Contracts and Leases: Are You Protected?
Entering into a contract or lease as either an individual or a business owner or both is often seen as a simple process. However, that view is deceptive because the process is actually quite complicated. One issue arises when there is a request for the business owner to sign a personal guarantee. As a result, if the business fails, the business owner is still on the hook for the entire amount of the lease. Even more problematic is when the lender requests that the spouse of the business owner signs a personal guarantee. If the spouse is not an owner of the business (the fact that you are married does not automatically make your spouse an owner under laws applying to legal entities), there is no legitimate reason for anyone to request that the spouse be a co-personal guarantor nor should the spouse become a personal guarantor.
Another issue that commonly arises is when a business and/or individual relies on the oral assurances of the opposing party, and does not have an attorney review the document before signing. It is not uncommon to review a contract or lease drafted by the other side that does not match the alleged oral agreement. However, most agreements include a provision that the written agreement supersedes any oral agreements. As a result, it is vital that you understand the terms of the agreement before signing, and that those terms reflect your oral understanding of the terms.
Most contracts and leases also contain a choice of forum/venue clause. It is important that you understand the consequences of this provision. It is not uncommon to see this provision state that the parties will agree to, for example, the laws of New York, and name the New York courts for venue. In other words, if there is a dispute regarding the contract or lease, under this example, you would be flying to New York for court, and you would need to retain an attorney licensed in the State of New York.
Another common issue is when parties draft the contract by using a form contract or lease that is located on the internet. A form contract cannot provide you with legal advice. Also, a form contract does not take into consideration your unique circumstances (because every business and individual does have unique circumstances, different goals, etc.). Furthermore, a form contract probably does not comply with Minnesota law. Depending on the circumstances, you might also need to make certain that certain federal laws and local ordinances are also followed. Drafting a contract without legal advice will most likely not provide you with the protection you need.
Spangler and de Stefano, PLLP represents businesses (for-profit and non-profit) regarding contracts and leases, including but not limited to: business to business contracts, non-compete agreements, independent contractor agreements, asset purchase agreements, stock purchase agreements, and commercial and residential leases.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.