Businesses enter into contracts each and every day. Contracts are formed when customers make purchases, when suppliers deliver materials, or when contractors place orders. Contracts are a critical element when it comes to operating a business, and when contracts are not honored, disputes arise.

What Is Required to Form A Contract?

A contract requires five basic requirements, and if any one of the requirements is missing, no legal contract can be formed. The requirements for a contract include:

1. Parties Capable of Entering a Contract. The parties to the contract must be legally capable of entering the contract in the first place. This means that each party to the contract must be fully aware of what they are doing by entering the contract and must understand what the contract means. As a general rule, minors are not legally capable of entering into a contract due to their inexperience, nor are individuals who are considered insane capable of understanding what it means to enter a contract.
2. Offer and Acceptance. In order for a contract to exist, an offer to contract must be made by one party, and the offer must be accepted by another party. The offer must be clear and the acceptance must be definite and unqualified.
3. The parties must exchange something. Each party makes a promise to the other or gives something of value to the other party. The consideration does not necessarily have to be fair or proportional: one party could agree to pay a single dollar in exchange for a motor vehicle, and so long as both parties agree to that arrangement, it can be binding. Consideration could also take the form of not doing something, or foregoing something a party normally would do or has a legal right to do, such as waiving certain rights. This is sometimes referred to as “bargained for exchange” or “bargained for detriment”.
4. Legal Purpose. The contract must be for a legal purpose. To say this another way, the contract cannot violate the law. The parties cannot negotiate terms for the contract that break the law, or are illegal.
5. Mutual Assent. Both parties to the contract must have a meeting of the minds, meaning both parties have a similar understanding of what the contract means, and both agree to be bound by it.

If any of the above requirements is lacking, then it is unlikely that a contract has legally been formed. Furthermore, specific types of contracts might have additional requirements in order to successfully form a valid contract. For instance, for many types of contracts encountered in business, the contract must be made in writing, identifying key terms of the contract, and signed by both parties. For instance, California Civil Code Section 1622 notes that all contracts can be made orally, unless the contract is specifically required to be made in writing by law.

Additionally, certain states may impose additional requirements for a contract to be legally binding and valid, and these laws should be taken into consideration if a specific state’s laws govern the contract.

These elements are fairly straightforward, yet when a contractual issues do arise it can be very difficult for the parties to understand and navigate the legalities in contract law.  Please contact our office if you are facing a contractual issue, dispute, or simply have additional questions relating to contracts.

There has been a lot of political talk lately about the pay gap between male and female workers, and California is one of the more progressive states when it comes to tackling this issue. In October, Governor Jerry Brown took steps to help close that gap in California by signing S.B. 358, which will revise the existing version of the California Fair Pay Act, specifically Cal. Labor Code §1197.5.

The existing law prohibits an employer from paying male and female workers in the same establishment at different wage rates for equal work requiring equal skill, effort, and responsibility. Exceptions exist under the current law, for seniority, merit, quality and quantity of work, or some other bona fide factor other than the sex of the worker. At present, it is a misdemeanor offense to pay workers of opposite sex differently in violation of the law.

Taking effect on January 1, 2016, the law will be strengthened and will incorporate changes, such as:

• Employees are permitted to discuss their own wages, and the wages of others, openly. These changes are designed to promote pay transparency.
• Instead of prohibiting wage differentials between workers of the opposite sex in the same establishment, the new law will prohibit paying workers of the opposite sex differently for substantially similar work, taking into consideration skill, effort, and responsibility associated with the work.
• If there is a wage differential between workers of the opposite sex, the burden is on the employer to affirmatively demonstrate why the wage differential exists, based on seniority, merit, quality and quantity of work, or some other bona fide factor other than the sex of the worker. These factors must be applied reasonably, and must account for the whole differential. This new provision will place a higher burden on employers who are trying to justify a pay gap between similarly situated employees of different sex.
• Employers are prohibited from discharging, discriminating against, or retaliating against workers who seek action under the new provisions of the new law, and any employee who is discharged, discriminated against, or suffers retaliation by their employer for seeking action under the provisions of the new law will be eligible to recover lost wages (including interest and lost benefits), may seek reinstatement or other suitable equitable relief. This change makes it easier for employees to establish a prima facie case against their employer.
• Employers are required to retain records concerning employees’ wages and wage rates for a period of three years, as opposed to the current two years.

What Can Employers Do In Preparation For This Change?

