Author Archives: Admin

Sued by a business partner

Have you ever contemplated going into business with a colleague? Maybe it’s someone with whom you’ve had a great experience on a previous project. It all sounds great in theory and you’re ready to move ahead. You may want to pump the brakes and review this blog before contracts are executed and funds are exchanged.

What would happen if you or your business partner were accused of mishandling funds or misrepresenting the details of a transaction? Our office has been on both sides of the aisle for this dilemma. We recently represented clients who were swindled out of funds entrusted to people who were working together (call it conspiring together), but did not necessarily own a company together. Ultimately, it was a convoluted business scheme which left our clients out of pocket in excess of six figures and the defendants pointing the finger at one another. Fortunately, we were able to obtain a seven-figure judgment against the culprits, who ended up  jointly and severally liable for the judgment.  The problem, of course, is in collecting on the that judgment.

Now, the more important question: how do you avoid such a devastating outcome, but still do business with a colleague?

First, evaluate the extent of your relationship with your business partner. Is this a one-time transaction or an ongoing business venture? Are there any documents evidencing your characterization of the business relationship? Although you may only intend to collaborate with your partner(s) for a specific business venture, as opposed to starting a corporation, your relationship could nonetheless, be deemed a partnership.

Florida will consider an association of two or more persons carrying on as a co-owners of a for profit business as a partnership.1As such, you could be held jointly and severally liable for all obligations of the partnership, unless otherwise agreed or provided by law.2Therefore, as a legally recognized partnership, anything your business partner does in his or her capacity as your business partner, could leave you to be held equally liable for any and all claims relating to such activity. It is highly important that the terms of the business relationship be memorialized in writing.

Next, take all the preventive measures that you can. Be open and transparent with your potential colleagues and counterparts regarding the terms of every transaction. Although unintentional, even the slightest misrepresentation of a material term could be materially damaging. Negligent misrepresentation is defined as a misrepresentation of a material fact which the party should have known was false, made to induce another to rely on their representations, on which the other party did, in fact, rely to their detriment.3

Have you disclosed all material terms to your colleague(s)? Keep accurate records of all your communications to and from the colleagues. Maintain even more precise accounting records regarding the transaction. Be patient and ensure your colleagues understands the nature of the transaction at the onset to avoid later issues because of  a lack of clarity.

If you are already reacting to accusations regarding ongoing business dealings with a business partner, cooperate with the harmed party to rectify the situation prior to the commencement of any litigation. Communicate with your business partner regarding the accusations and expectations of all interested parties. If the harmed party nonetheless pursues litigation, seek legal counsel immediately, and cease all further communications, even to your partner until you’ve had an opportunity to speak with someone advocating specifically on your behalf.

If you or someone you know has been accused of mishandling funds or have questions regarding your business partner(s) and corporate structure, we always provide a free consultation so that you may better understand your legal options.

1Fla. Stat. 620.8101(7) (2018).

2Fla. Stat. 620.1404 (2018).

3Simon v. Celebration Co., 883 So. 2d 826, 832 (Fla. 5th DCA 2004).

Raising Money

Regulation D and Regulation A+ Final Rules Offer Important Capital Raising Alternatives

Raising Money Through the JOBS Act: Q&A

Raising Money Through Reg A+

Raising Money Through 506c

5 Critical Elements To Look for When Seeking the Services of an Attorney

Larry Pino

If you are planning to seek the services of an attorney, here are five critical elements to consider:

  1. Be clear the attorney is competent in the area in which you need assistance.  Law, like medicine, is specialized.  Best to seek out the assistance of a specialist in what your needs are; it will be less expensive in the long run and the work product will be better.
  2. Make sure both you and your attorney are clear as to what your objectives are and what is achievable.  If your attorney understands what you are trying to get accomplished, he or she will be better able to advise you as to what can reasonably be achieved, and what might be more problematic.
  3. Discuss, agree and have in writing the fee arrangement with your attorney.  There is no reason why either of you should ever be surprised about the billing once it starts.  The time to have that conversation is up front.
  4. Discuss and come to terms on how you and your attorney will communicate.  One of the major points of discontent between a client and an attorney is a lack of ongoing communication on the part of the attorney.  Best to have that conversation about your expectations up front.
  5. Check with the Bar Association to confirm whether there are any disciplinary proceedings against your attorney.  If there were, it doesn’t mean to stay away from a particular attorney if the above conditions are met, but knowing if there are prior client complaints will help you make a more informed decision.

Feel free to contact PinoNicholson PLLC today at 407-425-7831 to learn more.

Bells and Whistles: A Guideline for Avoiding the Pitfalls of Contracts

Image source: www.ukconstructionmedia.co.uk

You’ve had a great opportunity presented to you, and assumed you could handle the entire transaction on your own. You and your counterpart exchanged notes you wrote on a napkin at lunch and some text messages later during the week. You typed up a quick contract based upon a free template you found online, and your counterpart was ready to commence services right away. While frowned upon, this is actually common in today’s era of technology.

You both executed the contract, but then early on, something goes wrong, and your counterpart refuses to pay. Whose responsibility is it? What do you do? No one expects to end up at this juncture, yet, so many contract deals wind up arriving at this final destination.

