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Substantive Legal Content

Murray’s Rant About Rights of First Refusal

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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Family Law and Family Business

Spouses often both own shares in a corporation that operates a family business, sometimes because they are both active participants in the business, and sometimes as part of an income splitting or creditor protection plan.

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Danger Lurks in Dark Places and Purchase Orders

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.

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More of Murray’s Musings on Family Business Succession

Leo Tolstoy said, “happy families are all alike; every unhappy family is unhappy in its own way.”

Mary Karr wrote: “a dysfunctional family is any family with more than one person in it.”

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Murray’s Musings About Family Business Succession

I have many thoughts about family business succession. Here are a few of them:

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Landlord Waivers

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.

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Yet Another Way for Business Lawyers to be Negligent

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.

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A Few Interesting (Sort of) Things About Interest

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.

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Two Stupid Clauses Dumb Lawyers Put in Shareholders Agreements

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

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The Only Two Things That I know About Franchising

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.