What does ‘breach of contract’ actually mean?

When two or more parties enter into an agreement, there are specific obligations which are expected to be met by those parties (individuals or companies).  However, when one or more of those parties fail to meet the express obligations, it is known as a ‘breach’ in legal terms.  There are many actions (or even inactions) that can be considered a breach, depending on the terms of the agreement.  A breach may occur when one of the parties does not perform according to the agreement’s terms, does not perform within the time guideline outlined in the contract, or simply fails to perform at all.

When a contract is breached, or allegations made that an agreement has been breached, either party or both may desire to enforce the terms of the contract or agreement, or recover financial compensation for losses which were a result of the alleged breach.  This may be approached in a variety of ways from a legal standpoint including litigation, through mediation, binding arbitration, or other alternative methods of dispute resolution.

Examples of remedies or “relief” for breach of contract under the law

There are several remedies which may be awarded to one party by the other to settle a dispute over a contract that has been breached, including specific performance, damages, or cancellation of the contract or agreement and restitution.

Specific performance – when damages are not an option, the party who did not breach the contract may seek specific performance which simply means that the party breaching the contract may be ordered by the court to perform a specific duty so that the non-breaching individual or party essentially ends up in the position they were initially intended.  This is usually only a remedy when the terms contained in the contract are unique or rare.

Damages – damages may be compensatory, punitive, nominal or liquidated, and are the most common remedy sought when a contract is breached.  Essentially, the party who breached the contract will make payment in some form to the non-breaching party.

Cancellation and restitution – the contract or agreement may be cancelled by the non-breaching party; this party may then take action and file a lawsuit for restitution provided the party who breached the contract has been given a benefit by the non-breaching party.  Cancellation essentially relieves both parties of all obligation, and voids the contract; restitution allows the non-breaching party to reclaim the benefit given to the breaching party, putting the non-breaching party back in the position it was in before the breach occurred.

For further explanation of breach of contract and legal options, contact the Beverly Hills business attorneys at the Law Offices of Spotora & Associates.

Not to say incorporating is for every Los Angeles business, because it is not.  There are circumstances in which becoming a corporation can be detrimental, particularly for new businesses.

The tax advantages alone are reason enough for many businesses, particularly those that are sole proprietors, to incorporate.  According to statistics, Schedule C businesses (sole proprietors) are much more likely to be audited by the IRS than corporations.  Additionally, corporations generally enjoy lower tax rates as owners may distribute at least a portion of business profits as income not considered self-employment income.

Below are some additional advantages of incorporating:

• ŸCorporations can have an unlimited life, which means the corporation can continue on even after the owner/partners are deceased.  Additionally, corporations create tax benefits in some situations, and can easily transfer ownership by transferring securities.
• ŸConfidentiality is another advantage of incorporating for those who prefer privacy, and who would rather the general public did not know all of the business affairs.
• Credibility.  There is no doubt that having CORP or INC at the end of your company’s name creates an aura of trust.  While it’s really a simple matter of how people perceive things, it still matters.  Your business is more likely to flourish, because potential clients feel more confident and secure in dealing with a corporation.

While there aren’t many disadvantages of incorporating, there are a few:

• ŸAdded paperwork.  When you incorporate your business, you will be required to pay annual fees and file with the state periodically, therefore legal record-keeping means additional paperwork.
• ŸAdded expense.  Setting up a corporation is a bit more costly than just starting to work as a sole proprietor.
• Certain formalities must be observed by owners and directors; annual meetings are required as well.

Sometimes it’s difficult for an individual or partners to determine if it would be to their benefit to incorporate.  This is where an experienced Los Angeles business incorporation attorney can help.  At Spotora & Associates, we understand that the business entity you choose can have a huge impact on whether you succeed or fail.  Contact us today, and let us counsel you on the best business formation for your company.

When spinoffs occur, two or more public companies can be created and these businesses would be well advised to hire an experienced business attorney to consider the legal issues and potential ramifications that must be addressed.

First, the board of directors must deem that a spinoff is in the best interests of shareholders and other key stakeholders. Spinoffs can be a complex, challenging task, so the board must balance their interests with the need to treat the decision with care and fairness. It is not just about increasing share price or calming shareholder activists; spin off companies should be created for best interests in the long-term.

Companies should remember that extensive disclosures to shareholders must be completed when a spinoff transaction occurs. Legal counsel can help to prepare these required disclosure documents and inform directors of the new company what their responsibilities are in conjunction with securities regulations. Thorough due diligence is also needed to separate assets and liabilities between the original company and the spinoff. Decisions on these matters can affect the company’s future growth and risk profile, so bringing in a business attorney and financial experts can make this undertaking more successful.

