California Injury Attorney Blog

The greatest advantage to running a business as a corporation is that, as with an LLC, the owners are protected from being personally liable for any losses, debts or obligations of the business itself. So, for example, if your corporation were sued and lost the case, the successful plaintiff would not be able to go after your personal belongings - the most you could lose is whatever you had actually invested in the company. In addition, because a corporation is an entirely separate legal entity from its owners, a corporation generally has an unlimited life beyond the life of its owners, lasting for decades or even centuries.

The other major advantage of a corporation is its ability to sell stocks, allowing investors to become partial owners of the company. It is therefore easier to raise capital with a corporation than with other types of business forms, because you can take your company public and allow anyone to become an investor/shareholder.

Continue reading "The Advantage of Corporate or LLC Formation Is the Protection From Personal Liability" »

Every business should protect proprietary information when dealing with independent contractors, vendors and other businesses. The best way to do this is to use a non-disclosure agreement, often referred to as an "NDA."

What is an NDA?

An NDA is an agreement between two parties to protect confidential information disclosed in a business transaction. The proprietary information can include business methods, finances, client lists, and anything that isn't already readily available in the public arena. If a party subsequently breaches the NDA, the injured party can sue for damages, an injunction against further disclosure and attorney's fees.

Directional NDA

In many situations, only one party requires the protection provided by an NDA. If you invent a new product, you are going to need an NDA from manufacturers, distributors, etc., before you discuss the product with them. While this may seem like common sense, most businesses fail to carry the thought through to their daily activities.

Practically every business hires independent contractors, but they rarely obtain NDAs prior to disclosing information to the contractors. For example, do you use third parties to create or maintain your websites? Did you obtain NDAs from any of them? If not, what's to keep that party from using your business methods on other sites? A directional NDA can keep this from occurring.

Mutual NDA

As the name suggest, a mutual NDA allows two parties to protect confidential information. The mutual NDA is typically used when two businesses are negotiating a joint venture. Each party must disclose enough information to make the negotiations viable, but neither wants that information made public if the negotiations fail. If negotiations go well, additional non-disclosure information will be incorporated into the joint venture agreement to protect additional information revealed during the joint venture.

Refusing to Sign an NDA

Alarms and warning lights should go off if a party refuses to sign your NDA. Unless they can provide a very compelling reason for the refusal, you should walk away from the business relationship.

When an NDA isn't really an NDA

Just because a document is titled, "Non-Disclosure Agreement", does not mean it provides you with protection. You should ALWAYS read the language of an NDA because the document may establish that you are WAIVING all confidentiality rights. The waiver might be very direct and read something like, "The disclosure of information pursuant to this Agreement shall not be considered confidential." Alternatively, the language may be more indirect and read, "The parties acknowledge and agree that all information exchanged pursuant to this agreement has previously been established in public forums." Regardless, the "reverse NDAs" strip you of protection and should not be signed.

Continue reading "The Business of Obtaining Non-Disclosure Agreements For Your Business" »

