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Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
Basic Contract Law: For Small Business Owners and Independent Contractors
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Basic Contract Law: For Small Business Owners and Independent Contractors

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This presentation was given to the Social Media Club of Hawaii's pros on November 14th, 2012. It discusses the basics of contract law and is intended for an audience of small business owners and …

This presentation was given to the Social Media Club of Hawaii's pros on November 14th, 2012. It discusses the basics of contract law and is intended for an audience of small business owners and independent contractor consultants. As this is general legal information please do not rely upon it for specific legal advice, and seek out an attorney in a relevant jurisdiction for legal help and services.

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  • 1. Basic Contracts Law: For Small Business Owners and Independent Contractors presented by Ryan K. Hew, Attorney at Law 535 Ward Avenue, Suite 206 Honolulu, hi 96814
  • 2. DISCLAIMER• THE INFORMATION FOUND ON THE FOLLOWING SLIDES ARE MEANT FOR AN ORAL PRESENTATION. ALL THE INFORMATION FOUND ON THE SLIDES ARE NON-SPECIFIC AND GENERAL. NO PERSON SHOULD RELY ON THEM TO LEGALLY ACT OR REFRAIN FROM ACTING. IF YOU NEED LEGAL ADVICE CONTACT AN ATTORNEY IN YOUR RELEVANT JURISDICTION. MAHALO.
  • 3. OutlineIntroductionWhat is a Contract? How is a ContractFormed?Boilerplate Provisions: They are Important!Suing for Breach of Contract: RemediesF.A.Q.s7 Practical Tips for Contracts
  • 4. IntroductionRyan K. Hew, Attorney at Law, JD/MBAI focus on transactional and compliancework.Preventative law is all about avoiding suits.For contracts, attention to detail andmaking assumptions about the future arekey. In addition, knowing how the deal wasnegotiated plays a vital role tointerpretation.
  • 5. What is a Contract?Basic: a promise for a promise (or an act)A contract (express or implied) has 4 elements: Capacity (your ability to enter into a contract); Mutual agreement (“meeting of the minds”) (offer and acceptance); Consideration (something of value exchange); Legality (only legal deals - no slavery, usury, drug deals).
  • 6. How is a Contract Formed?Valid Contracts are Enforceable (both partieshave rights) vs. Unenforceable (missing arequirement): Capacity - legally competent minors/intoxicated/insane = NOT Void = not valid from the start (physical duress) Voidable = binding on one side (minor) (mental duress) - a child can reject the contract
  • 7. How is a Contract Formed? cont.Mutual Assent - “meeting of the minds” Offer - intent + definite + communicated to the other side: this becomes basis of terms Acceptance - clear and unqualified Counter-offer - qualification causes the offeree becomes offeror
  • 8. How is a Contract Formed?Consideration - is a bargained-for-exchange: itis the this-for-that concept - it can be an action orrefrain from taking action, BUT: illusory promises, gifts, past consideration, already obligated to do, moral obligations are not valid consideration.Promissory Estoppel - where one sidedetrimentally relies on a promise on the other(Examples: person who moves for a job, the offeris rescinded after the person moves or a nonprofitmaking expenditures for a promised contributionthat is never made).
  • 9. Boilerplate Provisions: They Are Important!Attorneys Fees and Costs - losing party in suit paysADR - mediation? arbitration? both?Choice of Law - What state’s laws will apply in a dispute?Jurisdiction - Where a lawsuit must be filed in a dispute?Waiver - agreeing to give up the right to sue for a breach for apart of a particular provision w/o giving up future claims regardingthat provision. (i.e just because I don’t enforce it now, doesn’t mean I won’tenforce it later)Severability - invalid provisions, will not invalidate the wholeagreementIntegration - what you see written is the whole agreement
  • 10. Boilerplate Provisions: They Are Important!Notice - what is proper notice/how is it handled?Relationships - you are not a partnership/employmentAssignability/delegation - can you assign the rights/delegatethe duties under the contract?Limit on Damages - (discussed later)Warranties - promises and assurances regarding the contractobligations (i.e. I warrant I own this stuff I am selling to you.)Indemnification - one (or both) parties guarantees that it willcover the costs of disputes brought by 3rd partiesCounterparts - you can execute copies without needingeveryone to be present at the same time to sign
  • 11. Suing for Breach of ContractWhat is the Contract worth? Efficient breach: it is valuable to break a contract for a more favorable deal.Remedies: Look to the contract first! compensatory - to compensate you for the breach: put you where you would have been if no breach occurred. consequential - have the breaching side pay for all the problems that arose from the breach (usu. limited) punitive - only available if the breaching party was willful and reckless, usually never awarded - only by statute or a business tort claim - contract law isn’t about punishment liquidated - the contract may have a formula built-in for breaches, BUT it must be fair - if a penalty fee is disguised as a liquidated clause a court will not enforce it
  • 12. F.A.Q.sQuestion: Are oral contracts valid? Yes. Express contracts are stated in words, whether oral or written. Problem is evidence (“he said, she said”). Some deals must be evidenced in writing: paying another’s debt; sale of land interest (property law); performance takes longer than 1 year; and sale of goods for $500.00 or more.
  • 13. F.A.Q.scontract?Question: Can an email be a Yes. A contract is a promise for a promise/act. If a series of written documents evidences all the requirements of a contract - you have a contract!This raises the point of implied contracts: implied by conduct/actions (versus words); implied by law court will create a contract to avoid one side benefitting at the expense of the other.
  • 14. F.A.Q.sQuestion: Is silence acceptance? No. The offeror can never impose a duty to the offeree to do something, as their is no previous obligation, BUT: if the offeree does take action; in mutual agreement both parties agree silence is acceptance; and prior dealings, the parties have shown silence to be acceptance.
  • 15. F.A.Q.sWhat is the statute of limitations for acontract claim (i.e. if there is a breach howmany years can the nonbreaching partybring a suit)? Haw. Rev. Stat. § 657-1 et seq.: 6 years
  • 16. F.A.Q.sQuestion: Are boilerplate provisionsenforceable? Most of the time yes, as they are often ignored, and what people don’t realize, many of them are key in a breach or for a suit. Some of the provisions are unenforceable. Adhesion Contracts - unfair terms, when the difference in leverage between the two parties is big (mostly consumer law).
  • 17. F.A.Q.sAre noncompetes and NDAs enforceable? NCAs are enforceable (except in Cali) - risk to the company vs. person’s ability make a living AND public good: duration - 3 or 30 years? geographic restriction - C&C of HNL or U.S.A? scope of restriction - industry-limited or wide? NDAs are enforceable if you can show: existence of a trade secret/confidential information; that the secret/information was acquired improperly or as a result of the relationship; and that there was actual/threatened unauthorized use of the secret/information.
  • 18. 7 Practical TipsAttorneys can draft whatever you want, but always consider a) legalityand b) your ability to supervise/enforce your own agreement.Ambiguity is construed against the drafter, so think when deciding whoshould draft the agreement.Develop an exit strategy, should you need to repudiate a contract.If you are the non-breaching party, try communicating first, thenconsider not paying, ADR, then lawsuit last.Don’t make promises over email. Use a phone or have an in-personmeeting.Consider MOUs/LOIs for short-term deals that the details need to befilled in over time.A Contract Audit should be performed periodically to determine whatobligations you owe and are owed outstanding AND gives you time toconsider re-negotiating some contracts.
  • 19. Thank YouMahalo for coming.If you have further questions or contractdrafting needs please contact me at: Email: ryankhew@hawaiiesquire.com Office Phone: (808) 944-8400

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