The new law is meant to provide additional protections to employees by placing new burdens on employers. Worker’s rights are important, and it is important that business owners and employers be appraised of the new changes that will be taking effect in the new year concerning employee wages. Any business who has California employees will be subject to these new requirements.

Employers should get ready for this change by evaluating employees’ payment structure and assessing whether there is any potential for problems to arise. Employers have a few months before the law takes effect, in which they can take steps to correct or mitigate any potential employee pay issues. Analyzing any wage differentials and assessing whether any reasonable factors exist that warrants the differential in employee’s pay are just a couple of important steps an employer should be taking at this time. Employers can also advise management of the changes in the law, especially the provisions concerning workers’ new ability to openly discuss wages.

For more information on the ramifications of this legal update, or should you need advisement for any employment-related matter, contact Spotora and Associates, PC today and to speak with a senior level Los Angeles business attorney.

The healthcare industry is a bustling marketplace for new ventures to enter these days. Americans are demanding better quality care at a better price, and recent healthcare reforms have paved the way for disruptive technology and new businesses to make a move into the healthcare industry. There are a number of unaddressed needs and challenges in our healthcare systems that are waiting for the right innovative solution to come along.

Be Mindful of Laws and Regulations That Apply to Your Business

As you work to move your new business into the healthcare industry, keep in mind that it is one of the most highly regulated industries out there, largely because people literally depend on healthcare products and services to save their lives and keep them healthy. Not only do new ventures in healthcare need to build their businesses within the parameters of the Affordable Care Act, but many also need to engage with the Food and Drug Administration (FDA).

While these rules and regulations may seem difficult to navigate and poses potential hurdles to developing your business, they are manageable and your business will get through them. When you need help navigating the law or other regulations that affect your business, you should contact a business lawyer that specializes in those specific matters.

Join a Healthcare-Specific Incubator or Accelerator

There are a number of healthcare-industry specific startup incubators and accelerators that new ventures can apply to and utilize to help get their business off the ground. These incubators help fledgling companies make contacts with potential investors and industry leaders, assist these companies with preparing grant applications, and can offer guidance and support on how to make it big in the healthcare industry. Incubators help to develop small companies into sustainable businesses, and many new ventures use incubators as a stepping stone, and sometimes even a spring-board, to further the success of their business.

Success Doesn’t Happen Overnight

Breaking into the healthcare industry is never quick work. New companies and startups have to demonstrate that they have a useful and practical new product or service that fills a need in the market and also need to build a name and reputation for themselves. There are two main impediments that can delay how quickly a new venture can make it big in healthcare.

First, there is the time and energy requirement that goes into familiarizing others with your products and services, building relationships with industry partners, and creating a network and support structure around your business. Getting noticed isn’t easy work, and while some new entities get a lot of attention when they first enter the healthcare industry, for many new companies and startups it can take several years to establish themselves. Be persistent, resilient, and adapt and grow your business, even if it is slowly – all progress is good progress when trying to make it in the healthcare sector.

Second, regulatory requirements can take a long time to get through as the FDA is not known for its speediness. The good news is, working through the regulatory processes isn’t so much about being difficult as it is about being lengthy. While there is a lot of red tape, your business will get through it if you just stick with it and are patient.

When you need help navigating the law or other regulations that affect your business, you should contact a business lawyer that specializes in those specific matters.

Recently, it was announced that Two Toasters, a design and development agency for applications on Google and Apple platforms, was acquired by Ticketmaster, a divisions of Live Nation Entertainment. While Ticketmaster had little to say about the acquisition, it did confirm on the company’s website that the acquisition “further demonstrates Ticketmaster’s commitment to expanding its mobile capacity.”

While the amount Ticketmaster paid to acquire Two Toasters was not disclosed in news reports, the American Tobacco Campus-based company will be known as Ticketmaster Mobile Studio, according to the Herald Sun. On Tuesday, March 31, Ticketmaster issued a statement saying that the acquisition of Two Toasters “further demonstrates Ticketmaster’s commitment to expanding its mobile capacity and creating a truly end-to-end platform unlike any other in the live event and entertainment space.”

According to news sources, Two Toasters has been successful in the launch of more than 50 mobile applications for a wide array of companies, some of which include Regal Entertainment Group, Birchbox, Ebates, and Airbnb, among others. Two Toasters currently employs 32 individuals. The company was founded by Adit and Rachit Shukla, brothers. The deal is an important strategic undertaking for Ticketmaster, according to sources, who say the deal establishes a solid presence for Live Nation in the Triangle.

