Fresh Coat, Inc. v. K-2, Inc.

by Shelly Levick Masters

Segal McCambridge Singer & Mahoney, Ltd.

Shelly Masters is a Shareholder in the Austin office of Segal McCambridge Singer & Mahoney, Ltd. With over ten years of experience, she maintains a varied trial practice that focuses primarily in the areas of complex business litigation, general litigation, construction, employment, insurance coverage and products liability. Ms. Masters is a frequent author and speaker on a variety of legal topics for city, state and national events and publications. She is the Co-Leader of the firm’s Construction Practice Group and one of the creators and editors of LegalBuild, a legal newsletter for the construction industry. Her experience includes all aspects of pre-trial and trial work before state and federal courts, as well as mediation and arbitration. She has acted as primary trial counsel involving cases pertaining to construction defects, breach of contract, insurance coverage, property damage, wrongful termination, sexual harassment, personal injury and corporate matters. She has provided legal representation in all aspects of commercial and residential construction, including liability defense, contract disputes and interpretation, OSHA compliance, premises liability and indemnity issues on public, private and federal projects. She currently represents commercial and industrial product and equipment manufacturers in environmental and toxic tort product liability litigation. Her practice also includes corporate risk assessment, insurance coverage analysis and business organization planning and implementation. Segal McCambridge Singer & Mahoney is a full-service, national law firm with offices in Illinois, Maryland, Michigan, New York, New Jersey, Pennsylvania and Texas.

In a decision released on August 20, 2010, the Texas Supreme Court addressed the scope of the Texas Product Liability Act (“TPLA”) and its application to the indemnity rights of a construction subcontractor. K-2, Inc. is a manufacturer of a synthetic stucco cladding product called “Exterior Insulation and Finish System” or “EIFS” as it is commonly referred to in the construction industry. A Texas homebuilder entered into a subcontract with Fresh Coat to install EIFS on residential homes. The subcontract contained a standard indemnity clause requiring Fresh Coat to indemnify the builder from any damages assessed against the builder regardless of fault. Approximately 90 homeowners brought suit against the homebuilder alleging that the EIFS allowed water penetration resulting in structural damage, bug infestations and mold. The plaintiff homeowners alleged the EIFS was defectively designed, manufactured and marketed (i.e., product liability allegations under the TPLA) among other causes of action. Settlements were reached between the plaintiffs and all defendants before trial.

Topics: Featured, Legal, Articles

The Catch 22 of Construction Change Orders

by Shelly Levick Masters

Segal McCambridge Singer & Mahoney, Ltd.

Shelly Masters is a Shareholder in the Austin office of Segal McCambridge Singer & Mahoney, Ltd. With over ten years of experience, she maintains a varied trial practice that focuses primarily in the areas of complex business litigation, general litigation, construction, employment, insurance coverage and products liability. Ms. Masters is a frequent author and speaker on a variety of legal topics for city, state and national events and publications. She is the Co-Leader of the firm’s Construction Practice Group and one of the creators and editors of LegalBuild, a legal newsletter for the construction industry. Her experience includes all aspects of pre-trial and trial work before state and federal courts, as well as mediation and arbitration. She has acted as primary trial counsel involving cases pertaining to construction defects, breach of contract, insurance coverage, property damage, wrongful termination, sexual harassment, personal injury and corporate matters. She has provided legal representation in all aspects of commercial and residential construction, including liability defense, contract disputes and interpretation, OSHA compliance, premises liability and indemnity issues on public, private and federal projects. She currently represents commercial and industrial product and equipment manufacturers in environmental and toxic tort product liability litigation. Her practice also includes corporate risk assessment, insurance coverage analysis and business organization planning and implementation. Segal McCambridge Singer & Mahoney is a full-service, national law firm with offices in Illinois, Maryland, Michigan, New York, New Jersey, Pennsylvania and Texas.

When a construction company first places a bid on a project, it spells out the services and materials to be provided in the construction contract. This contract also outlines the specifications for the project and the projected final outcome including terms of payment. If problems arise during the construction process or the owner modifies the project, a change order form must be completed. The change order form details the new plan, including services, materials, and costs, which are agreed upon (or to be agreed upon) by the owner and the contractor. The change order form then becomes the valid contract by which the owner and the contractor must legally abide.

Topics: Featured, Legal, Articles

When is a domain name a trademark? When is it infringement?

by James Blake

The Blake Law Firm, PLLC.