Shareholder agreements, also known as stockholder agreements, are important for many businesses but particularly for closely held businesses and family businesses. A shareholder agreement is negotiated and executed before any business problems develop. Shareholder agreements provide businesses with a roadmap of how to act in certain situations. Also, in privately held companies, some shareholder agreements may be kept confidential among the stockholders, unlike the corporate governance documents that must be filed with the state's Secretary of State's office.
Stock Ownership Provisions of Shareholder Agreements
The most important issues that are addressed by shareholder agreements are those that address stock ownership. A shareholder agreement can serve two important purposes with regard to stock ownership- it can control when a stock is sold and to whom. For example, in a closely held or family business a shareholder agreement can limit the sale of stock to third parties and it can define triggering events that require a stockholder to sell his or her shares to the other existing shareholders. This is important for a closely held business that only wants specific shareholders and does not want to extend ownership rights to others.
However, some closely knit businesses and family businesses may not want to prevent the transfer of stock to third parties in every situation. Therefore, they may require that an existing stock owner offer other existing stock owners the right of first refusal when selling stock. If the existing owners do not want to purchase the stock then, pursuant to the shareholder agreement, it may be sold to a third party.
A shareholder agreement can also limit a stockholder's actions after his or her shares are sold. Many shareholder agreements include no competition clauses that prevent a stockholder who sells his or her shares from directly competing with the business for a certain amount of time. In order to be enforceable, this provision must be carefully written so as to allow the selling shareholder a reasonable opportunity to make a living and not unduly restrict economic competition.
Other Provisions of Shareholder Agreements
Shareholder agreements can also contain other important provisions related to the operation of a business. For example, a shareholder agreement can:
· Explain how individual stockholders will be elected to the Board of Directors;
· Require a "super majority" vote among stockholders for certain important votes;
· Describe how future capital contributions will be made to the business and how these contributions may affect ownership rights;
· Create procedures to follow when there is a "tie" vote and the shareholders do not have a majority opinion; and
· Establish conflict resolution procedures to follow if disputes arise among stockholders. This could include mandatory mediation and/or arbitration, for example.
Like all businesses, closely held and family businesses want their businesses to succeed. However, unlike other businesses, they have additional concerns and must take the necessary steps to protect their business from outside control and to protect the rights of different family members. For these reasons, shareholder agreements are particularly important to closely held and family businesses.

Small businesses are incorporating, Incorporating yourself has gained popularity and is exceedingly much more advantageous for those looking to incorporate. businesses like real estate agents, mortgage brokers, online marketing, eBay, are looking to corporations and limited liability companies because of the benefits that are realized when owning a company.

We are going to talk about the benefits of incorporating and how it's not only reserved for big business andabout entrepreneurs looking to gain an edge on the competition by forming a business entity and gaining all possible advantages through incorporation says California Small Business Law Attorney Steven C. Peck.

Liability protection. One of the primary purposes of forming a business entity is to separate yourself personally, and your personal assets from the business. By creating separation, you protect yourself in the event your new company fails, and will not be held liable personally for any liability that was in the business name, but will not be held personally liable for the debt in most instances, various exceptions to individual responsibility for corporate debt could arise depending on the facts and the circumstances indicates California Business Attorney Steven C. Peck.

Taxes. There's no secret that business entities, LLC's and corporations have the ability to provide tax advantages. The reason for this is this country thrives when small business thrives. and when small business is earning money,businesses will hire more people. 70% of all businesses are small businesses. The government is consistently stimulating the small business industry. It is believed that small business will always benefit from tax breaks because of its importance in maintaining a thriving economy. Owning a business entity and understanding its tax advantages, tax breaks, can be a extremely useful benefit to even the smallest of small business owners.

Continue reading "Business Incorporation and its Many Advantages" »

While limited liability protects the owners, directors and officers of a corporation, they may still be personally liable in situation where they have severely mismanaged the corporation.

However, it is very rare for directors to be found personally liable because of the business judgment rule. This rule basically says that a director will not be held personally liable for a bad decision as long as he or she was acting in good faith, was diligent in learning information relative to that decision and was not personally interested in the underlying transaction. This rule therefore provides a broad amount of protection to corporate directors.

Continue reading "The Business Judgment Rule" »

There are several advantages to setting your business up as a sole proprietorship. Principally among these advantages is that sole proprietorships are very cheap and easy to setup, and fairly cheap and easy to run. This is because there are not a lot of laws and formalities that you have to worry about complying with. Thus, you do not generally have to hold any formal meetings, make any filings with the state (unless you are using a fictitious name) or pay the state any ongoing fees says California Business Lawyer Steven C. Peck.

Running a sole proprietorship can also make your life easier because you can mix your business and personal assets without worrying about running afoul of any legal requirements (although this is not necessarily a good practice from a practical standpoint), and your business taxes are relatively easy to prepare and file as your profits and losses are simply reported on your personal tax returns. Finally, if you start your business as a sole proprietorship and later find that your needs have grown and you need to run the business in a more complex form (such as an LLC), it is relatively easy to change the business form.