While it is vital that you seek legal counsel early in any financial transaction you may be contemplating, here is a list of preliminary items to consider initially to avoid some common pitfalls while deciding to seek legal assistance:

 

  1. Beyond the standard boilerplate language necessary to avoid lengthy judicial procedures, e.g. applicable laws, jurisdiction, and venue, substantive provisions must be included to ensure avoidance of some common pitfalls in a breach of contract scenario. For example, some contracts fail to state the grounds for default or provide indemnification provisions in the event of any future legal claims.

 

  1. While the average consumer may consider what is mainly required of a contracting party, they may nevertheless fail to specify the grounds for termination: terms that allow a part to discontinue the contract. Consider what conduct are grounds for termination or a material breach. We represented a corporate client during litigation of a breach of contract claim. The defendants argued our clients initially breached the contract, while our clients argued that the defendants’ funding deficiency caused them to breach. Unfortunately, the contract, which our office did not draft, never identified the grounds for a breach, clarified a material breach, or instructed who was to perform first, let alone the nature of the relationship in the event one of the conditions was waived. With so many open-ended questions, the resulting litigation was substantial.

 

  1. Clarify each party’s responsibilities. So often, key details are overlooked: who’s financially responsible while the goods are in transit up until the time the transaction is complete; who’s responsible for utilities; how do the parties receive official notices and other important communications; is insurance required; who’s responsible for any negligent conduct, and so forth? We represented a local mega church, which often hosted programs for various organizations benefiting the local community. One local organization wanted to host a program to assist ex-convicts in the rehabilitative process. We very much supported the effort and counseled the church about the risks for which an appropriate indemnification would limit the church’s exposure to liability.

 

  1. It’s important to clarify any allotted waivers. While a party may be in breach of a contract, you can give up your legal rights to sue for any breach, or rescind the contract due to any breach, in the event a waiver is given, implicitly or explicitly.

There are just some of the common pitfalls in contracts that we see daily. My law professor once told me, “A good litigator knows how to draft a contract, but a great transaction attorney knows how to avoid litigation.” These initial conversations will help prevent many disputes that ultimately end up in litigation.

While breaches of contract are never fun, they can be adequately provided for in an appropriately drafted contract. Engaging the right legal team to assist you in your legal transactions can be the difference between walking away from a deal with everything you wanted or walking away with nothing. Contact us today for a free consultation.

SaveSave

SaveSave

Cryptocurrency and its Risks: What You Need to Know

Cryptocurrency: it’s innovative, yet deceptive. Like any contemporary tech idea, millennials, business owners, and investors have flocked en masse to capitalize on it. For many, cryptocurrency provides a new approach to transact business with family, friends, partners, and even foreigners. Yet, such an unregulated space carries issues that can have devastating effects in this wild-wild-west type of atmosphere.

Cryptocurrency: what is it? Without the services of any centralized bank, cryptocurrency allows digital currency (of any kind) to be transferred to a recipient via complex encryption techniques. It essentially allows individuals to exchange currencies, for any purpose, without having to go through a bank by using encrypted codes assigned only to that particular individual. This feature provides substantial privacy; however, the fallacy that it is completely secure from third parties and exempt from compromise has been disproved by digital hackers. Moreover, transactions are permanent, so there is no one available to resolve errors or disputes or otherwise access the account.

While SEC officials and other federal regulators have been attempting to determine how best to regulate the cryptocurrency world since its inception in 2009, it has already been and is currently being utilized by millions of individuals all over the world. Earlier this year, in Miami, Florida, a seven-figure real estate transaction was completed exclusively using cryptocurrency. Locally here in Orlando, Florida, we have begun seeing cryptocurrency ATMs appear in some convenience stores.

Our law firm recently handled a contract dispute matter for a corporate client, who unknowingly got entangled within the cryptocurrency world. Basically, the contracts provided that their feature film would be financed with certain funds, and those particular funds would be held in a specific account. Unbeknownst to our client, the account identified was one of many platforms used to exchange cryptocurrencies, and the account held various forms of currency. However, after the contracts were breached and funds were not properly transferred from the designated crypto-platform as instructed by the agreements, our client got us involved to file suit and recover funds.

Ultimately, we obtained a multi-million dollar judgment for our client, but we have had difficulties acquiring the funds from the crypto-platform, which contained currencies more than sufficient to satisfy the judgment. The defendants claimed to not have access to the account, thereby refusing to turn over the funds. Since no central governing body regulates the platform, it has been challenging filing garnishments or otherwise levying upon the cryptocurrencies. Eventually, we were able to successfully obtain an injunction prohibiting any of the currencies from being transferred from the crypto-account. However, we are still attempting to retrieve the full contents of the encrypted account.

If you are considering transacting utilizing cryptocurrency, weigh your options and consider:

  • Whether privacy is more important than regulation. Banks verify account holders and even question certain suspicious transactions, whereas cryptocurrencies are encrypted, and anyone can transact anything without being traced; and
  • The extent of your relationship with the opposite transacting party. All cryptocurrency transactions are permanent: it’s the flagship feature of the exchange. There is no one to oversee any of the parties or govern the transaction.

Irrespective, should you intend to proceed forward with a transaction involving cryptocurrency, and would like assistance, feel free to contact our law firm.

Image source: Fortune Magazine (via Youtube)

SaveSave

SaveSave