James Blake is a growth-oriented business attorney who strives to be a creative business partner, to identify value-add opportunities, and to crystallize the relationships, structures, and processes that will drive your commercial success. James Blake practices law in Texas and Hawaii, and has protected the interests of businesses across a broad range of industries, including technology, construction, service and retail, food and beverage, franchisors and franchisees, product manufacturers, and investors. His work experience encompasses commercial transactions, litigation, and advising business operations in the U.S., Africa, and Asia. James was an editor of Law Review at the University of Hawaii and conducted international commercial law research for the Institute of Asian Pacific Business Law. He served as the Official Reporter for the 2008 IAPBL China Enterprise Bankruptcy Law Symposium held in Hong Kong, and in the same year worked at a large firm in Singapore. James currently advises clients in international business and investment issues in addition serving his client’s legal and business needs in Hawaii and Texas. Currently based in Austin, Texas, James is an avid writer and enjoys speaking at business-law seminars in addition to his legal practice. In his spare time, James enjoys sculling and kayaking on Ladybird Lake, outdoor photography, and supporting visual and performing arts.

The law is always struggling to keep up with the pace of technology – especially the internet. One interesting legal issue that has emerged is the intersection of domain names (URLs) and trademarks. Under Texas law, your domain name may be infringing on the trademark of one of your competitors, or your competitor may be infringing on your trademark with a similar domain name. But how do you know who is infringing who? And if you’re starting a business or growing your business, what do you need to know to avoid trademark infringement?

A trademark is “a word, name, symbol, device, slogan, or any combination thereof that, whether registered or not, has been adopted and used by a person to identify his or her goods and distinguish them from the goods manufactured or sold by others.” Domain names are frequently used to identify a company, product, or service, and thus, will often qualify as a trademark – even if it isn’t registered. If you’re starting a business and using a domain name that is similar to an existing trademark, the trademark owner can bring a domain name trademark infringement lawsuit.

The Anticybersquatting Consumer Protection Act made it easier for trademark owners to bring lawsuits against others using domain names that are similar to their names and trademarks. The Uniform Domain Name Dispute Resolution Policy (UDRP) also made it easier and faster to resolve domain name trademark infringement disputes. However, domain name trademark disputes can still be difficult if it involves an unregistered trademark. Thus, if you’re starting a business or growing an existing business, it’s important to talk with a business attorney about protecting your brand with trademark registration. Similarly, when starting a business or building your brand, it’s important to ensure your domain name doesn’t infringe on others’ trademarks.

James Blake is an Austin Business Attorney who regularly advises clients regarding copyright, trademark, internet law, technology, and other intellectual property issues. To read more articles on copyright, trademark, and other intellectual property law, visit his Austin Business Law Blog.

Topics: Business Best Practices, Legal, Blog Posts, Marketing

Transaction account guarantee update – will big banks pass on the cost?

by Mary Ann Hebel

Business Bank of Texas

Mary Ann Hebel is organizer, director, executive vice president and chief financial officer of Business Bank of Texas, N.A. With over 37 years of banking experience, Mary Ann has contributed to the success of three national banks in the areas of accounting, data processing, human resources, and more recently as chief operations and chief financial officer. Mary Ann has also served as a consultant to the Texas Department of Banking in the capacity of liquidation agent for failed trust companies and private banks.

The Business Bank of Texas was founded in 2007 with the concept of using modern technology to help reduce the cost of doing business and to pass on that savings to our customers. Unlike many banks, we haven’t passed on the cost of providing the base level of FDIC insurance and we haven’t passed on the cost of participating in the TAG program.

Topics: Featured, Legal, Articles, Accounting & Finance

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Tech company partnerships with non-profit organizations

by James Blake

The Blake Law Firm, PLLC.

James Blake is a growth-oriented business attorney who strives to be a creative business partner, to identify value-add opportunities, and to crystallize the relationships, structures, and processes that will drive your commercial success. James Blake practices law in Texas and Hawaii, and has protected the interests of businesses across a broad range of industries, including technology, construction, service and retail, food and beverage, franchisors and franchisees, product manufacturers, and investors. His work experience encompasses commercial transactions, litigation, and advising business operations in the U.S., Africa, and Asia. James was an editor of Law Review at the University of Hawaii and conducted international commercial law research for the Institute of Asian Pacific Business Law. He served as the Official Reporter for the 2008 IAPBL China Enterprise Bankruptcy Law Symposium held in Hong Kong, and in the same year worked at a large firm in Singapore. James currently advises clients in international business and investment issues in addition serving his client’s legal and business needs in Hawaii and Texas. Currently based in Austin, Texas, James is an avid writer and enjoys speaking at business-law seminars in addition to his legal practice. In his spare time, James enjoys sculling and kayaking on Ladybird Lake, outdoor photography, and supporting visual and performing arts.