Two Toasters’ CEO Rachit Shukla said in the statement issued by Ticketmaster that, “We’ve assembled one of the best mobile teams in the region and Two Toasters has become a magnet for new talent.” Shukla went on to say that by Two Toasters joining Ticketmaster, the company’s visions has been expanded, and the talented team given the opportunity to take ownership and build a completely new mobile standard in the industry as Ticketmaster Mobile Studio.

Spotora & Associates is a talented team of Los Angeles business attorneys dedicated to achieving and exceeding your business goals. We specialize in mergers and acquisitions and successfully represent businesses in a wide array of industries; if you are in the process of acquiring a new entity or being acquired, we can help you ensure all bases are covered at every step. We know the complexities involved and will provide the expertise and knowledge essential to helping you make a smart and profitable business decision. Our primary goal is to obtain your objectives in business transactions from the simplest, to the most complex. Contact us to get started right away.

Recently it was announced that two giants in the food industry, Kraft and Heinz, would merge. Once combined into one company, Kraft Heinz will be the 5th largest food and beverage groups in the world, according to an article at the New York Times. In fact, the Kraft Heinz Company is expected to have a market value in excess of $80 billion. As you can imagine, this is the largest merger of 2015 thus far.

While Heinz focused primarily on condiments and canned goods such as ketchup, baby food, Classico spaghetti sauces, and other sauces, meals, and infant/nutrition, 3G Capital will take control of Kraft Foods, famous for Planters nuts, Jell-O, Mac and cheese, Oscar Mayer label meats, and other foods. 3G acquired Berkshire Hathaway, a companied formed by billionaire investor Warren Buffett, in 2013.

What is the intention of the merger? 3G, who took over beer giant Anheuser-Busch in 2008, intends to take ownership of iconic brands in an effort to expand the companies internationally, and drastically cut costs. According to news resources, Warren Buffett and 3G are hoping that combining Heinz and Kraft will result in steady growth of sales for such names as Velveeta, Lunchables, and Kool-Aid, just as the Heinz ketchup brand has risen in sales steadily since its acquisition in 2013.

Currently, the majority of Kraft products are sold in the U.S., while most of Heinz sales are generated abroad. 3G chairman of Kraft Heinz Alex Behring hopes that by merging, Kraft’s sales will expand into the global market. According to Behring, “Combining our two businesses, we’ll create the third-largest food and beverage company in North America, and the fifth-largest food and beverage company in the world.” Behring went on to say that the merger will enjoy a substantially enhanced scale at both the retail and food service channels in North America, its key market.

The merging of Heinz and Kraft has been in the works for years, however it wasn’t until the beginning of 2015, when John T. Cahill took over as CEO at 3G that Mr. Buffett approached Kraft about the two companies merging. In a statement, Buffett said that he was “delighted to play a part in bringing these two winning companies and their iconic brands together.” Buffett went on to reveal his excitement and anticipation of the opportunities possible for the newly combined organization.

At Spotora & Associates, our LA business merger attorneys know the complexities involved when two companies become one, and the potential pitfalls. Whether your company is small and local or known globally, work with a skilled and experienced Los Angeles business attorney to ensure positive, profitable results for your company.

At Spotora & Associates, our Los Angeles mergers and acquisitions attorneys understand the complexities involved when one company acquires or merges with another.  Purchasing another company must be approached carefully and thoughtfully, with the assistance of a skilled lawyer.  Recently, El Segundo’s PCM Inc. purchased some of the assets of En Pointe Technologies Sales Inc., an IT firm who specializes in Microsoft products according to an article at the Los Angeles Business Journal.

PCM Inc. manufactures MacMall and PC Mall technology product catalogs in addition to information technology solutions designed for both local governments and businesses.  In acquiring specific assets from En Pointe Technologies Sales, PCM agreed to pay $15 million for the IT solutions acquired from En Pointe, a Gardena-based company.  Over the next three years, PCM will also pay 10% of certain agreed upon services revenues and 22 1/2% of the company’s future adjusted gross profit, according to a filing with the SEC (Securities and Exchange Commission.)

En Pointe is expected to retain its inventory and accounts receivable; this includes a $72 million contract over the next five years to provide more than 30 Los Angeles County departments with cloud-based software, a contract that was signed in June of 2014.  At the time the company’s year ended on September 30, 2014, revenue was reported to be $393 million.

The acquisition deal between PCM and En Pointe is scheduled to close on April 1st of this year, with PCM planning the creation of a new division which will assume the En Pointe name.

