Given Notice and the Right to Cure: most states require creditors to provide notice to debtors prior to repossessing property. The notice usually contains the legal authority the creditor has to repossess the property. It also provides debtors with a certain amount of time to pay the loan and any outstanding fees or penalties. If the debtor pays his or her obligations within that time then the creditor loses the right to repossess the property. However, if the debtor does not pay his or her obligations by the date contained in the letter then the creditor has the legal right to repossess the property.

· The Creditor may not disturb the peace : a creditor has the right to repossess property, without a court order, but only if it can be done without breaching the peace. That means that the creditor may not force entry to your home, intimidate you, or do anything unlawful to obtain custody of the property. For example, if a creditor is repossessing your car then the creditor may take possession of the car that is parked in a parking lot or your driveway but may not break into a locked garage to get the car. If the car, of other property, is out of reach and the debtor refuses entry then the creditor would need to seek assistance of the court to obtain the property.
If the creditor violates any of your rights then the property repossession may have occurred illegally and you may have the right to compensation.

Continue reading "The Threat of Repossession Upon the Default on a Loan: Valid Security Interests" »

Almost every business owner has faced the same problem at one time or another. The business provides a product or service to a customer, the business invoices the customer for payment and the business never receives payment. This situation is frustrating at best and a threat to the business's profitability and its continued existence at worst says California Business Attorney Steven C. Peck.

However, if you provided a product or service to a customer with the agreement that you would receive payment in return then you are legally entitled to payment and there are steps that you can take when faced with this challenging situation. It is important to understand what you can legally do, and what you cannot do, if you have a customer who doesn't pay you. In order to protect your business from nonpaying customers, you might consider:

· Creating your First Invoice Carefully. Your invoice is a contract and should carefully explain the required terms of payment. Most invoices include a payment due date. After that, you may charge appropriate late fees or interest on the uncollected amount due. Your invoice should specify what the late penalties are and include a phone number for your business in case the customer needs to discuss payment terms with you.

· Sending Follow up Invoices. If you do not receive payment within the required time frame then you may send a follow up invoice. If the bill was not paid because of an honest mistake, for instance if it got misfiled or never arrived, then a second invoice will likely result in a payment received. Make sure to mark the invoice as Second Invoice (or something similar) and include the date of the first invoice so that the customer knows that the bill needs to be paid upon receipt.

· Making Follow up Phone calls. Assertive phone calls are often an effective way to receive payment. However, you must make sure that you are following state and federal laws when you make the calls. As general rules, you should only contact the person who owes the debt and not a relative or employer of such person, you should only call the person between 9 am and 8 pm, you should always be truthful in your discussions and you should never be threatening to the customer.

· Using a Collection Agency. A collection agency can take over the collection attempts for you so that you and your employees have the time to devote to the other work of the business. If you decide to hire a collection agency it is important to thoroughly review the agency by requesting references and checking for complaints with your state attorney general's office or local better business bureau office. Your contract with the collection agency should be explicit in terms of what the agency is authorized to do on your behalf and what the agency will be paid.

· Hiring a lawyer. Your lawyer, such as Steven Peck, can help you negotiate with the customer and represent you in any legal proceedings attempting to collect money from the customer.

· Considering Tax Implication. If you already counted the amount invoiced as taxable income then you may be able to deduct unpaid invoices that you decide to forgive rather than collect.

Continue reading "When the Customer Does Not Pay the Invoice When Due" »

The collapse of the U.S. housing and mortgage-backed securities markets has raised the stakes in real estate workouts and loan negotiations as never before

Given the increasing prevalence and complexity of workouts amid the real estate collapse, the onus is now on investors, real estate loan negotiators and risk managers to adopt the savviest-possible strategies, says California Business Attorney Steven C. Peck.

"Extreme caution and the utmost planning and cash-flow analysis must precede revival of the real estate market," an avalanche of forced sales of distressed shopping centers, office buildings and other commercial properties is likely to occur in coming quarters, putting further pressure on existing assets. "

Issues related to letters of credit, both commercial and standby,a look at the dynamics related to preferences, in situations where a workout or modification occurred within the bankruptcy preference period and key issues associated with the treatment of secured claims, sale of assets, proof of claims and plan objections, and noteworthy foreclosure litigation are all items that need to be carefully reviewed indicates California Business Lawyer Peck.

