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Wanting to diversify his investments, Ernest “Big Daddy” Bux signed a franchise agreement with GA Fitness last year. Construction by Big Daddy’s contractor Bill Toosuit is scheduled to be completed for in time for an early May grand opening in the new strip center owned and managed by Mawl & Mawl. Last week, in response to the COVID-19 pandemic, the town’s mayor and the state governor prohibited any gathering of more than 10 people and directed that all bars, restaurants and gymnasiums close. Now that gymnasiums are prohibited from opening, Big Daddy’s business is almost certain to fail, and Mawl & Mawl loses a tenant. If Big Daddy stops construction and buys out his current lease obligation, Bill Toosuit loses his construction project and Mawl & Mawl loses a long-term tenant. Can Big Daddy get out of his lease obligations? And his construction contract? Are there other options to get to a win-win? Continue Reading Can COVID-19 Trigger a Force Majeure Defense?

Woman hangs a card with information about the store closing on a shop window due to the coronavirusWanting to diversify his investments, Ernest “Big Daddy” Bux signed a franchise agreement with GA Fitness last year. Construction by Big Daddy’s contractor Bill Toosuit is scheduled to be completed for in time for an early May grand opening in the new strip center owned and managed by Mawl & Mawl. Last week, in response to the COVID-19 pandemic, the town’s mayor and the state governor prohibited any gathering of more than 10 people and directed that all bars, restaurants and gymnasiums close. Now that gymnasiums are prohibited from opening, Big Daddy’s business is almost certain to fail, and Mawl & Mawl loses a tenant. If Big Daddy stops construction and buys out his current lease obligation, Bill Toosuit loses his construction project and Mawl & Mawl loses a long-term tenant. Can Big Daddy get out of his lease obligations? And his construction contract? Are there other options to get to a win-win? Continue Reading Can COVID-19 Make a Contract Impossible to Perform?

Email marketing and newsletter concept, Hand of man sending message and mobile phone with email iconSometime ago Ernest “Big Daddy” Bux conveyed a pipeline easement to Nodding Donkey Pipelines for the construction, operation and maintenance of a 24-inch pipeline across his Big Bux Ranch. In an email sent before Christmas, Lannie Landman with Nodding Donkey requested an easement for a second pipeline on the North side of the existing line. Landman’s January email stated “Pursuant to our conversation earlier, Nodding Donkey agrees to pay you $70.00 per foot for the second 24 inch line it proposes to build.” Big Daddy responded “We accept.” Subsequent Nodding Donkey exhibits attached to an email depicted the new easement both on the North and South sides of the existing pipeline and offered $15 to $25 per foot. Yet another email from Big Daddy attached a proposed amendment to the R.O.W. agreement between the parties.  Does Big Daddy have an enforceable agreement at $70 per foot? Can an email exchange create an enforceable contract? What about the Statute of Frauds?

Legally

Yes, since passage of the 2001 Uniform Electronic Transactions Act electronic records and signatures may create an enforceable contract for the sale of real estate – if the email(s) satisfies the Statute of Frauds. To satisfy the Statute of Frauds, there must be a “written memorandum which is complete within itself in every material detail.” In a more complicated recitation of these very facts, the Texas Supreme Court recently found that there was no enforceable contract. The conflicting email exchanges, including the introduction of a new investor in Nodding Donkey who offered substantially less, made it clear that oral testimony would be required to sort out the details – the very thing that the Statute of Frauds is intended to stop. The Texas Supreme Court held that the material contract terms offered by Big Daddy were incomplete and did not satisfy the Statute of Frauds.

Practically

As first blogged by my partner Jamie Ribman in 2009, great care must be exercised when using email. If you are negotiating a deal, be aware that unless you have disclaimers in your text saying that email communications are not binding upon the parties, and that the deal is subject to the preparation of a written and signed contract, the email exchange may become an enforceable contract. If you are determined only to have “ink” signatures, make sure that typewritten names within your e-mail state that they are for contact purposes only and are not the “signature” of the sender.

Tilting the Scales in Your Favor

A worthy substitute, perhaps, is an on-line electronic signature solution. The Texas Realtors, for example, make Digital Ink available for free and DocuSign at a discount. Products such as these make electronic documents and signatures legally binding for nearly every business or personal transaction around the world – exceeding the requirements of the ESIGN Act and the Uniform Electronic Transactions Act.

