This document summarizes a presentation on basic contract law for small business owners and independent contractors. The presentation covers what constitutes a contract, how contracts are formed, important boilerplate provisions, remedies for breach of contract, common questions, and practical tips. It was presented by attorney Ryan K. Hew and addresses capacity, mutual agreement, consideration, and legality as the four elements of a valid contract.

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. Outline
Introduction
What is a Contract? How is a Contract
Formed?
Boilerplate Provisions: They are Important!
Suing for Breach of Contract: Remedies
F.A.Q.s
7 Practical Tips for Contracts

4. Introduction
Ryan K. Hew, Attorney at Law, JD/MBA
I focus on transactional and compliance
work.
Preventative law is all about avoiding suits.
For contracts, attention to detail and
making assumptions about the future are
key. In addition, knowing how the deal was
negotiated plays a vital role to
interpretation.

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 parties
have rights) vs. Unenforceable (missing a
requirement):
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: it
is the this-for-that concept - it can be an action or
refrain from taking action, BUT:
illusory promises, gifts, past consideration,
already obligated to do, moral obligations are
not valid consideration.
Promissory Estoppel - where one side
detrimentally relies on a promise on the other
(Examples: person who moves for a job, the offer
is rescinded after the person moves or a nonprofit
making expenditures for a promised contribution
that is never made).

9. Boilerplate Provisions:
They Are Important!
Attorneys Fees and Costs - losing party in suit pays
ADR - 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 a
part of a particular provision w/o giving up future claims regarding
that provision. (i.e just because I don’t enforce it now, doesn’t mean I won’t
enforce it later)
Severability - invalid provisions, will not invalidate the whole
agreement
Integration - 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/employment
Assignability/delegation - can you assign the rights/delegate
the duties under the contract?
Limit on Damages - (discussed later)
Warranties - promises and assurances regarding the contract
obligations (i.e. I warrant I own this stuff I am selling to you.)
Indemnification - one (or both) parties guarantees that it will
cover the costs of disputes brought by 3rd parties
Counterparts - you can execute copies without needing
everyone to be present at the same time to sign

11. Suing for Breach of
Contract
What 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.s
Question: 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.s
Question: 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.s
What is the statute of limitations for a
contract claim (i.e. if there is a breach how
many years can the nonbreaching party
bring a suit)?
Haw. Rev. Stat. § 657-1 et seq.: 6 years

16. F.A.Q.s
Question: Are boilerplate provisions
enforceable?
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.s
Are 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 Tips
Attorneys can draft whatever you want, but always consider a) legality
and b) your ability to supervise/enforce your own agreement.
Ambiguity is construed against the drafter, so think when deciding who
should draft the agreement.
Develop an exit strategy, should you need to repudiate a contract.
If you are the non-breaching party, try communicating first, then
consider not paying, ADR, then lawsuit last.
Don’t make promises over email. Use a phone or have an in-person
meeting.
Consider MOUs/LOIs for short-term deals that the details need to be
filled in over time.
A Contract Audit should be performed periodically to determine what
obligations you owe and are owed outstanding AND gives you time to
consider re-negotiating some contracts.

19. Thank You
Mahalo for coming.
If you have further questions or contract
drafting needs please contact me at:
Email: ryankhew@hawaiiesquire.com
Office Phone: (808) 944-8400