"This recession has instilled overpowering fear in the 'long-term' investors -- the life blood of real estate projects," indicates Los Angeles Business Attorney Steven C. Peck.. "Moreover, no one believes that the full measure of losses from the real estate investment frenzy of 2006 to 2008 has arrived yet. Indeed, those investors who challenged the downturn in 2008 ended up being losers, and the investment community is now, for the most part, shying away due to lack of stability in most cash flows and a worldwide lack of stable short- or long-term credit." states Peck.

Continue reading "Collapse of U.S. Housing and Mortgage Lending has Raised Business Workout Stakes" »

General vs. Limited PartnershipsThere are two types of partnerships: general partnerships and limited partnerships (LPs). In a general partnership, each partner can incur obligations on behalf of the partnership, and each assumes unlimited liability for the partnership's debts. For example, if the partnership owns a truck, and the truck strikes and injures a pedestrian, each partner is personally liable for any damages or judgments says California Business Attorney Steven C. Peck.

This unlimited liability risk makes limited partnerships an attractive alternative to general partnerships. In an LP, there is usually just one general partner (although there can be more). The other partners are called "limited partners." The general partner has full management responsibility runs the day-to-day operations of the business. A limited partner cannot incur obligations on behalf of the partnership and does not participate in the firm's daily operations or management. In fact, a limited partner's role usually involves nothing more than making an initial capital investment in exchange for a share of the firm's profits indicates Los Angeles Business Lawyer Peck.

While the general partner wields most of the power, they also bear the lion's share of the liability. A limited partner's liability, on the other hand, cannot exceed their financial contribution to the partnership. So, if a truck owned by a limited partnership accidentally injures someone, the damaged party could go after the general partner's personal assets but could only go after a limited partner's actual investment in the partnership.

As a result, a limited partnership offers two key advantages: It gives the general partner the freedom to run the business without interference, and it protects the limited partners if something goes wrong. Limited partners may choose to get more involved in a partnership's daily operations, but they do so at their own risk. In the eyes of the law, their involvement may make them a general partner and strip them of their limited liability.

Continue reading "General vs. Limited Partnerships: Types of Business Structure" »

On the eve of the second of three major trials, one of the largest business lawsuits in Michigan history has settled for $500 million.

Livonia-based Valassis Communications, Inc. reached an agreement to settle its outstanding lawsuits against News America Marketing (NAM), a division of Rupert Murdoch's News Corp.

U.S. District Court, Eastern District of Michigan Judge Arthur Tarnow OK'd the agreement, which would have prevented a Feb. 2 trial in asserting violations of the Sherman Act. If Valassis had prevailed in this suit -- as it did in a $300 million July 23, 2009, trial asserting unfair competition and tortious interference -- the damages would have been trebled.

Besides paying Valassis $500 million, NAM also will enter into a 10-year shared mail distribution agreement with Valassis Direct Mail, a Valassis subsidiary. In addition, the judge will issue a permanent injunction related to certain business practices at issue in the lawsuits, and Valassis also will drop a pending state court case in California.

"It has become evident to our legal advisors from pre-trial proceedings over the past couple of weeks that significant risks were developing in presenting this case to a jury," said News Corp. Deputy Chairman, President and Chief Operating Officer Chase Carey in a statement. "That ... led us to believe it was in the best interests of the Company and its stockholders to agree to a settlement."

Valassis asserted that, over a six-year period, NAM tried to monopolize the free-standing coupon insert (FSI) market. Valassis contended that, by 2006, NAM had more than 60 percent of the FSI market, and did so by illegally bundling deals on its FSIs with its other consumer marketing division, in-store and point-of-purchase media.

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Long-term financing is a tool that most companies use to promote their business and increase their profitability says California Business Lawyer Steven C. Peck.

While several options for business loans are available, most loans are subject to the same volume terms and conditions.

Business loans have two main lengths: intermediate-term and long term. Intermediate-term loans are one to three years, while long-term loans are more than three years. Ten years is a popular choice for long-term loans.

Loan terms include loan amount, repayment options, interest rate and any special requirements such as financial statement updates or balloon payments. These terms have been negotiated by the applicant to ensure they get the best loan for their business.

