My last article pointed out a situation where parties conflate contractual indemnity and damages clauses. The standard language in Dunce’s Caps’ contract provided for an indemnification of “any and all losses arising from any breach of any representation or warranty in the agreement” and capped those losses at the price of the order. When Dunce’s failed to deliver the promised 100,000 hats, Flat Backs filed an arbitration action seeking recovery of an alleged $4 million in damages, even though the purchase order price was only $500,000. Ignoring Dunce’s damages cap argument, the arbitrator Terry B.L. Judge awarded Flat Backs the full $4 million. Arguing that Judge was not permitted to award Flat Backs more than $500,000, Dunce’s appealed to the state court seeking to overturn the arbitration award because Judge exceeded his jurisdictional limits. Did Dunce’s contractual indemnification provision operate as a cap on the damages that Flat Backs could recover for Dunce’s breach of contract? Continue Reading The Case of Mistaken Indemnity, Part 2
Struggling these last several months with the family dynamics and dilemmas of transitioning his family business to the next generation, Big Daddy Ernest Bux, 65, now turns to ordinary, practical considerations. What are Big Daddy’s businesses worth, and do they have sufficient value/cash flow to accomplish his plans? Will Big Daddy’s estate planning cover the estate taxes and transfer estate assets consistent with his plans and goals?
Continue Reading Family Matters: Can a Family Business Succeed Without Maximum Valuation and Sound Estate Planning?
Continuing to struggle with transitioning his family business to the next generation, Big Daddy Ernest Bux, 65, considers perhaps the most difficult task on his checklist: Ensuring that both his management succession decision makers and all of his ownership succession members are good communicators of both business and family issues. A couple of months ago, Big Daddy Bux addressed the family factor and its two components – the management succession process and the ownership succession process. Now that the management successors (the business decision makers) and the ownership successors are identified, how can Big Daddy equip them both to be good communicators? Continue Reading Family Matters: Can a Family Business Succeed Without Addressing Overlapping Business AND Family Issues?
Nifty Counsel, Dunce’s Caps in-house lawyer, came up with what he thought was a brilliant way to minimize the company’s liability to its customers. Nifty added arbitration provisions to Dunce’s customer purchase order agreements, and included language that the customer agreed the arbitrator could not award the customer damages exceeding the price of the order. Flat Backs, a major retail hat company, filed an arbitration action against Dunce’s after Dunce’s failed to deliver 100,000 Auburn Tigers 2019 NCAA Men’s Basketball Champions hats. The demand for arbitration alleged $4 million in damages, even though the purchase order price was only $500,000. Terry B.L. Judge, the arbitrator, ignored Dunce’s arguments that the purchase order’s arbitration clause prohibited Judge from awarding Flat Backs more than $500,000, and awarded Flat Backs the requested $4 million. Dunce’s then asked a court to overturn the arbitration award for the same reason – Judge exceeded his jurisdictional limits. Continue Reading The Case of Mistaken Indemnity
In recent months we have discussed litigation funding, specifically covering what litigation funding entails, whether such agreements are legal in different jurisdictions and the ethical issues surrounding litigation funding agreements. There’s an opportunity to continue the conversation as we keep a close eye on the Texas Legislative Session, just as we did last month with a recap of bills related to civil litigation. Members of the Texas House and Senate introduced bills relating to the disclosure of litigation funding in state court lawsuits. Continue Reading Could Litigation Funding Disclosure Be Coming to Texas?
Continuing to deliberate about when and how to exit from his family business, Big Daddy Ernest Bux, 65, considers yet another task on his checklist: Determine Exit Strategy. He’s already Identified Successors and Decision Makers, and Planned for Contingencies. Yet to be tackled are Establish Goals, Plan Entity Structure and Transfer, Complete Estate Planning, and Implement Document Maintenance and Control. Asking his banker last week about a new loan to expand his business, Big Daddy learned that his banker cannot give him a business loan without seeing a complete exit plan. How is an exit strategy different from last month’s thoughts on identifying successors? Continue Reading Family Matters: Can a Family Business Succeed Without a Written Exit Plan?
Realizing that at 65 it’s time to talk about succession of his family business – especially Buxboro State Bank, Big Daddy Ernest Bux identified his checklist: Identify Successions, Identify Decision Makers, Plan for Contingencies, Establish Goals, Plan Entity Structure and Transfer, Complete Estate Planning, Determine Exit Strategy, and Implement Document Maintenance and Control. To succeed, what does identifying successions and decision makers look like for Big Daddy’s family business?
The 86th Texas Legislative Session has been in swing for almost two months, so we thought now would be a good time to highlight some proposed legislation relating to civil litigation that may affect your business.
What if my Opponent Files a Claim in Arbitration After the Statute of Limitations Expires? Continue Reading Litigation-Related Legislative Bills that May Affect Your Texas Company
Realizing last month that, at age 65 he’s ready to think about his family business succession plan – especially for Buxboro State Bank, Big Daddy Ernest Bux identified his checklist: Plan for Contingencies, Establish Goals, Plan Entity Structure and Transfer, Complete Estate Planning, Identify Decision Makers, Identify Successors, Determine Exit Strategy, and Implement Document Maintenance and Control. Must Big Daddy’s family business have a contingency plan for divorce to succeed? Continue Reading Family Matters: Can a Family Business Succeed Without a Contingency Plan for Divorce?
This is the third installment in a series on litigation funding. The first article provided an overview of litigation funding. Last month’s installment focused on the legality of litigation funding. This article concentrates on potential ethical issues associated with litigation funding.