Creating an Enforceable Contract Presented by Richard St. Paul, Esq., PLLC Disclaimer: This presentation and supplemental material related to this presentation are intended to constitute basic information about forming a contract and are intended for informational purposes only. Neither the material nor any portions thereof constitutes legal advice.
Creating An Enforceable Contract Introduction A contract is only as good as your ability to successfully enforce it in court. November 3, 2016 Creating An Enforceable Contract 2
Creating An Enforceable Contract The Basics A contract is an agreement to perform. It can be an oral or written agreement. The agreement can be written on napkin or on paper. A contract has three basic elements: • An Offer • Acceptance • Consideration November 3, 2016 Creating An Enforceable Contract 3
Creating An Enforceable Contract The Basics • An Offer: A explicit proposal to contract which, if accepted, completes the contract and binds both the person that made the offer and the person accepting the offer to the terms of the contract. • Acceptance : The final and unequivocal expression of assent to another's offer to contract. • Consideration: Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances. November 3, 2016 Creating An Enforceable Contract 4
Creating An Enforceable Contract Material Terms • Identification of Parties: Name, address, titles. • Description: of goods or services and the compensation the party pays. • Dates: when payment must be made and when goods and services must be delivered. • Conditions: for terminating contract. • Governing Law • Merger Clause: This contract represents the full agreement and you do not rely on any other statement or agreement. • Signature: of all parties. Creating An Enforceable Contract 5
Creating an Enforceable Contract To enforce a contract you must prove that you properly accepted an offer and the other party did not perform. November 3, 2016 Creating An Enforceable Contract 6
Creating an Enforceable Contract Remedies: If the contract does not provide a remedy then a court can provide compensation or specific performance. November 3, 2016 Creating An Enforceable Contract 7
Creating An Enforceable Contract Example Richard, if your job is to take out the trash • Richard you’re responsible for taking out the garbage. But as an attorney, if I wanted to poke holes in the deal, I could ask: • What day and time during the week do I take out the garbage? • Can I take out the garbage only once, or is this an ongoing obligation? • Can I let the garbage pile up for a year and then take it out? • Do I need to take out all of the garbage in the house, or just some of it? • Does the garbage need to be bagged? Can I just throw a half-eaten chicken wing on the front porch? • Can I sub-contract my garbage-taking-out responsibilities to my daughter? • …and what exactly constitutes “ garbage ” anyway? November 3, 2016 Creating An Enforceable Contract 8
Creating An Enforceable Contract Example Richard, you ’ re responsible for taking out the garbage Written in lawyer speak… “ No later than 6 a.m. New York time each Monday and Thursday (and no earlier than 7 p.m. each Sunday and Wednesday, respectively). Vincent shall: i.place all Garbage on the interior of the house on the premises (the “ House ” ) in trash bags (any such trash bag into which Garbage has been placed, a “ Trash Bag ” ); ii.seal and place each Trash Bag in one of the garbage cans located on the exterior of the House (any such garbage can into with a Trash Bag has been placed, a “ Garbage Can ” ); and iii.thereafter place each Garbage Can no more than one inch south of the curb of the sidewalk relating to the premises and between one and seven feet west of the driveway on the premises. Vincent shall place all Garbage Cans on the east side of the House (and adjacent thereto) as of 6 a.m. New York time each Tuesday and Friday. November 3, 2016 Creating An Enforceable Contract 9
Creating An Enforceable Contract Example Vincent’s obligations under this paragraph are personal in nature and, as such are not assignable or delegable in whole or in part. “Garbage” means rubbish, as determined by Christine in her sole discretion.” November 3, 2016 Creating An Enforceable Contract 10
Partnership Agreements N.Y. PTR. LAW § 121-110 : NY Code - Section 121-110
Partnership Agreements Material Terms • Decision-Making • Capital Contribution. This is the section where you say how much money each person is putting in to start the business. • Salaries/Distributions • Death/Disability • Dissolution November 3, 2016 Creating An Enforceable Contract 12
Partnership Agreements Questions to ask before writing a partnership agreement 1) Basics • What is the name of the partnership? • What is the purpose of the partnership? • What is the duration of the partnership? 2) Responsibilities, performance and remuneration • What is each partner's role? • What are each partner's responsibilities within the company, and what level of performance is expected? • Are partners expected to make a full-time commitment to the venture, or are business activities permitted? • What will be the income of each partner, and how will profits or losses be distributed? November 3, 2016 Creating An Enforceable Contract 13
Partnership Agreements Questions to ask before writing a partnership agreement 3) Contributions • What will each partner be contributing to the partnership in terms of cash, assets, loans, investments, and/or labor? • If a partner loans to company money, what will be the terms or repayment? • Will the partners be expected to make additional contributions to the partnership, and if so, how will that be handled? 4) Withdrawal of partners/admission of new partners • What guidelines should be followed if one partner wants to leave the partnership? • Will partners be allowed to sell their interests in the business to outsiders? • On what grounds can a partner be expelled from the partnership (misconduct, non- performance of duties)? • How will new partners be admitted to the partnership? November 3, 2016 Creating An Enforceable Contract 14
Partnership Agreements Questions to ask before writing a partnership agreement 5) Buy-out procedures • What guidelines should be followed if one partner wants to retire or leave the partnership? • What happens if a partner is incapacitated or dies? • Will the partnership take out "key man" life insurance to ensure the surviving partner is able to buy the deceased partner's shares from his/her heirs? • Will partners who leave have to sign a non-compete agreement? 6) Dispute resolution • What methods will be used to settle disputes that can't be otherwise resolved? • What procedures should be used in the event of a tie vote between partners on crucial partnership decisions? • Will you use mediation or binding arbitration? • If disputes can't be resolved, is there a mechanism in place for dissolving the partnership? Creating An Enforceable Contract 15
Partnership Agreements Questions to ask before writing a partnership agreement 7) Financial arrangements • What banking arrangements will be made for the partnership? • Which partners will have check signing privileges? • Who will be authorized to draw on the partnership's accounts? • How will the books be kept? 8) Method for dissolving the partnership • When can the partnership be dissolved? • What happens to the partnership if the partners decide they can't work together? 9) Valuation • What methods will be used to determine the value of the business in the event of a sale, dissolution, death, disability or withdrawal of a partner? November 3, 2016 Creating An Enforceable Contract 16
Contact: Richard St. Paul, Esq. 445 Hamilton Ave Ste 1102 White Plains, NY 10601 Phone: 914-517-7568 Fax: 914-517-7569 Website: www.thestpaullawfirm.com
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