A business owner should consult an attorney early on and should find an attorney whom he can speak with when the need arises says California Business Attorney Steven C. Peck.

This means that every business owner or operator should make an appointment with an attorney at the very beginning of deciding to open a business, and then keep in touch with the attorney on a periodic basis to make sure that the business is operating within proper legal framework which will help prevent future problems.

Use your attorney to help you decide how to protect yourself and your family from potential liability. If you are not incorporated or operating under some other form of business entity which protects your assets, you need to correct this immediately. A good Los Angeles Business lawyer such as Steven C. Peck can counsel you on the correct business entity to choose depending on your business situation.

"Bulk sales" laws are intended to prevent business owners from defrauding or evading creditors by transferring all (or a substantial portion) of the assets of the business to another individual or entity. indicates Los Angeles Business Attorney Steven C. Peck.

The law is also intended to avert the possibility of businesses selling their assets below fair market value in a "sweetheart sale," in which the owner of the business manages to maintain a degree of control. For example, the law applies when the business assets are sold to another business that is controlled by the same owner. Virtually all states have adopted the Uniform Commercial Code that gives notice to creditors of bulk transfers of a business's assets.

Generally, when an existing business incorporates there is no plan to defraud creditors. These companies are simply changing the form of the business, and have every intention of honoring the debts of any previous incarnations. In cases where the corporation receives the assets of the unincorporated business and assumes its debts, the bulk sales law is a mere formality. The corporation is accountable for the debts of the business transferring the assets in proportion to the value of the transferred assets.

Concern arises when the business transferring all of its assets to the corporation has debts that the corporation does not assume. The corporation's officers should confer with a lawyer to ensure that the corporation will not be held legally responsible for those debts when it takes the assets from the other business. Bulk sales laws are intended to facilitate settling disputes around this issue says California Business Law Attorney Steven C. Peck.

If the company that is transferring the assets has debts that the corporation is not going to assume, the Fraudulent Transfers Act requires the corporation to take a number of steps before it can issue equities:

The corporation must prepare a Notice to Creditors of Bulk Transfer. The notice is printed in a general circulation paper that covers the judicial district in which the property being transferred is located, at least 12 business days prior to the date of transfer of the property.

The notice must also be published in the judicial district where the principal executive office of the prior business is located. Copies must be filed in each judicial district or county where the property is located and where the prior business had its principal executive office, with the county tax collector and the county recorder, at least 12 business days prior to the transfer.

If the creditors have no objection to the transfer, the corporation can take possession and title to the assets, free of all creditors' claims. If, on the other hand, the prior business's creditors have claims against the property, then special rules come into play under Section 6-106 Commercial Code. When a bulk transfer is about to be made the notice to creditors (Sections 6-105) has to state:

The names and business addresses of the transferor and transferee
All other business names and addresses used by the transferor within the last three years. Whether all of the debts of the transferor will be paid in full, and if so, the address to which creditors should send their bills. If the debts of the transferor are not to be paid in full as they become due, or if there is any doubt about that, the notice must also state the following:

Location and general description of the property to be transferred
Estimate of the transferor's total debts
Address where the schedule of property and list of creditors may be inspected
Whether the transfer is to pay existing debts
The amount of the debts and to whom they are owed
Whether the transfer is for new consideration
The time and place where creditors of the transferor should file their claims
The notice must either be delivered personally or be sent by registered or certified mail to everyone on the list of creditors provided by the transferor. It must also be sent to all other people whom the transferee knows to hold or declare claims against the transferor.

In cases where the corporation is attempting to gain ownership of the property of a prior business in return for its stock, and where the creditors are asserting their rights, the corporation must either pay the creditors (which essentially means they are paying twice for the property) or place the shares in the care of the court and let it determine ownership. In this scenario the corporation may wind up with unforeseen shareholders, leading to unforeseen difficulties.