Spinning off can also involve decisions on how the management team will change. This can involve employment contracts, pension plans, option and incentive plans, and collective agreements. Legal counsel can review changes in these matters to ensure that the decisions are fair and appropriate. Arrangements must also be made so that any shared services and business opportunities do not create conflicts.

Spin offs can be created without big tax implications, and legal counsel can review the requirements needed to lessen or eliminate taxes. These requirements include that the company being spun off must have been operating for at least five years and will need to have three years of audited financials. Additionally, at least 80 percent of the spinoff’s equity must be distributed to existing shareholders to avoid large capital gains tax.

Anthony Spotora is a Los Angeles business lawyer and Los Angeles business litigation lawyer. To learn more, visit Spotoralaw.com.

The business judgment rule will be used by the courts to see if the duty of care was upheld. This rule analyzes if actions were done in good faith and in line with how a reasonable person would have acted.

Board members should not be acting with self interest, bias, or only looking to preserve their roles. This duty of loyalty also includes the board of directors disclosing any conflicts of interest and a duty of confidentiality to prevent potentially harmful publicity or crises.

In real terms, all efforts must be made to receive the highest value for the corporation. Any preference for one bidder over another should be in line with getting the maximum price. If bias is discovered or a dispute ensues because favoritism is occurring for the wrong reasons, a breach of fiduciary duty can be claimed.

The courts recognize that even when the sale of a corporation is completed, some amount of business risk is taken. If the board of directors has made a decision that is in the shareholders’ best interests to further its’ goals, board members will be greatly protected from liability. But if the duties of care, loyalty, and disclosure are not upheld, a lawsuit can ensue. When wrongdoing is proven and shown to have caused damage to the shareholders, compensation for actual damages and sometimes even punitive damages can be sought. Courts do not rule favorably in circumstances where a board of directors or select individuals on the board have a conscious disregard for their duties in a sale, merger, or acquisition.

It is therefore advised to have a team in place to help the board of directors make the soundest judgments when an opportunity arises for the business to change ownership. An experienced business attorney is essential for the board of directors to have to review their duties and actions as the research and transactions unfold. Enlisting a competent attorney ahead of time can help to minimize risk and comply with all pertinent regulations.

Anthony Spotora is a Los Angeles business lawyer and Los Angeles business litigation lawyer. To learn more, visit Spotoralaw.com.

The lawsuit, In-N-Out Burgers vs. Pappas Restaurants alleges that Pappas’ used boomerang arrow signage outside its Houston, Texas airport location. In-N-Out Burgers has more than 260 locations throughout California, Texas, Arizona, Nevada and Utah. They allege that the boomerang logo is closely identified in the marketplace for In-N-Out Burgers and could cause confusion amongst the public. Thus, Pappas’ is allegedly engaging in trademark infringement under federal laws and unfair competition under Texas law, In-N-Out Burgers claims.

Pappas Burger has three burger restaurants in Houston and uses a yellow boomerang that bends with lights similar to In-N-Out’s signage. Case watchers say that the case will come down to how similar the signs are and how much confusion the two signs could have caused. What is interesting is that its logo is more of a baseball-oriented font and feel but the Houston signage does largely use a boomerang.

When companies go after each other for trademark infringement for a sign or logo, it shows that they are concerned about consumers being deceived, confused, or mistaking one company for another. Businesses spend a lot of time and money on signage and logos to have the public associate a set of words and images to their brand. Packaging, advertising, and promotions can also mirror the large-scale logo. Unless there is a partnership or marketing agreement that allows one business to utilize key parts of another’s logo for mutual benefit, trademark infringement can be charged.

An experienced trademark attorney is essential to protecting a logo and associated intellectual property assets. When a problem arises, a company can request a temporary injunction to prevent further harm, amongst other pursuits of resolution. Lost profits and losing part of a customer base can be devastating to a business when a trademark dispute arises. Moreover, in instances where a rival is acting in bad faith or confusion can be proven, monetary awards can be given. Punitive damages and attorney’s fees can also be sought after. Unjust enrichment and deterrence to continue the act of infringement is something that the courts will also look at when deciding a trademark case.

Anthony Spotora is a Los Angeles trademark attorney, Los Angeles intellectual property attorney, and Los Angeles business attorney. To learn more, visit Spotoralaw.com.

“When your profits are gone, the first place you look is to see who is taking the most money off you,” said Kevin Tackett, the president of the Quiznos Franchisee Association (QZFA).

With less people going to restaurants, franchisees start to look around the store for answers. Is it new food that is cutting into profits, forced advertising campaigns, or upgrade costs, for example? When a franchisee feels that their part of the franchise agreement is not being upheld, they should present their concerns to a franchise attorney, allow him or her to review the terms of their agreement, advise on those terms and potentially seek to initiate negotiations or litigation against the franchisor. Resolving a franchise dispute quickly is essential to making sure the business can run smoothly and be profitable.

