When you own a small business, signing personal guarantees often seems like a necessary evil. Unless your company has strong credit, landlords, lenders, and others will often require you to personally guarantee your company’s obligations to them. One of the most harrowing experiences I had when I set up my own law firm was signing a merchant services agreement so I could accept payment by credit card — which of course required a personal guarantee.
I’ve advised people for years not to sign the other side’s purchase orders, acceptances, quotations, and other ordering documents unless the documents have been fully negotiated. That’s because it puts you at a huge disadvantage in the battle of the forms.
Last week I discussed a case in which a Missouri appellate court upheld personal guarantees when the purported guarantors had signed a promissory note under the words “Personal Guaranty and Acceptance of Terms.” In that same case, the court held that a “late fee” was an unenforceable penalty, rather than an enforceable liquidated damages clause.
I’ve discussed liquidated damages provisions in these virtual pages before. In Liquidated Damages Provisions Can Be Your Friend, But Don’t Overreach, I talk about the difference between enforceable liquidated damages provisions and unenforceable penalties. So many people followed Google to that piece looking for sample contract language that I later posted a Liquidated Damages Clause Example.
There are a surprising number of cases dealing with whether people who purportedly signed a personal guarantee actually agreed to personally guarantee a contract.
Many of the issues I’ve seen arise when someone signs at the bottom of a contract as “guarantor” rather than signing a separate guarantee document. There’s nothing wrong with doing that, but it can cause issues. For example, I discussed a case in 2012 involving a corporate officer who signed a credit application that contained guarantee language. The officer signed the document only once, the signature did not indicate whether he was signing in his individual capacity or on behalf of the company, there was only one signature line, and the guarantee language did not clearly evidence that a personal guarantee was intended. The court held that the officer had not agreed to personally guarantee the company’s obligations and stated: [continue reading…]
When someone takes on a contractual obligation to provide insurance, that duty can preclude them from looking to the other party for damages covered by the required insurance.
In Storey v. RGIS Inventory Specialists, Kenneth Storey leased property to RGIS. The property was destroyed by a fire allegedly caused by one of RGIS’s employees. The lease required RGIS to repair damages to the leased premises caused by the negligence or intentional acts or omissions of RGIS, its agents, servants, or employees. Storey sued RGIS for damages resulting from the fire. The court dismissed Storey’s case on a summary judgment motion.
A (fairly) recent 8th Circuit case reminded me of the importance of including “no reliance” language in even simple contracts.
Exploring the idea of drafting simplified contracts for simple situations, I posted a sample contract for a sale of goods a couple of years ago. The idea was to draft a B2B contract that would afford minimum effective legal protection in situations where there’s no special reason to think that the agreement would be litigated. A reader left the following comment and I revised my form agreement in response: [continue reading…]
I attended a presentation to a room full of business owners the other day. The presenters were professionals who operate in trusted adviser roles. The topic was improving the value of your business by making yourself less indispensable.
An interesting part of the event was a discussion during the Q&A following the presentation. Someone mentioned the frustration of receiving financial statements from a CPA without commentary. What benefit to the business owner is the information without context, without direction, without advice?
Law firm business models are under a lot of pressure. And this has been true for quite some time. When I was a young lawyer at a regional corporate firm, I would go to the office early in the morning, leave in the evening, and bill almost every minute in between. And clients would pay for all that time. But it’s increasingly difficult to get clients to oblige.
The end-of-year deal-closing season has just come to a close. So I’ve been sending a lot of emails that I don’t want to screw up.
We’ve all felt it, that feeling of dread deep in your gut just after you hit “send.” Did I send that sensitive document to the wrong party? Did I attach the right document? Did I delete stuff from the bottom of the email chain that shouldn’t be forwarded? Fearing the worst, you click on the email in your “sent” folder to see whether life will go on as normal. Or whether you’ll need to polish up your resume.
Routine is a quality killer
Sending an email is so easy. It’s so routine. So why do we mess it up so often when there’s so much at stake?
One of my favorite things about blogging is sharing things I find interesting with others. That’s also why I like Twitter so much. So when my friend and fellow blogger Bill Ellis asked me to participate in a blog hop, I jumped at the chance.
Bill’s a branding expert and he writes a blog about what he calls fearless brands, such as Tiffany’s, the Naked Cowboy, the Beatles, and the St. Louis Cardinals. After a successful marketing career at a certain brewery that’s long been known in St. Louis at “the Brewery,” Bill put out his own shingle to help young businesses discover and articulate who they are as well as their key value to the market. Bill’s the first person I called when I decided to launch what has become Blue Maven Law. Here’s a link to Bill’s blog hop post. At the end of this post, I’ll introduce you to some bloggers I admire and whose blogs I read regularly.