Continue reading "Bulk Sales Laws Are Intended To Prevent Business Owners From Defrauding or Evading Creditors" »

What is a limited partnership?

A Limited Partnership ("LP") is an association of one or more general partners together with one or more limited partners to conduct business for profit as co-owners. The most important feature of a LP is that the limited partner enjoys limited liability as long as s/he does not participate in the control of the partnership business. The general partners of the LP are the ones who are responsible for the obligations of the LP.

In a limited partnership, it is the general partner who remains liable for the debts and obligations of the entity. For larger risk exposure, a corporation may be formed to serve as the general partner. A corporate general partner is protected from direct attack by a judgment creditor because the ultimate liability for the debts and obligations rests with the shareholders. By spreading share ownership, individual exposure is considerably reduced. Even without a corporate general partner, risk can be spread by distribution of limited partnership shares. If a judgment creditor obtains a charging order against one partner, the order goes to that partner's share in distributions from the partnership, and not to the entire business.

Continue reading "What is a Limited Business Partnership?" »

Michael Chapman, the owner of a building company with 20 employees in Santa Fe, New Mexico, has had trouble getting a bank loan and this month he let Kansas City Federal Reserve Bank President Thomas Hoenig know it.

Tight credit in commercial real estate "has really made it impossible for banks to lend to people like me," the president of Chapman Homes said during a question period after an April 7 speech by Hoenig. Chapman said his company, unable to get a loan to hire 15 workers while big Wall Street firms get record bailouts, is "too small to succeed."

Owners of small businesses across the country are telling Fed officials that they would expand and hire more workers if only they could get financing. Policy makers at the end of a two-day meeting starting tomorrow may cite scant lending as a drag on demand as they affirm a pledge to keep interest rates low for an "extended period."

"It's going to be a slow recovery to the extent it depends on banks opening up their lending," said William Ford, a former Atlanta Fed president now at Middle Tennessee State University in Murfreesboro. "Lenders have gone to the extreme of being very tight, very cautious, as they recover from serious earnings problems."

The Federal Open Market Committee is scheduled to issue a statement on April 28.

Confidence among U.S. small businesses fell in March to the lowest level since July 2009 as executives grew more concerned about earnings and sales, the National Federation of Independent Business reported April 13. More borrowers reported credit hard to get and good borrowers saw little reason to expand borrowing, said William Dunkelberg, the group's chief economist.

Out of Woods

Fed Chairman Ben S. Bernanke said in an April 7 speech that while a U.S. economic recovery is under way, "we are far from being out of the woods," in part because of tight credit.

"Bank lending remains very weak, threatening the ability of small businesses to finance expansion and new hiring," Bernanke told the Dallas Regional Chamber.

Commercial and industrial loans at U.S. commercial banks declined by $900 million during the week ended April 14 to $1.27 trillion, according to Fed data released on April 23. In March, such loans hit the lowest point in more than two years.

Revolving debt, such as credit cards, which are often used to finance small businesses, fell by $9.4 billion in February, the biggest decline in three months, according to Fed statistics.

'Extremely Weak'

"Currently, there is little evidence that financial institutions are significantly expanding the provision of credit and liquidity," Janet Yellen, president of the San Francisco Fed said in an April 15 speech in San Francisco. "Quite the contrary, even with very low interest rates, credit flows remain extremely weak."

The shortage of credit for small businesses will probably slow a decline in the U.S. unemployment rate, which fell to 9.7 percent in March from 10.1 percent in October.

Small companies generated about two thirds of the new jobs over the past 15 years, Cleveland Fed President Sandra Pianalto said in February. During recoveries from the 1990 and 2001 recessions, firms with fewer than 20 employees expanded their payrolls more than any other firms, she said.

