Ask the Lawyer – Business Attorney Answers Your Questions
As an attorney who works with small businesses on a regular basis, I offer professional advice on a wide variety of legal issues. Here is a sample of just a few of the questions that can arise in the course of running a business.
Will my new business name get me sued?
I am starting a home based travel agency and need to file for an assumed name. So as not to disclose names I’ll use ”anytown” for the city. Where I live there is a business by the name of ”Anytown Travel Agency” they have been in business for 30 years. I would like to file for my name to be ”Anytown Travel & Cruise”. I contacted the county clerk and this name is available as there is no registered name or similar name. Once I start advertising locally I am afraid this other travel agency will become upset. Can they legitimately sue me for using a similar name?
They might; anyone can sue anybody for anything. The better question is, will they win a lawsuit? The answer depends on whether your name causes confusion in the public’s mind as to which business is which.
LLC working for another LLC
I am currently working for a company as an independent sales agent. Do I have to announce that I am an independent agent to all potential customers? How should the business cards be worded?
You should always disclose that you are acting as an independent contractor, subcontractor, or agent of the principal.
Corporate Confusion
There are two partners in XYZ Corporation. Partner “A” got 35 percent share and partner “B” got 65 percent share in the business. The is no formal written agreement, but there are “share certificates” signed by both the partners. There is some investment from both the partners. “A” invested money to buy some office computers by credit card. “B” is the one that controls the business bank account and is active in the business. Can “A” claim her share in the corporation by way of her “share certificate?” Legally, do the partners need to have a formal partnership agreement to claim their shares in the business.
It is unclear whether this is a corporation, LLC, or partnership? Regardless, it sounds like you and your “partner” have been cutting corners on the formalities of the business. A corporation requires bylaws, a LLC requires an operating agreement, and both require that an annual meeting be held with elections and minutes being generated. A partnership requires a partnership agreement. If there is confusion between you and your “partner” regarding your rights and responsibilities in the business, it is probably because you have neglected the abovementioned formalities. I suggest you have an attorney review all the business records. If they are being neglected, you should rectify the situation. This matter should be handled immediately before there is a falling out between you and your “partner.”
Purchase Orders
What is the legal definition of a Purchase Order? What is considered to be legal acceptance of a Purchase Order if the P.O. items were shipped and acknowledged as shipped, invoiced, yet never signed?
A Purchase Order is a document authorizing a seller of goods or services to deliver said goods or services with payment to be made later. It is not necessary for the Purchase Order to be signed by you. If the goods were received and accepted, there may be a contract or at least a quasi-contract binding you. You may be obligated to pay for the goods.
Are wages due when employee quits without notice?
Concerning wages and previous hours worked, what is legally owed to an employee in the following two circumstances? (1) walks out on the job before their shift is over is terminated as a result. (2) quits by way of calling their supervisor and making known they no longer work for the company? We are a small business of 15 employees and recently ran into this situation.
Are you asking if that person is entitled to get paid? The answer is “yes,” if only for the actual time they worked. Otherwise, any severance is a matter of contract.
Buying a small business without assuming the current owner’s debts
When a small retail business is sold, do the NEW owners assume the past debts and liabilities of the Seller in relation to the business only? The Seller has a Sales Tax lien on herself/DBA and still owes a few creditors/suppliers. The business is NOT incorporated and is owned by a PERSON under a D/B/A status. The Seller is looking to settle all past debts, etc, at time of Close on Sale of Business. The Buyers are buying the business name, the Good Will, fixtures, etc. No Real Estate is involved. A new lease is being drawn for them.
You may purchase the assets only of the business, but I would have the tax-lien paid out of the proceeds of the sale at closing. If not, I would have a very specific indemnity agreement drafted wherein your seller would indemnify you against any claims for taxes. If the seller is financially well off and not insolvent, this may be an option, but paying the liens off at closing is still preferable.
Do YOU Have a question about a small business legal issue?
If you have a question you’d like answered in this blog, send your request to e@detailsinretail.com. We’ll do our best to include your legal question and answer in an upcoming post.
About the Author:
The Law Office of Blake P. Lipman is a full service law firm in the Metro Detroit area of Michigan.
Our office has 13 years of professional experience, so you can trust our advice. We specialize in:
- Small Business Planning (Corporations, LLCs, and Partnerships)
- Contracts (Leases and Business Agreements)
- General Litigation
- Real Estate Law (Boundary Disputes Sales/Purchases, and Contractor Disputes)
- Family Law (Divorce, Child Support, and Child Custody)
- Estates/Probate Law (Wills, Trusts, Guardianships, Conservatorships, and Decedents’ Estates)
Blake P. Lipman
http://www.blakelipmanatty.com/
—
Recent Comments