Categories
Contracts Business Law

Breaking Contracts Because of COVID-19

Breaking Commercial Contracts During COVID-19 

Many businesses may not be able to fulfill their contractual obligations on time or at all due to the widespread outbreak of the COVID-19 coronavirus. If you are a business owner wondering if you can get out of a contract because of the pandemic, this post is for you.  

To determine if your contract can be breached because of the pandemic depends on a lot of factors, all of which must be reviewed by a business attorney thoroughly. An attorney can help you navigate through the requirements of the provision and aid your legal process.

At a minimum, we need to look at three factors:  

  1. Do you have a written contract that’s legally enforceable?  
  2. If so, does your written contract have a force majeure clause?
  3. Does the force majeure clause include the coronavirus pandemic?

What is a “Force Majeure” clause?  

Force majeure is French for “superior force,” and in the contract world it is legalese for an event that cannot be anticipated or controlled. Think “Act of God,” or an event that no one could have foreseen.  

A force majeure clause excuses a party from their contractual obligations because of a major unforeseeable event that makes it impossible for a party to complete their end of the bargain.   

Which events are considered force majeure events?  

To answer this question, we must look at the force majeure events included in the specific clause of your contract. It’s a case-by-case legal analysis. Some force majeure clauses can include natural disasters like floods and earthquakes, violence such as war or civil unrest, shortages of power or even epidemics, pandemics, and mandated quarantines, such as events connected with the COVID-19 coronavirus.

Your contract may include a list of events in the force majeure clause as those listed above or it may not. Just because the coronavirus pandemic itself is not included does not mean that you cannot invoke the clause as an excuse from your obligations under the contract. So, it’s important to have a business attorney review your contract for the legal analysis and to help guide you through the legal process.

What should I do about my contract during the coronavirus outbreak? 

I know this may seem like the obvious answer, but you must hire a business lawyer to review your contract to answer the three questions above. The answers are not simple, and they require a legal analysis of the negotiated terms, the breach at stake, the scope of the force majeure clause and the direct cause of your inability to complete your obligations under the contract.  

There are different conditions that change the outcome for everyone. A case-by-case legal analysis is required for each individual case to determine which plans of action are best for you and your business. 

We can help!

When you wish to break an agreement, the Benkabbou Law Firm, PLLC team will be able to fully examine your situation, help complete the application, and inform you of options available to you. Call our office at 813-586-3351 or email us at consult@blawfirmpllc.com to schedule a consultation with one of our attorneys. We look forward to being of service! 


To receive consistent updates like this one, please consider subscribing to our newsletter! We would love to have you as part of the Benkabbou Law Firm, PLLC family.

Subscribe to our newsletter here.

DISCLAIMER: Information communicated in, to, or through this blog post and your receipt or use thereof: (1) does not create an attorney-client relationship; (2) it is not intended as a solicitation; (3) is not intended to convey legal advice or constitute legal advice; (4) and it is not a substitute for obtaining legal advice from an attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter.

Categories
Business Incorporation Business Law Contracts

5 Mistakes Rookie Entrepreneurs Make When Buying a Business

Buying an existing business can have its advantages. If the business already has a loyal fanbase, you could potentially have plenty of customers, which makes it easier to ensure continued success. However, there are some mistakes that people tend to make when buying businesses that puts future success in jeopardy. Below, the Benkabbou Law Firm describes some of the common legal rookie mistakes that people make when buying a business and what you can do to avoid making them.

1. Not Being Aware of the Reason(s) for the Sale

Always find out the reason for the sale of a business. Some entrepreneurs start businesses and move on from them quickly because they are always looking for a new, profitable venture. Just because someone is selling a business, it does not mean that the business is not doing well. Some business owners choose to sell at the right time when they can make a decent amount from the sale while stepping away from the industry for personal reasons. However, there are times when business owners are looking to sell because they are unable to achieve success with the business. In order to make an informed decision, you need to know this information in advance.

2. Not Reviewing the Contract Before Signing

The sales contract between you and the original business owner is a BIG deal. If you do not read through it and have any legal jargon translated into simpler terms before signing, you could make some major EXPENSIVE mistakes. Always make sure that you have a good understanding of what the contract entails before you sign it. You should have a business lawyer carefully review all the details of the contract before moving forward. 

3. Not Having a Plan for the Business

Before you buy a business, you should have a plan for it. If you know what the business is about and who the targeted audience is in general, you should be able to come up with some unique and fresh ideas that could help you take the business to the next level. If you do not have a plan and you just jump into the purchase anyway, you could run into a lot of trouble, including coming across unexpected legal issues.

4. Failing to Seek Legal Advice Before Making the Transaction

Not getting legal advice when making such a major transaction is one of the worst things you could possibly do. You need to speak with an attorney about your intentions of purchasing the business. An attorney can help you make the decision to invest in the business based on different factors, including the potential legal liabilities of the business, the value of the business, and more. Your attorney will help you review financial documents, contracts, governing documents, etc. for the business to let you know if you are making a wise investment or not. Your attorney will also ensure that the purchase will not violate any antitrust laws as these laws can be implicated in some business acquisitions.  

5. Investing in a Business That You are Not Passionate About

If you are not passionate about a business and what it sells, you should not invest in it. You need to have a true passion for the product or service that is provided to the customers. If it is not something you love or believe in, you are going to have a difficult time staying motivated to keep things running during the pitfall of the entrepreneurship journey.