According to chairman and chief executive of PCM Frank Khulusi, the company feels that acquiring En Pointe will complement PCM’s commercial and public sector segments.  In addition, the 240 employees of En Pointe will be offered equivalent positions at PCM.

Bob Din, Chief Executive at En Pointe, founded the company more than two decades ago in 1993.  When the acquisition of En Pointe by PCM was announced on Monday, shares at PCM closed at $9.11, an increase of one percent.

We understand how difficult it can be in making a decision to acquire a company, and all of the issues involved including often times difficult negotiations, regulatory filings, reaching your objectives and goals, tax implications, and more.  At Spotora & Associates, our LA acquisition lawyers want to help ensure your decisions are solid, smart, and most important of all, that all transactions and strategies are sound, protecting you from potential litigation in the future.

As experienced Los Angeles business attorneys we understand the issues franchisees often face in running a franchise.  Recently, a former 7-Eleven executive allegedly blew the whistle on company executives who put him in charge of ‘Operation Take-Back,’ a project that was designed to rid the franchise stores in New Jersey of South Asian and Indian franchisee owners, deemed no longer a part of the company’s vision.

According to a news article at NJ.com, Ian Shehaiber was hired by 7-Eleven as a district manager/field consultant in 2010.  Soon after, he was given a $1,500 cash reward and named 2011 Rookie Field Consultant of the Year.  However, all of that changed when his bosses placed Shehaiber in charge of the project in 2012.

Shehaiber filed suit against 7-Eleven in December in state Superior Court in Middlesex County, thereafter the company requested a change of venue to the U.S. District Court due to federal labor and discrimination law issues.  According to Gerald Marks, Shehaiber’s attorney, the franchise has taken action over the past two years to interrogate, dehumanize, and ridicule Indian franchisees in their effort to retake the 7-Eleven stores and resell them at a profit.

Margaret Chabris, a spokeswoman for 7-Eleven, said in a statement that “The allegations made in this complaint are false.”  She went on in the statement to say that the franchise is dedicated to protecting other franchisees, employees, and guests by terminating the relationship with franchisees who violate the franchise agreement or the law when appropriate, and that “a few” franchisees had been caught in violation of the law and/or their contractual obligations.  Shehaiber’s attorney did not comment on Chabris’ statement.

The lawsuit claims that Shehaiber was instructed to take part in the project in mid 2012, the goal being to identify franchisees who had stolen money from the franchise.  Shehaiber also claims in the suit that meetings regarding the take-back were fueled by aggressive anti-Indian tactics and racial remarks.  He said that he was constantly in fear that he would be terminated if he spoke up; Shehaiber also claims in the lawsuit that due to his Christian faith and his supervisor’s contempt for those who are non-Muslim, he was discriminated against and forced to work in a hostile environment.

Executives at 7-Eleven who were allegedly involved in ‘Operation Take-back’ claimed that franchise owners who were Indian made a habit of attempting to take advantage of others.

It will be interesting to learn how this all turns out, and whether 7-Eleven is able to put the stores in question under corporate control.

Whether you are a franchisor or franchisee, it is important to consult with a Los Angeles business attorney specializing in franchising when problems or issues surface that you are not certain how to deal with.  At Spotora & Associates, our staff has the skill, knowledge, and experience to successfully advise and handle any and all franchise issues.

Recently, a $90 million award against ABM Security was overturned by a California appeals court after the court found that the facts of the case were indisputable. The security company provided security guards with regular rest breaks, and the guards took them. In question was whether it was lawful for the security company to require the guards to leave radios/pagers on during these breaks, in addition to responding to security issues as needed while on break.

Essentially, plaintiffs in the case, which went to trial almost three years ago, claimed that ABM Security was not in compliance with California law because the company required guards to remain “on call” even during rest breaks. Plaintiffs maintained that during rest breaks, they should be relieved of all duties and not be required to respond to security issues, or leave pagers and radios on during these breaks. Following a lengthy court battle, plaintiffs in the case, Augustus v. ABM Security, which included thousands of former and current security guards with the company, were awarded a summary judgment.

The appeals court found that while meal breaks, or breaks that are unpaid, do not require security guards to remain on call, rest breaks do not require that employees are relieved of being on duty, only that security guards are relieved of performing actual work while on rest breaks under state law. The appeals court determined that being on call did not mean that employees perform work, however being available to work was not one and the same as performing actual work. The Court also noted that security guards for ABM engaged in activities such as making personal telephone calls and surfing the Internet while on rest break.

