21 April

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The Mistake of a Business Owner Regarding Insurance

Insurance is often undervalued and misunderstood by the business owner. Most insurance policies are relatively inexpensive. However, if something bad happens and you do not have insurance for that event most likely your business will go under. Hypothetical: Lovers Nots, LLC owns a commercial building outright without a mortgage. The LLC decides that they cannot afford their insurance policies that protect against natural disasters. So, they cancel it. Then, a fire breaks out in the electrical panel and destroys the building. Rebuilding will cost $2,000,000. The land is worth $200,000. Analysis: Most likely the LLC will have to sell the land because...

07 April

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Common Contract Terms – Part II

Posted by Evon Spangler

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It is important when you are reviewing a contract that you have a basic understanding of common contract terms and the importance of some of those common contract terms. Assignment. Whether or not you can assign your contract or lease is often dictated by its terms. Some contracts and leases prohibit an assignment, some allow one party to assign it and not the other, and still others allow an assignment under certain circumstances. This issue often comes up when you are trying to sell your business and the contract or lease does not allow an assignment or have defined a default...

23 March

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Arbitration Cannot Be Required for Sexual Assault and Sexual Harassment

Posted by Evon Spangler

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Federal law (Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021) now prohibits, effective immediately, a requirement that sexual assault and sexual harassment claims must be arbitrated. The prohibition applies to those claims brought under federal or state law. However, neither sexual assault nor sexual harassment is defined under the new law, and instead those terms are defined as under the applicable state or federal law. Therefore, the definitions will vary. In addition, the law prohibits any waiver of a right to bring claims of sexual assault or harassment through a class action. This law does not only...

23 February

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DIY (Doing It Yourself) Comes with Risks

Posted by Evon Spangler

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Sally Sue Mallard dreams of owning her own business. She decides to open Sally Sue’s Baked Goods and Cleaning Services. Specifically, she is going to provide baked goods served with eating utensils (a niche she believes) to homeowners and commercial real estate owners. So, she decides to name her business, “Sally Sue’s Baked Goods and Cleaning Services, Inc.” She decides to use “Inc.” because it makes her business look sophisticated and elegant. So, her friend tells her that opening up a corporation is easy—you just go to the Secretary of State’s office and register your business as a corporation—which Sally...

09 February

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The Mistake of a Business Owner Regarding Contract Provisions

Posted by Evon Spangler

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Certain contract provisions appear to be a “bunch of legal mumble jumble” that are often ignored. Ignoring contract provisions, regardless of how mundane they appear can have serious consequences. Do not overlook a notice provision in a contract or lease. Consider the following examples: Hypothetical: Ella enters into an equipment lease for her business. She owes $5,000 a month under the terms of the lease. The equipment continually breaks down, so Ella wants to bring a lawsuit. Analysis: The contract requires that Delaware law governs the terms of the contract and that the lawsuit must be heard in Delaware courts. Ella then...

27 January

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Common Contract Terms

Posted by Evon Spangler

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It is important when you are reviewing a contract that you have a basic understanding of common contract terms and the importance of some of those common contract terms. Governing Law. Just because your business is in Minnesota does not mean that Minnesota law automatically governs. A properly drafted “Governing Law” provision is critical. Without the contract specifying what law governs that may be one of the issues that first gets litigated. In addition, it is essential that the laws that govern do so without giving effect to the conflict of laws principle. Without that language, if there is a dispute...

19 January

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Transfer on Death Deed

Posted by Evon Spangler

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Minnesota did not allow TODDs until 2008. A TODD is only for real property. It transfers real property automatically to the person(s) or entities names in the TODD upon the owner’s death. Therefore, it operates like a beneficiary designation on a life insurance or retirement account. TODD’s are often used when the owner wants the real property to pass outside of probate court. When real property transfers via a TODD, it generally is not subject to probate court proceedings. A TODD is an efficient, but effective way to complete estate planning for an individual who wants to avoid probate, if possible,...

27 December

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New Workplace Protections

Posted by Evon Spangler

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On January 1, 2022, there are new workplace protections in place in Minnesota for expectant and new parents. This article provides a brief, but not complete, summary of the significant changes. If your business has a minimum of 15 employees this law now applies to you (under the old law, the minimum number of employees was 21). Furthermore, this law applies immediately on day one of employment. The new law also prohibits requiring lactating employees to use accrued paid time off, vacation or sick time when they are expressing milk. In addition, based on an eight-hour shift, now the break time...

24 November

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Piercing the Corporate Veil

Posted by Evon Spangler

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Hypothetical: You open up a flower shop. You file as a business entity with the State of Minnesota, but do not have any other corporate documents. Your business uses your personal account for the business. You and your business are then sued when a customer stumbles and falls when coming into your business to pick up a floral arrangement. Punishment: If you do not follow corporate formalities, and your business is sued, the court can pierce the corporate veil and seize your personal assets to pay a business debt. Factors that the court considers are: Insufficient capitalization; Failure to observe corporate formalities; Nonpayment of dividends; Insolvency of debtor...

04 November

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The Mistake of a Business Owner Regarding Oral Contracts

Posted by Evon Spangler

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Most oral agreements are binding. However, oral agreements should be avoided. If there is an oral agreement, the first issue that is generally litigated is the terms of the agreement. Once the terms are determined, then what is litigated next is whether there was a breach of an agreement. If there was a breach, then what is litigated next are the damages. There are several types of oral agreements that are not enforceable. The following hypotheticals includes some examples of oral agreements that are not enforceable. Hypothetical: George owns George’s, LLC. His friend Sam approaches him because he wants to be...