Contracts

How Can A Simple Noncompete Agreement Benefit Your Business?

Two of the most valuable assets of your business are the goodwill and the intellectual property that you’ve developed. A noncompete agreement can be instrumental in protecting these aspects of your business from a wide range of problems with departing employees, including the spread of trade secrets and other confidential information to your competitors. Today’s post will discuss the legal requirements you should keep in mind in order for your noncompete to be enforceable, and some of the potential benefits of using a noncompete agreement in your business.

Setting the Stage At some point during the life of your business, you will likely need to recruit, train, and rely on employees to help grow (or simply maintain) your business. You’ll have to...

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Contracts

Series | Understanding Contract Terms

In this iVLG blog series, we take common terms you see in your business contracts and help break them down, so you can understand what exactly the terms mean, the role of each term in your contract, and how to explain to the other side why the term makes sense.

We know that reading a contract can be a daunting task, especially when it’s full of words you may not have seen or don’t fully understand. Our goal is to help you understand why contracts include the “boilerplate” terms and how those terms may affect your business. Next time you sign on the dotted line, you’ll know exactly what you’re agreeing to.

The understanding contract terms series will breakdown the following contract...

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Contracts

How to Position Yourself to Win a Contract Dispute

Yesterday the Washington Court of Appeals released an opinion providing a good example of how you can position yourself to win a contract dispute. The opinion affirmed a summary judgment awarding more than $300,000 plus fees and interest to GLV International, Inc. against American Rodsmiths, Inc. and its president Robert Scherer.

The Facts of the Case American Rodsmiths purchased more than $300,000 in goods from GLV. American Rodsmiths then failed to pay its outstanding balance. GLV extended credit to American Rodsmiths based on a personal guaranty from the company president, Mr. Scherer. The personal guaranty included a provision awarding attorney fees to GLV if it prevailed in a suit against Mr. Scherer to enforce the terms of the personal guaranty. GLV offered...

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Contracts

A Practical Guide to Reseller Permits in Washington State

It’s important to keep up-to-date on state and local regulations that govern the purchase and sale of goods within Washington state, including which sales taxes may affect your business. Washington no longer uses resale certificates; instead, it requires every business that sells goods at wholesale to apply for a reseller permit to present to vendors. Reseller permits allow you to purchase goods (or services) that you intend to resell without having to pay retail sales tax on the original purchase. If you run a business that purchases items that you are intending to resell, you should obtain a reseller permit in order to avoid any unnecessary tax consequences for your purchases. Today’s post details some of the key issues that surround...

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Contracts

A Partnership Agreement: “You should have it in writing”

Two close friends decide to start a company. They agree on just about every issue, including how the business should be formed and managed. They are ready to launch, make money, and grow their idea into a sustainable business. Each partner has an equal stake in the company, and they’ve decided that each will receive equal compensation as well. They want it to be simple, no lawyers, no accountants, no additional partners, etc. You get the picture, right?

Both partners trust each other, and neither has any reason to believe that their relationship will deteriorate. What they haven’t taken into account is that circumstances change; life is not predictable, and neither are the twists and turns that many businesses (and their...

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Contracts

Former Amazon Exec Sued For Going to Work for Google

When you sign a non-compete agreement in exchange for $325,000 as part of a severance agreement, you should avoid going to work for your prior employer’s rival (at least for awhile).

Former Amazon executive, Daniel Powers, signed a severance deal that he would not go work for the competition for at least 18 months. In exchange, Powers received $325,000. Rather than avoiding the “competition” and enjoying his severance pay, four months later Powers decided to accept a new job with Google, as the director of cloud platform sales.

While non-competes are not valid in California, the lawsuit that was filed by Amazon on Friday will likely stand as it was filed in Washington’s King County Superior Court. In a similar case, a...

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Contracts

Understanding Contract Terms (post 6): Arbitration

As is the case with all the terms we discuss in this series, you have likely run across the term arbitration in a number of contracts. You also probably have a vague idea of what arbitration is. Today’s post will give you a better understanding of why contracts include an arbitration clause, including some of the benefits and drawbacks to using arbitration instead of the traditional litigation process.

First things first, let’s explore the definition of arbitration. Webster’s Dictionary defines arbitration as the hearing and determination of a case in controversy by an arbiter. Essentially, when a dispute arises between two parties, the case is brought before a neutral third party (the arbitrator), and each side presents its side of the...

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Contracts

Understanding Contract Terms (post 5): Conditions Precedent

In this latest post in our series on understanding contract terms, we’re tackling conditions precedent. Below is the definition and explanation of how conditions precedent affect your contracts.

A condition precedent is an event which must take place before a party to a contract must perform or do their part. For example, you agree to paint a house if the owner of the house supplies the paint. Until the paint is supplied, you’re not required to (or able to) paint.

If a condition precedent does not occur, no duty of performance arises and no payment is required. Furthermore, the party protected by the condition is not in breach when that party does not perform his or her part of the contract.

Use in...

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Contracts

Understanding Contract Terms (post 4): Force Majeure

In today’s post, we continue our series on understanding contract terms. In this fourth post, we focus on the term force majeure.

Webster’s Dictionary defines force majeure as “an event or effect that cannot be reasonably anticipated or controlled”—for example, such as hurricane, flooding, earthquake, war, riots, etc. The term is French, and is translated to mean “superior force.”

This term is included in contracts as a way to relieve each parties’ liability or obligation when an extraordinary event occurs or circumstances arise that are beyond the control of the parties and prevent one or both of the parties from satisfying their obligations under the contract. It is most commonly used in insurance, construction, and supply contracts.

Typically, the force majeure clause does...

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Contracts

Understanding Contract Terms (post 3): Severability

In just about every contract you’ll come across, you’ll see the term severability somewhere in the last few paragraphs of the contract. It’s one of those ‘boiler plate’ clauses that most people glance right over when they’re reviewing a contract. However, the effects of this clause are worth reviewing and understanding. In today’s post, the third in our series on understanding contract terms, we explore the definition of severability, and how it may affect your business.

Webster’s Dictionary defines severability as “capable of being divided into legally independent rights or obligations.” Finally, we have a Webster’s definition we can work with. At the root of the definition is the idea of dividing something into parts.

In contract terms, this clause refers to...

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