The FOMC this week will probably affirm its view that the recovery may not be strong enough to reduce unemployment rapidly, said former Fed Governor Lyle Gramley, a senior economic adviser at Potomac Research Group in Washington.

Gotten an Earful

While speaking to executives across the U.S., Fed officials have gotten an earful from small business owners hungry for financing.

In Dayton, Ohio, Bernard Jergens, general manager of Breckenridge Financial Supplies, which sells automated teller machine supplies, told Pianalto in February his firm was forced to scramble for funding after its lender declined a refinancing application. Businesses "have to work harder to find a solution" to meager credit, he said to Pianalto.

In Santa Fe, Richard Czoski, 57, Santa Fe Railyard Community Corp's executive director and a developer for 25 years, told Hoenig that "conservative" real estate projects can't obtain financing.

"There is an unwillingness on the part of local banks to lend," he said in an interview. "Even reasonable projects can't get financing."

In Alexandria, Virginia, Diane Palmintera, president of Innovation Associates, told Fed Governor Elizabeth Duke on April 19 that start-up firms -- hurt by "contracting venture capital" and declining home equity -- are pressed for loans. "They are increasingly challenged even more than existing small businesses," she said.

Never Defaulted

Chapman, 57, who's never defaulted on a loan, says that with financing he'd add 15 or more jobs and build five or six more houses. "Anything called a commercial real estate loan is virtually unavailable," he said in an interview.

His concern was echoed last week by New Mexico Governor Bill Richardson, who wrote Bernanke and other banking regulators that the "overzealous" application of rules may be choking off lending. Community banks didn't cause the financial crisis but they "are feeling increased pressure to restrict lending by federal financial regulators in the field," he said.

Some banks may be reluctant to lend because of the large numbers of problem loans, Hoenig said in response to Chapman. "The banks are going to be more cautious," he said.

'Problem' Banks

U.S. banks reported profits of $914 million in the fourth quarter, compared with a $38 billion loss in the year-earlier period, the Federal Deposit Insurance Corp. reported. Still, the number of "problem" banks climbed to 702 with $402.8 billion in assets, the highest level in 17 years.

The policy makers' statement will probably affirm their March 16 description of inflation as "subdued," Fed watchers said. The central bank's preferred gauge of inflation rose at a 1.3 percent annual rate in February, below the Fed's longer-run goal of 1.7 percent to 2 percent.

In assessing the economy, the FOMC may be "heartened" by strength in the housing market and a firming in financial markets, said Gregory Hess, a former Fed economist who's now dean of the faculty at Claremont McKenna College in Claremont, California. He is a member of the Shadow Open Market Committee, a group that critiques Fed policy.

"Credit demand has been pretty soft and that means the economy is not going to grow rapidly or very much," said Sung Won Sohn, former chief economist at Wells Fargo & Co. and now an economics professor at California State University-Channel Islands in Camarillo, California.

"Sluggish growth, low inflation and weak credit demand all translate into what Bernanke has talked about: low interest rates for an extended period," he said.

Taken From Bloomberg News

One of the worst things that may happen to a fledgling company is making the mistake of not keeping properly documented records about all relationships involved in the business from day one. This observation also applies to the early start-up stages as well.

"While it's natural to be rather informal at the beginning, who knows what value the company will really have later. The value of the company later is the crucial key here and means that hiring a lawyer at the beginning of the start-up process for a company is a wise investment move for all concerned," states Los Angeles Business Attorney Steven C. Peck.

Often investors feel it's not necessary to hire legal advice that early in the process. Unfortunately, it's this very time when the business is making crucial decisions that will affect their future that they "need" legal advice. They also need to be keeping good records of everything that happens during their start-up. No one knows when these records will come in handy.

Even though it's statistically likely that most company founders will do just fine during their start-up by not documenting everything they do, the chances are high that those who don't take this precaution will have serious problems later. "The facts are that without any documentation on the company start-up, the founders assume legal risk," Peck says.

