6 Legal Terms Every Business Should Know Right Now
A common response to legal terminology: eye rolling, laughter, or the hard grimace. But, at the end of the day, legal terms matter to your business. They impact your rights and obligations under contracts and how you can protect valuable assets in your business.
Force Majeure: One issue that keeps coming up in this COVID-19 environment is the force majeure provision in contracts. Force majeure is a contract provision that excuses performance if it’s rendered impractical by a supervening event. This event may include pandemics or governmental-ordered closures or actions; it depends on what the force majeure provision says. This could mean the difference between applicability and liability of a contract or not. One of the focuses of my practice right now is to assist businesses in reviewing these contracts and help them make choices on what to do with their contracts.
Matthew Fornaro, Attorney at Law | Coral Springs, Florida
Intellectual Property: A lot of businesses are pivoting and expanding into areas that may be new. The take-away for businesses is that even if they already have a trademark registration, they would need to think about what the scope of that registration is. If they are launching important new offerings that are not listed in their existing registration, they should consider filing a new trademark application to include important new products or services. Many companies are not necessarily aware that the “mark” is not just the name, but the entire “package,” i.e., the name, the goods/services, etc. Because trademark filing is a race to the Trademark Office, and because there is high activity in certain sectors, companies should plan accordingly, so that the desired name is not co-opted by a competitor.
Diana Palchik | Palchik Law & Consulting | Dallas, Texas
Liability Waiver: Juliet Peters, recently published a blog post, To Waiver or not to waiver, that is the question wherein she talks about employee waivers and business waivers in light of the Covid-19 pandemic. She writes: “Through the years, we have all gotten used to liability waivers. You know, the things that you sign that say the business isn’t responsible if you get hurt. If you are a parent, you have inked them for every team your kid has played on and at every facility you frequent. Adults sign them at potentially risky places like racetracks, horseback riding venues, and sky diving enterprises (gulp). Businesses faced with the specter of lawsuits from COVID-19 may be wondering if they should make customers sign them.” One of the many tips she provides regarding waivers is: “Keep it simple but precise. Tailor the waiver to your business and the activity. The broader it is, the riskier it is. Be specific about the particular risks customers are waiving.”
Juliet Peters | Framework Legal | Phoenix, Arizona
Consideration: In a nutshell, the concept of consideration is that you should get something in exchange for giving something. Law students spend a lot of time comprehending the concept of what a “bargained for exchange” means. This concept of consideration (what is given in exchange) is one of the core defining elements of a contract.
Practically, you can see this issue in severance agreements for employees that are terminated by the company. In exchange (or in consideration for) a release and waiver of claims, the company agrees to pay severance. As a core prong of an enforceable contract, anytime you are analyzing whether a contract is enforceable, consideration will need to be an element.
Beth Lebowitz | Nimbus Legal | Phoenix, Arizona
Companies often include language in contracts limiting their liability if something goes wrong with the product or service they are selling. Related to this, a company, especially one providing services such as consulting, may include a liability “cap”. A liability cap sets forth a breaching party’s maximum dollar liability under a contract. It is often expressed as a multiple of fees paid pursuant to the contract by one party to the other party. For example, the cap may be the total amount of all fees paid by the customer or client for the services provided, or the total amount paid during a stated period of time, such as the previous twelve months. A liability cap can protect the party from open-ended or wildly uncertain damages claims.
Mark Spitz | Spitz Legal Counsel | Denver, Colorado
Indemnification clauses in contracts allocate the risk and expense arising out of either party’s breach, negligence, or misconduct. The purpose of indemnification is to protect the indemnified party from losses incurred in connection with third-party claims made pursuant to an agreement. The indemnifying party agrees to compensate the other party for costs or damages arising out of the indemnifying party’s breach, negligence, or misconduct. For example, if a third-party sues the licensee of a patent or trademark, alleging infringement, the licensee may be able to seek indemnification from the licensor, who is the owner of the patent or trademark, for any costs or damages related to that third-party claim. Indemnification clauses can be very complicated and are usually subject to a lot of negotiation, so having an experienced business lawyer can help protect your interests.
Mark Spitz | Spitz Legal Counsel | Denver, Colorado
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