Now more than ever, technology companies are utilizing tax-exempt non-profit organizations to grow market share and platform adoption, to increase sales of complimentary services and products, and to control market standards. This trend has broad implications for both large and small technology companies, and any company seeking to form strategic alliances with technology-oriented non-profit organizations should carefully consider the partnership agreements, intellectual property licensing, and other business law planning necessary to ensure a positive outcome.

Topics: Sales, Technology, Legal, Strategic Planning, Taxes

IRS opens tax season with delays and changes

by Ron Ratliff

Ron Ratliff CPA

Ron Ratliff was a CPA who practiced accounting in Austin, Texas for many years. He passed away in 2011 and his articles are archived on the Business Resource Center for the long term, so that the business community can continue to benefit from Ron’s expertise.

The Internal Revenue Service (IRS) opened the 2011 Tax Season by announcing delays and changes as a result of Congress’ late enactment of the Tax Relief, Unemployment Reauthorization and Job Creation Act of 1020

Topics: Featured, Legal, Articles, Accounting & Finance

Disclaimed warranties and representations: promissory fraud and the right to lie

by James Blake

The Blake Law Firm, PLLC.

James Blake is a growth-oriented business attorney who strives to be a creative business partner, to identify value-add opportunities, and to crystallize the relationships, structures, and processes that will drive your commercial success. James Blake practices law in Texas and Hawaii, and has protected the interests of businesses across a broad range of industries, including technology, construction, service and retail, food and beverage, franchisors and franchisees, product manufacturers, and investors. His work experience encompasses commercial transactions, litigation, and advising business operations in the U.S., Africa, and Asia. James was an editor of Law Review at the University of Hawaii and conducted international commercial law research for the Institute of Asian Pacific Business Law. He served as the Official Reporter for the 2008 IAPBL China Enterprise Bankruptcy Law Symposium held in Hong Kong, and in the same year worked at a large firm in Singapore. James currently advises clients in international business and investment issues in addition serving his client’s legal and business needs in Hawaii and Texas. Currently based in Austin, Texas, James is an avid writer and enjoys speaking at business-law seminars in addition to his legal practice. In his spare time, James enjoys sculling and kayaking on Ladybird Lake, outdoor photography, and supporting visual and performing arts.

What your mom taught you about telling the truth is still good advice. While it may seem to go without saying, at least one judge has reaffirmed your mother’s rule: “it’s not okay to lie,” even if your contract says you don’t have to tell the truth. In Abry Partners V, L.P. v. F&W Acquisition, LLC, the court had to decide whether a very explicit disclaimer of all warranties and representations would be enforced to limit the liability of a company that had knowingly made false representations to induce the sale of the business to another company.

On its face, the disclaimer was very clear – the company that made the false representations had no contractual duty to tell the truth to the acquiring company, and any liability for false statements was limited to a predetermined amount. While the exact wording of the disclaimer may be too long to repeat here, it might as well have said: “Company A may make any false statement or misrepresentation to Company B to induce the sale, and Company B’s only legal remedy shall be capped at XYZ dollars.” This kind of disclaimer was written in two different sections of the sales contract.

Yet writing something in a contract doesn’t necessarily make it so. Judges have broad discretion regarding the enforcement of contract terms. Even though both Company A and Company B were sophisticated businesses with teams of legal professionals to advise this multi-million dollar transaction, the judge in this case held that it would be against public policy to enforce the disclaimer and to protect the company that made false representations.

What’s the moral of this story? Honesty isn’t just the best policy – it’s the law of the land, and no wording in a contract will change that. Further, as a general rule, you can’t rely solely upon the wording of a contract to forecast the outcome of potential legal disputes. Ultimately, courts strive to preserve justice, and a judge may easily override overbearing or unfair contracts.