Banks use strict credit assessments to determine the amount of credit to extend to the applicants. Factors such as current outstanding loans, on-hand capital and business credit ratings are important factors used in approving long-term loans.

Some lenders require businesses to provide collateral for the loan amount. This security is surrendered to the bank if the company fails to fulfill any of the loan terms.

Long term Business loans are best used by companies expanding business or buying competitors, which will increase their profitability. These types of long-term profit operations allow companies to build a positive cash flow before repaying their long-term loans.

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By category, the top five legal service requests according to Pre-paid Legal Services include:

Real Estate, Landlord/Tenant Issues and Foreclosure - Approximately 358,000 requests for legal services that include residential and commercial real estate transactions, landlord and tenant issues and legal counsel related to foreclosure and short sales

Consumer Finance - Approximately 195,000 requests for legal services related to retail transactions for warranties, guarantees and other contracts

Family Law - Approximately 193,000 requests for legal services related to divorce, child support, child custody and child visitation

Collections - Approximately 162,000 requests for legal assistance to support members against other parties and to defend members from third-party debt collectors

Estate Planning - Approximately 160,000 requests for legal services for preparation of wills and other counsel related to final estates.

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While filing for bankruptcy can ruin one's credit record, it can protect consumers from debt collection actions, including being taken to court.
Mounting medical bills and job losses have pushed many U.S. residents to seek protection from creditors by filing for bankruptcy in federal court, which saw a 68 percent increase in bankruptcy filings over the past year.

Steven Peck, a California Business Attorney, says chronic medical conditions are triggering a rise in bankruptcy filings because some of the major medical bills consumers face aren't always fully covered by health insurance.
"Most clients who come to see me have done everything they can do to avoid bankruptcy, and every penny of available income has been spent, but debts are still owed, including late fees, interest, penalties, court costs, etc.," Peck says.
Debt-burdened consumers also can get overwhelmed as garnishments, repossessions and foreclosures loom, he added.

The National Bankruptcy Research Center reported that bankruptcy filings rose by nearly a third last year."As foreclosure and unemployment rates rise, consumers and businesses turn to bankruptcy for reprieve. A fundamental goal of the bankruptcy code is to grant the debtor a "fresh start" from burdensome debts, according California Bankruptcy Attorney Steven Peck.

But while the bankruptcy code offers a fresh financial start for those crumbling under the weight of heavy debts, debtors who must list their assets and liabilities, by business professionals who must disclose their relationships and financial arrangements, and by trustees who must zealously attend to their fiduciary duties.

There are several bankruptcy filing categories in which a debtor can file, and the most common are filings under Chapter 7 and Chapter 13 of the bankruptcy code.

Under Chapter 7, in return for having debts discharged -- meaning debtors are no longer obligated to pay them -- a debtor must turn over certain non-exempt property to a bankruptcy court trustee to be sold and the proceeds distributed to creditors.

Non-exempt properties include tax returns, real property other than the debtor's home, or a second car for a single filer. In order for a debtor to keep any property subject to liens and mortgages, such as cars or homes, the debtor must continue to make regular payments to retain the property, indicates California Business Attorney Peck.

Under Chapter 13, debtors propose a repayment plan to make installments of past-due debts to creditors for a period of three to five years. During the repayment plan period, the law forbids creditors from starting or continuing collections efforts against the debtor. But if agreed-upon payments fall behind, the trustee and/or the creditor can ask the court to allow foreclosure proceedings against the debtor.

The surge in bankruptcy filings have occurred even after the bankruptcy laws were substantially changed in 2005 to make it more difficult for individuals," according to Peck, to have their debts discharged under Chapter 7 of the bankruptcy code.

The National Bankruptcy Research Center, which compiles and analyzes bankruptcy data, stated that personal bankruptcy filings across the nation rose to 1.41 million last year, representing a 32-percent jump from 2008. It added that 2009 saw the highest bankruptcy filings since 2005 when reforms made bankruptcy filing tougher.
The 2005 bankruptcy law overhaul pushed more consumers into Chapter 13 filings instead of Chapter 7, according to the center. However, to file under Chapter 13, an individual must have a regular income, and with the national unemployment rate at 10 percent, many filings may not met that standard.

