Articles Posted in Business Law

Underwood-Blog-Images-5-300x300Attorney’s fees are those fees owed by a client to an attorney who performed legal services on behalf of the client. In some cases, a court may order the losing party to pay the attorney’s fees of the other party. Whether attorney’s fees are available as damages depends on the nature of the action. In cases involving a breach of contract, whether attorney’s fees are available generally depends on the terms of the contract. 

What is a Breach of Contract?

A breached contract occurs when a party fails to fully perform its obligations under a valid contract. Generally, to prove a breach of contract, a litigant must prove that a valid contract existed and that the valid contract was breached by the party in some way, causing damages to the litigant.

Underwood-Blog-Images-2-300x300If the parties consent to arbitration, they decide to settle their dispute outside the confines and strict procedure of courtrooms. That said, arbitration awards are not automatically court judgments just because they resolve legal claims.

On the contrary, arbitration awards are just contracts between parties and are not independently enforceable under the law. For that reason, those individuals who receive an arbitration award need to take one final step and confirm the award by petitioning the court.

These petitions, however, can be the subject of much litigation in their own right. Parties will treat these petitions as a means of re-opening legal disputes the arbitration was designed to close. But it doesn’t need to be this way. At Underwood Law Firm, our attorneys are well-versed in the law surrounding arbitration and other methods of alternative dispute resolution. With our assistance, we can help litigants get through the arbitration process.

Underwood-Blog-Images-300x300In California, business enterprises can take many forms (LLCs, corporations, partnerships, etc.). But perhaps the most unique is the “joint venture,” a special entity that, more often than not, is imposed by courts as a matter of law. This is because a joint venture is simply an “undertaking by two or more persons jointly to carry out a single business enterprise for profit.” (Unruh-Haxton v. Regents of University of California (2008) 162 Cal.App.4th 343, 370.) 

Joint ventures can be thought of as informal general partnerships, lacking the formalities of partnership agreements and usually lasting for a shorter duration. That said, they nonetheless carry the same fiduciary duties and responsibilities associated with partnerships in California. Moreover, the statutes within the Revised Uniform Partnership Act apply with equal force to both types of entities. (Chambers v. Kay (2002) 29 Cal.4th 142, 151.) 

At Underwood Law Firm, our attorneys are well-versed in the law behind joint ventures and partnerships, particularly as these entities relate to real estate projects. With our skills, we stand ready to help all of our clients achieve their litigation goals. 

Underwood-Blog-Images-4-300x300The way a business is conducted depends on the entity used to conduct it. There are several entities one can form in order to conduct a business. One common entity used to conduct a business is a partnership. The formalities for creating a partnership are dependent on what type of partnership a person decides to form. A partnership can be formed either as a general partnership or as a limited partnership. The purpose of this article will be to provide information on partnership entities and their formation. 

What is a General Partnership?

A partnership is defined as an “association of two or more persons to carry on as co-owners a business for profit.” Cal. Corp. Code § 16101(10). A general partnership is made up of only general partners, and each general partner is jointly and severally liable for the partnership. This means that a general partner is liable for the obligations of the general partnership. 

Underwood-Blog-Images-2-300x300No. In California, individuals often hide behind “corporations” that consist of a single shareholder. In so doing, they protect themselves from liability by utilizing a corporate form. This can be especially frustrating in lawsuits.

Often, a plaintiff will receive a judgment in their favor, only to find the corporation they’ve sued has magically become bankrupt, unable to satisfy their debts. California law provides a remedy for this instance, called “piercing the veil.”

But sometimes, the situation is reversed, and an individual cannot satisfy their debts. In some states, courts allow creditors to reverse pierce the veil and seize the corporate assets owned by the individual shareholder. California does not allow this, as the courts see it as a hasty and inadequate solution for which other remedies already exist.

Underwood-Blog-Images-5-300x300General partnerships, and their “joint venture” cousins, are composed of partners seeking to make a profit in a business venture. But things don’t always work out. Often, a once promising endeavor breaks down due to mismanagement and miscommunication. In these situations, partners may feel the urge to get out with whatever equity they can. Usually, it isn’t that easy. 

The Revised Uniform Partnership Act allows partners to dissociate from their partnerships whenever they want. Yet this withdrawal can sometimes cause serious damage, especially when the partner trying to leave was a major source of capital. For that reason, the California Corporations Code provides for penalties when the dissociation is “wrongful.” In the end, getting out of a partnership isn’t so much about doing it the “right” way as it is about avoiding the “wrong” way to dissociate.

What is dissociation? 

Underwood-Blog-Images-1-3-300x300Yes. While joint ventures are a distinct type of business entity, they share many similarities with general partnerships in California. In fact, “the resemblance between a partnership and joint venture is so close that the rights as between adventurers are governed by practically the same rules that govern partners.” (Milton Kauffman, Inc. v. Superior Court (1949) 94 Cal.App.2d 8, 17.) That being said, there are some differences between the two. This post will address those differences and discuss the common issues that arise among them.  

What is a joint venture?

Under California law, a joint venture “exists where there is an agreement between the parties under which they have a community of interest, that is, a joint interest, in a common business undertaking…” (County of Riverside v. Loma Linda Univ. (1981) 118 Cal.App.3d 300, 313.) In essence, “a joint venture is an undertaking by two or more persons to carry out a single business enterprise for profit.” (Unruh-Haxton v. Regents of University of California (2008) 162 Cal.App.4th 343, 370.)

Underwood-Blog-Images-3-300x300 Shareholder derivative suits are lawsuits that allow and assist shareholders in bringing legal action against the board of directors or officers in a corporate entity for illegal action. 

Read on to find out about the relationship between shareholders and derivative suits.

What is a shareholder?

A handshake with a building image overlay
At some point or another, it becomes necessary to have “the talk” and “define the relationship” within a business. While the thought of defining business roles may make some people nervous, not having a conversation is a source of even greater anxiety when the relationship involves an investment, business venture, or development project.

The problem, for many people, is that they don’t know what terms to use to define a business relationship or how to structure it other than as a “50/50 partnership.” Many people are reluctant to structure it in any other way because of a concern of looking “greedy” or because another structure could cause the other party to back out of the deal, thereby removing the capital necessary to make the project happen.

If you find yourself in these situations, however, you should know that there are many alternatives to a “true partnership” that may work better for all of the parties involved.

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