Thinking of Buying a Business? Get Expert Legal Advice Ahead of Time

When you are thinking about buying a business, make sure to get legal expert advice beforehand. At the Benkabbou Law Firm, we are prepared to help you make an informed decision about your investment. Your best interests are important to us. Reach out for a consultation by calling us at 813-586-3351 or emailing us at consult@blawfirmpllc.com. 

Categories
Business Law Contracts Media and Press

5 Reasons Why You Should Never Use a Free Contract Template

It is almost impossible not to browse the web and not come across hundreds of contract templates for various areas of the business world. Even though many think that using a contract template is the best way to draft a contract, it can lead to serious legal problems. Thousands of parties enter into contracts that have been drafted using a template in lieu of a contract that has been drafted by an attorney. Below, you will find the dangers of using a contract template instead of an attorney drafted contract and how it can impact your agreement with another person or company.

1) Using the Wrong Contract Template

One of the biggest dangers of using a contract template instead of a contract written by an attorney is that you might use the wrong form. There are thousands upon thousands of templates available for use online. How do you know which one is correct for your situation? You simply do not know. It is possible that you could be signing a form that is for a joint venture when you would rather sign a form that establishes a partnership agreement between you and the other party. Once the documents are filed, you will need to go through a lengthy and expensive legal process to fix the problem.

2) Omitting Important Language

Language is key in any type of contract you draft, which is why you need to avoid templates at all costs. You have no idea who wrote the template you are using, which can lead to the omission of important language that can either make or break your agreement. When you work with an attorney to draft a contract, he or she will know the appropriate language to use in your contract based on the situation being discussed.

Why You Should Never Use a Free Contract Template

3) Not Having an Understanding of Your Rights

It is vital in any legal situation, especially when writing or signing a contract, that you have an understanding of your rights. When you use a contract template, you likely will not have a solid understanding of how your rights should be protected in the contract. An attorney knows the situation you are in and how your rights come into play, ensuring that all of your applicable rights are protected in the contract.

4) Failing to Tailor the Contract Template to Your Situation

Using a contract template does not make it easy to tailor the contract to your specific situation. For example, a contract template will not have language in it to address the terms of the deal you and the other party have discussed at length in meetings or via email. Instead, the wording will simply be generic and could cost you a lot of money and time if the other party decides to take advantage of this situation.

Why You Should Never Use a Free Contract Template

5) Failing to Know the Differences in State Laws

When you utilize a contract template, you fail to know or look for the differences in state laws. It is vital to the health of the contract that you have an attorney draft a contract for you since they know how state laws differ, especially when it comes to registering or creating a business.

In Need of a Contract? Contact an Experienced Contracts Attorney Today!

Do you need to draft a contract for your business? It is best done with the help of an experienced contracts attorney. Call or text the office of The Benkabbou Law Firm, PLLC at 813-586-3351 to schedule a consultation today.

Categories
Contracts Business Law

Sample Contract Template…should I use a contract template form online?

It is never a good idea to google a sample contract template and sign your name on it. It is almost better to have a verbal agreement than it is to sign your name on a sample contract template that could work in the best interest of your opponent. Imagine that! First, let’s talk about why formal written contracts are important and then we can discuss why DIY contracts are a bad idea.

Doing business properly requires you to make a small investment in the onset of your business transactions. Contracts are NECESSARY when entering into any type of transaction. Outside a few exceptions, your verbal agreement will constitute a legal contract anyway. So why not make sure you protect your interests and assets by capturing the agreement in writing? I mean if everyone kept their word, there would never be a need to have contracts.

There are many benefits to having your business transactions solidified in a formal contract. Contracts allow you to create your own law in a sense, so you will bind yourself to the law of the contract as long as what you are signing is legal. In addition to the deal points, you decide how the disagreements will be handled and who has what right. You lay out the foundation and intricacies of the transaction based on your comfort level.

Aside from protecting your legal rights, contracts also give you great leverage in the event of a breach of the agreement. You see, a properly drafted contract will likely scare the opposing party from suing you. Business lawsuits are a business decision at the end of the day. If it is likely that the opposing party will lose in court because you properly protected yourself with a well-drafted contract, then you are less likely to find yourself in litigation. So take advantage of that and protect yourself accordingly.

Now that you understand that formal contracts are necessary, let’s discuss why you should never, ever, EVER download a sample contract template online.

Business owners only concern themselves with the deal points of the contract, so as long as the other party is paying the negotiated amount for the services provided or the products for sale, it is assumed that the legal needs are covered. NOT!! It’s never that simple, and you are operating with a HIGH risk of litigation. The last thing a small business owner needs is to set aside money to defend a lawsuit, which is waaaaaay more expensive than hiring a lawyer to do it right from the beginning.

Business owners do not pay attention to the boilerplate provisions (the stuff in the end of the contract) that for some reason don’t seem important to them. Those boilerplate provisions are not only important for protecting your rights and limiting your liability, but they set the tone of any litigation that may ensue. The law does not care that you did not know better, the law assumes you consulted with a lawyer.

DO NOT download a contract from the Internet and think you covered your legal basis, chances are, you did not. You are not a lawyer, and you are not trained to review legal documents. You will not know what you don’t know until you find yourself in a disagreement or worse defending a lawsuit. Most importantly, you may have given the other side so much rights and didn’t protect any of your rights. I have seen this avoidable mistake one too many times in my practice.

Bottom line, being proactive with your legal needs is always cheaper than waiting till something goes wrong. If you consult a lawyer when things go wrong, just know that it will be very costly and more expensive than doing things right from the start. Such a mistake could even mean winding down your business.