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Continue reading "Medical Bills and Job Losses Have Pushed U.S. Residents To Seek Bankruptcy Protection" »

Whether you are a business that regularly has customers or clients in collections or you are an individual that is owed money by another person you should seek an attorney that specializes in the field of collections. Too many times people will go either to a collection agency or an attorney they have worked with in the past or have been referred to even though they have no or little collection experience. Usually, these experiences end either ineffectively, costly, or both.

Let's talk about effectiveness. You tell me what is more effective, a letter from a law office or from a collection agency? How about a call from an attorney or a collector? A collector has hundreds if not thousands of accounts on his call list. He treats them all the same because to him they are. He calls, he blows out the person on the other end, and moves on. A collection attorney will take the time to know your file because he is the one that may one day have to appear in court on it. Collection attorneys are also skilled negotiators who will listen when it is time to listen and press when it is time to press. They can, and often do, incorporate many styles of negotiating into a single claim depending upon the situation. Often times they will get a deal on the table when a collector will not.

What about cost? Collection agencies work on volume. Therefore, if you are not providing them with a large number of accounts then you will probably be charged a fairly high contingency rate. Furthermore, they need to incorporate an attorney's rate into their rate in case they cannot collect and the claim needs to go into litigation. For example, if they charge you 33%, they will pay the attorney 25% out of that rate if it goes to litigation. If you go directly to an attorney you may be able to negotiate the same or lesser rate and skip the "middle man", so to speak.

What else does cutting out the "middle man" mean? It means you do not have to assign your claim as is so often required by collection agencies. This means that instead of the legal right to collect the claim being in their name, it stays your name. Granted, if an assignment occurs the agency will owe you a fiduciary duty, however, you are essentially giving up your rights and should never do this. Collection agencies can go out of business overnight and/or collect money and not remit to the original creditor. It has been known to happen. If you go to a collection attorney they represent YOU, and they are not going to risk their practice and years of expensive schooling by not looking out for your best interests.

Maybe you are thinking, "If my account goes to a collection attorney anyway if the agency cannot collect, why not take two bites at the apple?" As we discussed, the collection agency is likely going to charge you a higher contingency. Also, the account may no longer be in your name. Of additional importance is that now that the collection agency is involved they will stay involved even once the account goes into litigation because they have a vested interest in it. So instead of dealing with the attorney directly, you are still dealing with the collection agency who is dealing with the attorney. He is essentially their attorney, not yours.

Continue reading "Collection Attorneys versus Collection Agencies" »

Although the goal of the federal bankruptcy laws is to offer a financial "fresh start" to the honest but unfortunate debtor allowing a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.

A discharge releases you from personal liability for certain specified types of debts. Discharge means you are no longer required to pay those debts. It is your 'get out of jail free card', so to speak. It is refreshing, and; relieving. And best of all, it is morally, ethically, and; legally o.k. It is your fresh start!

The discharge directs creditors to refrain from taking any form of collection action on discharged debts, including legal action and communications with you such as telephone calls, letters and personal contacts. In other words . . . hopefully in your case . . . No more worrying. When you place it in our hands, you will hopefully begin to feel release, and; begin to sleep at night, knowing that no one will harass you on the phone any longer.

Not all debts are discharged in a California bankruptcy. Although you may be relieved of personal liability some debts may continue after the discharge. For instance some liens on a property may remain after the bankruptcy case. A second trust deed; in some cases, might be discharged completely! That means, that if you have a $100,000.00 secondary lien on your home, it could be wiped off completely (this of course is on a case by case basis, and; you will need to call the law firm for an appointment to discuss your case).

A secured creditor may enforce the lien to recover the property secured by the lien. In other words, if your car is still under financing, the lender can repossess the vehicle. You may; however; reinstate the loan if you so desire in certain situations.

Other types of debt that are not dischargeable include alimony, child support, certain taxes and debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances. (Of course, all bankruptcy matters are on a case by case scenario, and; each client's matters must be discussed with the attorney in order to insure that all of the rules of bankruptcy are applied and; that the best relief possible is being given to you).

Continue reading "Dischargeability of Debt in a California Bankruptcy: Basic Principles" »