Businessman Signing An Official Document as a DBAFrasier and Niles fulfill a lifelong dream by purchasing a treasured but faded restaurant through their company, Crane Brothers, LLC. They rechristen their restaurant as “Les Freres Heureux” and file an assumed name certificate registering that name. Frasier also signs multiple contracts to renovate the building and purchase food, beverages, and furniture in the following manner: “Les Freres Heureux by its president, Frasier Crane.” Unfortunately, opening night is a disaster, and the restaurant quickly closes its doors. Frasier and Niles put Crane Brothers, LLC into bankruptcy, so unpaid vendors begin suing Frasier, arguing that he is personally liable for the contracts he signed. Is Frasier in the soup? Continue Reading Risky Business: Using a DBA or Trade Name in Corporate Contracts

an elderly person has mental problems. The President of First Bank of Buxboro Ernest “Big Daddy” Bux is growing older, and he’s showing it. Despite tightening bank regulations on lending and credit documentation, Big Daddy seems to be getting even more lax. Moreover, just last week – during important loan renewal negotiations with the Bank’s largest customer – Big Daddy could not remember the name of the company or the name of its principal. Do the directors of First State Bank owe any legal responsibility to the FDIC as the insurer? Do the Bank directors have any legal responsibilities to the Bank?  What about Big Daddy, personally, does he have rights? Continue Reading Can your Company be Protected from the Risk of an “Unfit to Work” Partner?

Girl feet on the hover board. Self-balancing scooter or mini segwayOn December 26, Marty and Dave McFly were playing video games when, downstairs in the living room, the hoverboard that Marty had received for Christmas ignited. The fire quickly engulfed the Christmas tree and spread throughout the house. Marty and Dave escaped with minor injuries, but their house was destroyed. Since the McFlys had bought the hoverboard from Amazon.com, they sued the company, alleging that it sold them a defective product and failed to warn them that it was unsafe. Amazon, however, argues that it is not responsible because it did not manufacture or even sell the hoverboard. Instead, it merely set up a marketplace by which a third-party Chinese manufacturer sold the hoverboard. Is the McFlys’ lawsuit up in smoke? Continue Reading Amazon Packages Bursting into Open Fires, Jack Frost Nipping at Your Nose…

businessman hands tearing apart money banknote into two peaces. vector illustration in flat designIn this series on defining wins in litigation, we’ve talked about defining the goals and strategies at the outset, clear and open communication, and the benefits of resolving a dispute both financially and reputationally.  The final piece in this series discusses why mitigating the plaintiff’s damage recovery can also be a “win”.  I can speak from experience because I have effectively used this strategy for a client.

Suppose your customer accuses your company of taking certain actions that violated the terms of your contract.  After digging into the contract and some other communications between the parties, it is clear you breached the contract.  It also appears that your employees’ actions violate a statute that allows the customer to recover punitive damages.  The customer claims $500,000 in compensatory damages, and wants another $3 million in punitive damages.  What do you do from a litigation strategy standpoint? Continue Reading Defining a Win in Litigation: Mitigating Losses

magnificent 21 point red deer stag rated at 430 SCI, West Coast, South Island, New ZealandReleasing an image of a pickup truck closely resembling I.M. Steelin’s, Texas Parks and Wildlife investigators believe a red stag deer was shot by I.M. Steelin over the Thanksgiving weekend. The exotic, tame, breeding, red deer bull “Rudolph” was found decapitated on Bragg Schtag’s sprawling Red Bull Ranch – a large hunting ranch with a high-fence on a remote road in northwest Burnet County. Facing a string of charges, including a potential third-degree felony for poaching, can I.M. Steelin really be jailed for poaching from a county road? Can Schtag sue Steelin for damages? Continue Reading Poaching Santa’s Reindeer – What’s the Penalty for Poaching Your Neighbor’s Red Stag?

Feedback online or review on computer laptop concept vector illustration, flat cartoon pc with voting hands thumbs gesture and reviews stars, idea of like or dislike symbolsIf your business provides consumer-oriented goods or services, your reputation is very important to you.  When I use the term “consumer-oriented,” I mean goods or services that are primarily used for personal or household purposes.  That is not to say that businesses that do not directly affect consumers are not worried about their reputations.  In fact, they are, because reputation means everything.

Suppose one of your customers claims one of your employees stole an item while they were at the customer’s home making repairs.  You interviewed all of the employees who were at the customer’s home.  None of them saw the item in question.  You speak to the homeowner, and discover that your employees were working in a completely different part of the house than where the homeowner keeps the item.  You looked in the company vehicles and do not see any evidence of the item.  The only thing supporting the customer’s claim is that the customer was not home at the time your employees were there.  The customer files a police report.  Your team cooperates, and the police do not find sufficient evidence to support any charges.  The customer is insistent that your employees took the item, and is threatening to sue.  What do you do? Continue Reading Defining a Win in Litigation: Saving Reputational Costs