Wendy’s recently settled with its largest franchisee, the WendPartners Franchise Group, after it wanted stores to install new toasters for an up-and-coming cheeseburger that would increase sales by more than two percent. Big costs like new toasters across many stores can be tough when profits are not as plentiful as they were in the past.

Burger King settled a lawsuit with its franchisees in the spring after store owners were required to sell a double cheeseburger for $1 as part of a promotion. Franchisees said they were losing at least a dime per sandwich, and when you add it up, it hurt their bottom line. The Burger King National Franchisee Association says the settlement has been a positive step that allows franchisees to have more input in future promotions. The restaurant is also hoping that a menu makeover will also drive more profits to the franchisees.

Quiznos survived a slew of franchisee lawsuits back in 2009 too. Franchisees were in disputes over royalties, marketing funds, and food and supply issues. The QZFA seeks to work with Quiznos Corporate in an open way so that business decisions are more transparent and profit concerns are addressed more efficiently.

And even over at KFC, the franchisee-led KFC National Council and Advertising Cooperative (NCAC) won a recent battle against the corporate office over advertising. Advertising strategies and promotional dates should be a discussion between both sides to have the most impact.

In the end, franchisees are wise to have a franchise lawyer on speed dial and open lines of communication with their fellow stores. The downturn in the economy is too severe to go it alone against the corporate office.

Anthony Spotora is a Los Angeles business lawyer, Los Angeles franchise lawyer, and Los Angeles business litigation attorney. To learn more, visit Spotoralaw.com.

Original authorship on websites, business slogans, and even innovative marketing campaigns are critical to protect. A skilled intellectual property attorney can help you acquire and protect these coveted assets that mean so much to your business. Otherwise, these parts of your business could be jeopardized because you did not get adequate protection. It is worth the time and investment to have an experienced attorney help you with these steps.

It is important to note that if you are the first to use a name, logo, or slogan in a geographic area, then you might have gained some common law rights and have a ‘first use’ argument. You have the right to initiate a lawsuit should someone infringe on these business assets, but they are limited without registration. So if you want to protect these assets on a national or international level, you must register and trademark them.

In a recent intellectual property suit, graphic designer Bill Dawson was shocked to find that a logo design he created for an independent film company was on the big screen, when months before the company had expressed no interest in his designs. This issue started when the designer saw his logo at the end of the Conan the Barbarian movie, but then he noticed it was in several Millennium films, including Elephant White, Trespass and Puncture, and that it was also on Millennium’s website. Dawson is claiming at least $200,000 in damages for copyright infringement and breach of contract for unauthorized use of his work.

Originally, Dawson had been contacted by Technicolor, a technical production services company to create a logo for Millennium Films for a small fee. Dawson, as the head of the graphic studio XK9, says that he had a verbal contract with a Technicolor agent. But when Millennium did not show any signs of interest in the designs, no further compensation was pursued.

That there seems to be a missing gap of information between Dawson, Technicolor, and Millennium in this exchange will make for a very interesting court case. Perhaps the court case will show what the agreement, if any, was between Technicolor and Millennium. Regardless, the lack of written terms will likely weigh in Dawson’s favor under copyright laws. As the rightful owner of the designs, he is seeking $200,000 in damages and wants any products, advertising, and marketing collateral with the unauthorized logo to be given back to him.

Anthony Spotora is a Los Angeles intellectual property lawyer, Los Angeles entertainment lawyer, and Los Angeles business litigation attorney. To learn more, visit Spotoralaw.com.

PPMs are a great sales tool to attract investors, which are also known as subscribers. This document shows that the company directors and officers are serious about their company, have the professionalism to succeed in their particular industry, and are committed to having good products, no matter what sector they are in. The content should be focused on information that allows the investor to make an informed investment decision. Some of the information is required by law, and this is where the business attorney provides valuable insight.

The length of a PPM will be greatly influenced by the caliber of angel investors sought and the amount of capital needed. All PPMs should be very polished, professional documents. The company must disclose all material and relevant facts. No half truths, omissions, or false statements of facts are tolerated. Otherwise, making material misstatements can lead to a securities fraud claim that can affect the company as well as the company’s directors and officers. The SEC can also levy civil and criminal penalties for securities fraud. Thus, taking the time to create and thoroughly review the PPM with a business lawyer’s guidance is well worth the effort and money.