Ultimately, the California appeals court specified that meal breaks required that guards or employees are relieved of all duty in regards to work, while the definition of rest breaks contained no similar language.

What did this mean for employers? The bottom line is that while Department of Labor Standards Enforcement opinions and prior court rulings do not agree in regards to the extent of control employers have over employees during rest breaks, employers are not required to relieve employees of all duties during these breaks, but cannot require that security guards or other employees perform actual work.

As experienced Los Angeles employment lawyers, we realize the issues employers face in regards to employment policies and issues. For unsurpassed legal guidance and support, trust the skilled and dedicated staff at Spotora & Associates.

You are excited about owning a franchise, have asked those you know who are franchisees about their experiences and success, and perhaps have already begun work on your business plan. Is this enough, or do you need to do more to protect ensure you are protected from a legal standpoint? The quick answer – you need to hire an experienced Los Angeles franchise lawyer. Here are a few of the reasons why taking this step is so important to your success.

Franchise attorneys understand what really matters. From FDD’s or Franchise Disclosure Documents to contracts, lawyers who focus in this area of the law know what is essential to ensuring you are up-to-date with the latest franchise laws, and the various restrictions/obligations you must abide by as a franchise owner in order to avoid termination.

Guidance on how to set up your franchise business. Few franchisees understand the various options when it comes to setting up their business as a C-Corporation, LLC (Limited Liability Corporation), or Subchapter S Corporations. What are the differences, and which is best in your situation in regards to how your business will be taxed? A skilled franchise lawyer in LA can provide the guidance you need in this area of your business.

When it looks like you are destined to fail, you need an attorney’s expertise. You never expected your franchise to fail, but it does happen – all too frequently, unfortunately. The location you chose may not have been the best, or you failed to profit fast enough to stay in the game. Perhaps the franchisor is partially to blame for the failure of your business. Franchisors have a responsibility to help franchisees with the “ins and outs” of the business in regards to location, the development of new services or products, the success of other franchisees, competitive factors such as price, and other details. Another reason it’s important to hire a capable franchise lawyer – and to thoroughly read and understand the FDD.

Those involved tell you that hiring an attorney will be a waste of money. If there is one red flag in owning a franchise, this is it! Franchise developers often advise potential franchisees that the agreement contains no negotiable terms, so hiring a lawyer will simply be a waste of money. Essentially, the top priority of the franchisor is to get the agreement signed, without a professional reading over the terms to advise you of any potential problems or issues that may in fact be negotiable.

Are you considering a franchising opportunity? Going forward with this type of business opportunity involves a certain level of uncertainty and stress. By hiring a qualified Los Angeles franchise lawyer, you will enjoy peace of mind – not to mention a more restful sleep at night.

When one successful company merges with or acquires another successful company, the deal attracts a lot of attention, particularly when the players are big names in high-profile industries. The growth potential of each entity can be enormous.

But what can also be profitable are strategic “carve-outs,” which occur when assets are “scooped out” of an ailing company. You may be able to purchase just the piece of the company that you are interested in, or you may be able to buy the entire company and then sell off the assets that you don’t care to keep.

There is more inherent risk with carve-outs because you are dealing with something that is currently troubled financially. The flipside is that these assets often come at a reduced price.

When looking to purchase a carve-out, it is imperative to look at every piece of the company’s financial puzzle and be sure the asset can be turned around successfully. Thorough analysis is paramount.

Some of the questions you want to ask yourself:

-From the ground up, what problems did the asset or company face?

-What does the expense structure look like?

-How long will it take to make the necessary adjustments for the company or asset to become profitable?

-Is the risk worth the potential reward?

Just because an entire company or asset is not performing well doesn’t mean it is worthless. Perhaps the asset simply needs a shift in its business strategy or a minor restructuring of its finances to put it in the black.

When looking for a carve-out, the best bets are within industries that you have experience with or carry the potential for “synergy” with your current business. This can save a lot of money and make the deal more profitable in the end. For example, if you manufacture household goods, you would do best to purchase a product that can be easily integrated into your current operation. Because you are purchasing a troubled asset, it makes little sense to take more risks than necessary.

While companies seeking carve-outs usually look to their local competition, sometimes it makes sense to go beyond your own borders, too, particularly in today’s challenging economic climate. To stay competitive and to diversify in tough times, it may make sense to expand to a global market. Of course, that carries with it a whole host of added legal requirements.

If you are a company looking to “carve-out” a competitor’s assets, it is important to speak with an experienced attorney.

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