For these reasons, it's a good idea to discuss the founding of the company with a competent Los Angeles business lawyer, setup the correct entity, review and edit agreements, properly explain to the clients' the possible worst case scenarios and plan for them accordingly, and make sure that the new entity has been properly advised of the legal ramifications pertinent to their particular start up company. Many of these same issues will appear upon the purchase or sale of a company, too. Document any and all transactions in writing, and when in doubt call your attorney immediately.

There are many other pitfalls that a good business lawyer will be able to outline to founders of a new business and steer them in the right direction to success. Hiring a lawyer early is one smart business investment.

Continue reading "The Hiring of a Lawyer During the Start Up Process of a New Company Is A Wise Investment" »

In terms of business structure, there are several forms to choose from: a sole proprietorship, a partnership, a corporation, and a Limited Liability Company (LLC). When deciding which legal structure is best for a particular business, a business owner should be familiar with the main characteristics of each structure and be able to do a comparison.says California Business Law Attorney Steven C. Peck.

Sole Proprietorship
The sole proprietorship is the simplest business structure and the least expensive to form. It is generally owned by either one person acting alone or a married couple. All the assets of the sole proprietorship belong to the owner as well as any profits that the business generates. When it comes to paying taxes, the sole proprietor is only required to file an individual tax return and on it list the business' profits and losses.

One of the biggest disadvantages to the sole proprietorship is that the sole proprietor has unlimited liability and is held legally responsible for all debts against the business. This means that both the business and personal assets of the sole proprietor are at risk.

General Partnership
A general partnership made up of at least two people. Like the sole proprietorship, partnerships are inexpensive to form, but they require an agreement between all the partners involved that outlines how they will own and operate the business. In most cases, the profit and loss as well as the management responsibilities are shared among the partners, and each partner is held personally liable for partnership debts. Unlike the sole-proprietorship, a partnership files a separate tax return. The individual partners also report their share of profits and losses on their personal returns.

C Corporation

The C corporation is the most common business structure among mid-sized and big companies. Of all the business structures, the process of incorporating a business requires the most time and money. A corporation is also subject to more licensing fees and government regulation.

The owners of a corporation are its shareholders. The shareholders in turn elect a board of directors to oversee the business. With a corporation, the net business income is subject to corporate income tax. When funds are distributed as dividends to its stockholders, the money is again taxed (a process called double taxation). Unlike the sole proprietorship and the partnership, a corporation is a legal entity separate from its owners. This means that shareholders have limited liability for the corporation's debts.

S Corporation
The S corporation is a subcategory of the corporate business structure. Like the C Corporation, the business is owned by its shareholders, but in this case the number of shareholders is limited. The S corporation also provides a limited liability situation for its owners. The major difference between the S corporation and the C corporation is that in the former case, the business is taxed much like a partnership. This means that the income passes through to shareholders who then report it on their individual returns.

Limited Liability Company
A LLC is a relatively new business structure that combines the limited liability of a corporation with the tax advantages and flexibility of a partnership. It is generally considered a good choice for small businesses. LLCs do not have stock, and owners are considered to be in a self-employed status. Income can either pass directly through to the owners, or the members of the LLC can elect to be taxed like a corporation.

In closing, every business structure has its own set of pros and cons. Business owners should enlist the help of a professional accountant or attorney to make the comparison and choose the structure most suitable for their situation indicates California Business Attorney Steven C. Peck.

Continue reading "A Comparison of the Characteristics of Business Structures" »

One of the key legal features of corporations are their separate legal personality, also known as "personhood" or being "artificial persons".