Topics: Sales, Featured, Business Best Practices, Management, Legal, Articles

Legal lifecycles of businesses

by John Drisdale

Drisdale Law Firm

John Drisdale is a principal in the Austin area business law firm of Drisdale Law Firm. Drisdale believes in Ben Franklin’s theory that preventive legal costs are typically a fraction of remedial legal costs such as litigation and dispute resolution. John graduated second in his 1979 law class at Baylor University and was Editor in Chief of the Baylor Law Review. He is a published author and speaker on several important legal topics that affect small business including business entity formation, buy-sell agreements, purchasing and selling businesses, contracts, and commercial real estate. His professional experience includes practicing business law as a partner in an international law firm and serving as general counsel for a publicly traded global corporation. John now focuses on the "entry to exit" preventive business law needs of small to mid-size businesses. Drisdale limits his law practice to the areas he knows best and helps his clients manage the rest. Litigation, tax and other specialty matters are referred to other attorneys and professionals. John’s practice is based in Lakeway Texas where he has been an active Board member of the Lake Travis Chamber of Commerce for many years. He enjoys making business owner educational presentations to area groups and is a lifetime learner.

This is the first of 18 articles that will trace the legal life cycle of a business from its formation, through its operation and to its sale. The legal life cycles of businesses will be outlined in the following articles:

Topics: Featured, Legal, Articles

Forming a Legally Enforceable Contract

by James Blake

The Blake Law Firm, PLLC.

James Blake is a growth-oriented business attorney who strives to be a creative business partner, to identify value-add opportunities, and to crystallize the relationships, structures, and processes that will drive your commercial success. James Blake practices law in Texas and Hawaii, and has protected the interests of businesses across a broad range of industries, including technology, construction, service and retail, food and beverage, franchisors and franchisees, product manufacturers, and investors. His work experience encompasses commercial transactions, litigation, and advising business operations in the U.S., Africa, and Asia. James was an editor of Law Review at the University of Hawaii and conducted international commercial law research for the Institute of Asian Pacific Business Law. He served as the Official Reporter for the 2008 IAPBL China Enterprise Bankruptcy Law Symposium held in Hong Kong, and in the same year worked at a large firm in Singapore. James currently advises clients in international business and investment issues in addition serving his client’s legal and business needs in Hawaii and Texas. Currently based in Austin, Texas, James is an avid writer and enjoys speaking at business-law seminars in addition to his legal practice. In his spare time, James enjoys sculling and kayaking on Ladybird Lake, outdoor photography, and supporting visual and performing arts.

Today’s blog is about the most fundamental issue in contract law: do you actually have a contract? While this might seem like a no-brainer, you’d be surprised at how many sophisticated businesses file lawsuits to dispute particular terms in a “contract” only to get the unpleasant surprise that the disputed terms are moot because there was no legally enforceable contract at all. Here are the necessary elements of a legally binding contract.

Topics: Sales, Business Best Practices, Legal

Why you should register your out-of-state company doing business in Texas

by James Blake

The Blake Law Firm, PLLC.

James Blake is a growth-oriented business attorney who strives to be a creative business partner, to identify value-add opportunities, and to crystallize the relationships, structures, and processes that will drive your commercial success. James Blake practices law in Texas and Hawaii, and has protected the interests of businesses across a broad range of industries, including technology, construction, service and retail, food and beverage, franchisors and franchisees, product manufacturers, and investors. His work experience encompasses commercial transactions, litigation, and advising business operations in the U.S., Africa, and Asia. James was an editor of Law Review at the University of Hawaii and conducted international commercial law research for the Institute of Asian Pacific Business Law. He served as the Official Reporter for the 2008 IAPBL China Enterprise Bankruptcy Law Symposium held in Hong Kong, and in the same year worked at a large firm in Singapore. James currently advises clients in international business and investment issues in addition serving his client’s legal and business needs in Hawaii and Texas. Currently based in Austin, Texas, James is an avid writer and enjoys speaking at business-law seminars in addition to his legal practice. In his spare time, James enjoys sculling and kayaking on Ladybird Lake, outdoor photography, and supporting visual and performing arts.

Taking shortcuts with your business and legal strategies can get you in trouble. If you are an out-of-state company doing business in Texas, you are a “foreign corporation” that must register with the State of Texas and acquire a certificate of authority under the Texas Business Corporation Act. While some companies may consider shortcutting this requirement, failure to register your foreign corporation will have costly consequences.

Topics: Business Best Practices, Legal, Risk Management

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