A PPM has numerous technical sections. This includes:
• Summary of Offering Terms: Usually laid out via a term sheet
• Issuer Description: Describes the company and its structure, a short overview, a cap table and context of the offering
• Business plan: Contains information on the company’s position in the market, its unique value proposition and products, as well as the sales and marketing plan, financials, intended use of proceeds, and management
• Risk factors: Details potential and actual risks that could affect the investor; cautionary language should also be included about investment risks in general with unregistered securities; and conflicts of interest should also be described
• Supplemental information: Any additional information should be included that is critical for the investor to make an informed decision
• Subscription procedures: Describes the steps for investors to participate in the offering

Having a trusted business attorney to create, review, and file the PPM allows a business to focus on its daily operations and long-term plan. Business owners can have peace of mind that all the paperwork is done in a thorough way to minimize issues and attract key investors.

Anthony Spotora is a Los Angeles business attorney , Los Angeles trademark attorney, and Los Angeles entertainment lawyer. To learn more, visit Spotoralaw.com.

The structure of a partnership agreement should be tailored to fit the business and management style. It should state the compensation, including the profits, losses, and draw each partner will take. Moreover, and surprising to many new partnerships, it is also commonly considered as wise for one partner to have more shares than the other(s). Otherwise, it can become a situation where the company becomes stalled with equal decision makers at the top.

The agreement should additionally show the contribution each partner has made to the business, including property, funds, and services. It should further list how new partners can be added at a later time, when applicable. Of equal importance are outside business activities a partner might take on, and what is permitted.

Basics such as who has check-signing privileges and decision making authority or voting rights is also very important and should be included. And while legalese to many, miscellaneous provisions that cover matters like how the agreement can be revised at a later date to meet the growing needs of the business should also be incorporated into the partnership agreement.

Of particular importance are the portions of the agreement that define what action will be taken if a partner leaves or can no longer perform the job duties. This facet is also important for financing as lenders want to see a rational agreement that will help the business maintain stability should this occur.

Stipulating what will happen should a dispute ensue is also critical. Partners should think this through as arbitration or mediation can be a better route than litigation in most cases.

Partners should get a skilled business attorney to create the contract and review it to ensure that each person’s rights and obligations have been addressed and are fair. Without legal representation, the agreement might be so threadbare that state law might override it during a dispute. It might feel awkward to think about all of the “what ifs” during the infancy of the business, but it is crucial to ensure that the business can develop in a healthy way. Time spent with a qualified business attorney will pay off later.

In California, Los Angeles business attorney Anthony Spotora, of Spotora & Associates, P.C. is accomplished in counseling business partners to create solid partnership agreements. Their team of Los Angeles business lawyers helps many businesses, from California companies to major international corporate entities. They are known for their high-quality services and prompt attention to a client’s business needs.

Anthony Spotora is a Los Angeles entertainment lawyer and Los Angeles business attorney. To learn more, visit Spotoralaw.com.

In Richard Davis and Trademark Properties v. A&E Television Networks, Davis developed the idea of “Flip This House” and A&E orally agreed to divide the show profits 50-50 with him. During their meeting Davis and Charles Nordlander, director of lifestyle programming for the station, negotiated many facets of the show, including pay. After most items were agreed to, Nordlander said, “Okay, okay I get it.” After the pilot and 13 episodes, Davis left the show for a competitor. At trial and the appeal proceedings, both courts affirmed that an oral agreement was entered into and awarded Davis $4 million. The “Okay, okay I get it” was enough to seal in the jurors minds that an agreement had been made, even though it was never written down.

“There is nothing like a signed agreement,” says Los Angeles entertainment attorney Anthony Spotora. “At a minimum you should follow up a discussion and agreement with a confirming email or get your attorney to draft an agreement that is sent for all parties to sign. This case shows that you never know when this backup documentation will come in handy and can save you tons of time, stress and money.”

Another home and design show is under fire for oral agreements gone awry. Talent manager Lance Reynolds, his company Atlantic Talent Management, and Atlantic Films and Television, is suing Jamie Durie, the host of HGTV’s “The Outdoor Room”. Reynolds alleges the two made an oral agreement that Atlantic Films and Television would have 51 percent ownership stake in the popular show. In 2008, Reynolds was made an executive producer of the show and earned a program fee “on a favored nations basis with all other executive producers” after the two had a business dispute. Reynolds alleges after 39 shows, Durie has been well paid and owes him money.

“In oral agreements, courts will try to find any witnesses who might have heard the terms of the agreement, or if the parties have actions, evidence, or exhibit certain conduct to show that it was in existence,” said Spotora. “But you truly owe it to yourself to get your future earnings in writing.”

The Law Offices of Spotora & Associates has more than a decade of experience working with celebrities, producers, studios, agencies, managers, and networks in every genre of the Hollywood television and movie industry. They are known for their hands-on approach and senior-level counsel that is unparalleled by other firms.

For more information:
www.spotoralaw.com
Law Offices of Spotora & Associates, P.C.
1801 Century Park East, 24th Floor
Los Angeles, California 90067-2302

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To learn more, visit http://www.spotoralaw.com/.