However, separate legal personality does allow corporate groups a great deal of flexibility in relation to tax planning, and also enables multinational companies to manage the liability of their overseas operations. There are certain specific situations where courts are generally prepared to "pierce the corporate veil", to look directly at, and impose liability directly on the individuals behind the company. According to California Business Law Attorney Steven C. Peck the most commonly cited examples are:

Where the company is a mere façade;
Where the company is effectively just the agent of its members or controllers;
Where a representative of the company has taken some personal responsibility for a statement or action;
Where the company is engaged in fraud or other criminal wrongdoing;
Where the natural interpretation of a contract or statute is as a reference to the corporate group and not the individual company;
Where permitted by statute (for example, many jurisdictions provide for shareholder liability where a company breaches environmental protection laws) in many jurisdictions,
Where a company continues to trade despite inevitable bankruptcy, the directors can be forced to account for trading losses personally;

Continue reading "Coporations Have a Separate Legal Personality" »

According to reports issued this week, the domain name Sex.com will be put up for auction next week by its owners, with the bidding set to start at $1 million.

The domain, once considered one of the Internet's most valuable, is definitely one of its most storied. Acquired by Escom LLC in 2006, the domain is set to be auctioned off March 18 by New York law firm Windels Marx Lane & Mittendorf LLP, as part of a foreclosure by lender DOM Partners LLC, which backed the acquisition.

Escom, which, according to a Reuters report, published in the Globe and Mail, has been in default on its loan for more than a year. The article quotes a lawyer for DOM Partners, Scott Matthews, who says the company is foreclosing according to its rights outlined in the loan agreement.

The company acquired the domain in 2006 - for an amount believed to be in the range of $14 million - from then-owner Gary Kremen, who first registered the domain in 1994. Prior to its sale, Sex.com had been the subject of a long legal battle, one that continued until 2007.

In May of 2007, lawyers for Kremen announced that the Ninth Circuit Court of Appeals had issued an order dismissing the most recent appeal of a $65,000,000 judgment against Stephen Michael Cohen, effectively ending the case - at the time, it was considered a landmark decision in Internet law.

The story, in brief, is that Cohen used a fraudulent fax to convince the domain's then-registrar, Network Solutions, to transfer the domain to him. While Kremen sought to have the domain returned, Cohen operated a banner farm on the domain that reportedly generated between $50,000 and $500,000 per month, and continued to operate until 2000, when the courts ordered Network Solutions to return the domain to Kremen. Cohen left the country, and was arrested in Mexico in 2005.

Sex.com's story has been the subject of several books. But to date, the most interesting thing anyone has done with sex.com is steal it. The 2006 sale would seem to have been designed to tie the domain to a proper business venture, but - as observed in this week's TechCrunch report on the auction - as of earlier this week, the domain pointed to the PG landing page of a fairly ill-conceived sex-related "portal" site (as of Friday morning, the domain pointed to a parked page).

One of the most interesting subplots to the story is the fact that one of the Internet's most valuable properties has never really been properly developed. It's not clear who the suitors for the domain might be, but according to the announcement, they'll be required to bring a certified check for $1 million to the auction.

"I'm sure you've heard it before but the analogy I use is: it's like real estate," says Adam Eisner, director of domain services at wholesale registrar Tucows. "There are lousy properties, good properties, and great properties. As an address, sex.com is a great property. And in general, more people are starting to realize the value in the good and great names. It doesn't only apply to the great properties, though. Even smaller businesses are increasingly shelling out one to five thousand dollars to get domain names that are a perfect reflection of their business. Sure, they can have an okay name for a few bucks. Or they can spend a bit of their marketing budget to secure a good or great name."

Obviously there is still a great deal of inherent value in the domain sex.com - it's a single word, extremely topical and relevant, a powerful keyword related directly to a product people have proven very willing to pay for online. The question is whether that inherent value in the specific domain has diminished over time, though the changes in the nature of web navigation, the domain space itself and the user's relationship with the domain.

The question of the specific value of sex.com will be answered at next week's auction. The question of whether something compelling can be done with the property may take a little longer to answer.

While the auction is set to be an in-person affair at the law firm's New York offices, the Globe story quotes one of the partners as saying the firm was arranging for potential buyers to be able to bid online.

Continue reading "Domain Name Sex.Com to be Put up For Auction" »

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" »