Category: Substantive Legal Content

The End of Days

Sunset with birds and a tree. — Photo by Pixabay at Pexels.

“Review this agreement and provide me with your comments” is usually the first introduction that young business lawyers are given to the topic of reviewing contracts and the sum total of the training that they receive about how to do it. So off we go and comment on the scourge of typographical errors, the horror of undefined terms, the frightening absence of the word “reasonable,” and of course, unforgivably sloppy cross-references.

Actually, there are a multitude of more important things to think about when you are reviewing contracts. One of them is how long the agreement is going to last, and that actually depends on three things. These are: (i) term; (ii) termination rights; and (iii) renewal rights.

Introducing The Dumbies

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Lawyers are avid fans of awards, so much so that they sometimes even pay to get them, which is a topic for another day.

I was thinking (because I have time to do that now that I am retired) that perhaps we should create a new award program which we could call the “Dumbies.” We can award a prize for the dumbest clauses that lawyers regularly insert into commercial agreements.

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Substantive Legal Content

Murray’s Rant About Rights of First Refusal

Post author By Murray Gottheil
Post date May 9, 2022
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Bob, Ted, Carol, and Alice own a company. They have a shareholder’s agreement. The only divorce mechanism is a right of first refusal (“ROFR”).

Bob wants out. He goes to Ted, Carol and Alice and asks them to buy his shares. They refuse. They tell him to use the ROFR.

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Substantive Legal Content

Danger Lurks in Dark Places and Purchase Orders

Post author By Murray Gottheil
Post date April 4, 2022
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Dimly lit nighttime street scene. — Photo by Eva Elijas at Pexels

Here are some of the provisions which I have found lurking in purchase orders (a “PO”):

1. The P.O. replaces every provision in the vendor’s quotation and invoice.

2. The provisions of the P.O. include terms set out on the purchaser’s website, which the purchaser may change at any time. All changes will be binding on the vendor. It is the vendor’s responsibility to monitor the purchaser’s website to see which new terms have been imposed on it.

Landlord Waivers

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Banks financing a borrower operating from leased premises typically ask for a waiver from the borrower’s landlord of certain rights under the borrower’s lease. Landlords typically either refuse to give the waiver, resulting in a reduction of the credit available from the bank, or negotiate the terms of the waiver, driving up legal costs for the borrower, who will usually pay the legal fees for three sets of lawyers – the borrower’s, the bank’s and the landlord’s.

Although very few borrowers do it, the best time for you to deal with this issue is when you sign or renew your lease. When the landlord wants your signature, ask the Landlord to agree to provide a waiver to your bank on reasonable terms whenever you are putting new credit arrangements in place.

Substantive Legal Content

Yet Another Way for Business Lawyers to be Negligent

Post author By Murray Gottheil
Post date March 25, 2022
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Mannequins with discount signs in a store window. — Photo by Artem Beliaikin at Pexels

Let’s say that you represent a 40% shareholder in a corporation. You are reviewing a shareholder’s agreement which says that in certain circumstances (death, disability, termination of employment) your client is required to sell his or her shares at fair market value. So far, so good.

A Few Interesting (Sort of) Things About Interest

Post author By Murray Gottheil
Post date March 22, 2022
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Red baloon with a percentage sign. — Photo by Karolina Grabowska from Pexels

Here is a conversation that I had with lawyers from time to time. I would provide in a contract that interest would be payable at 18% if my client was not paid on time.

Two Stupid Clauses Dumb Lawyers Put in Shareholders Agreements

Post author By Murray Gottheil
Post date March 20, 2022
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A man with a clown face. — Photo by Jhefferson Santos from Pexels

Over my many years practicing business law I formed some strong opinions. Here are two of them which relate to shareholders agreements:

The Only Two Things That I know About Franchising

Post author By Murray Gottheil
Post date March 18, 2022
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I only know two things about franchising. Here they are.

While I was practicing law, I often came across clients who operated a successful business that they wanted to franchise. They had the idea that they could sign some agreements and then other people would send them money, with very little effort being required on their part.

Of Death and Taxes (And Shareholders Agreements)

Post author By Murray Gottheil
Post date March 17, 2022
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headstones in a cemetary — Photo by Mike from Pexels

Death: My favourite topic in a shareholders agreement.

What I like about the death provision is that it is usually not controversial, especially if the shareholders do not have an inkling about who is likely to die first.