Contract Lawyers Minneapolis | Getting Out of Contract in Minnesota

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This is an odd article to write for a Minnesota contract lawyer who spends most of his contract law practice making sure that the terms of a contract are enforceable. Yet, occasionally, I have clients who are looking for a way to get out of a contract for many reasons. Some of these clients suddenly found themselves in a situation where compliance with the contract terms is no longer economically feasible or desirable. Others have personal reasons which make continuation of compliance with a contract non-practical and even personally disagreeable (especially in business partnerships).

Lawyer-Written versus Non-Lawyer Written Contracts

For the purposes of getting out of contract, the situations where one party suddenly wishes to attack the enforceability of a contract can be divided into two large categories. The first category involves contracts written, or rather copied from other sources (especially Internet), by the parties themselves. In this case, the contracts are usually inadequately drafted and contain many errors and omissions. Naturally, this type of contracts is much easier to attack for someone who wishes to avoid his contractual obligations.

On the other hand, the contracts in the second category are drafted by Minnesota contract attorneys. Usually, these contracts are based on the court-tested provisions, involve multiple levels of defense, constrict venues of attack, and prescribe certain procedures for disputing the enforceability of the contract. These contracts present a much more difficult target than those in the first category.

Methods for Getting Out of Contract

Irrespective of the category to which a contract belongs, Minnesota contract litigation lawyers usually utilize five broad methods for helping their clients avoid their contractual obligations.

1. Exit Provision in the Contract

First, the most simple method is to take advantage of the provisions that a contract already contains. Most of the contracts I draft for my clients contain negotiated “exit” provisions, which prescribe the procedure for either contract termination or withdrawal of a party from a contract.

This is especially true in the case of entity governance contracts such as Partnership Agreements, Member Control and Operating Agreements (for multi-member LLCs), corporate Bylaws, and so on. Also, Independent Contractor Agreements, in order to comply with law, often include a very detailed contract termination procedure. Sales contracts often utilize a “liquidated damages” clause to cap the amount of damages.

2. Validity of Contract

The second method is to attack the validity of the contract itself. Some of these attacks, such as lack of adequate consideration or the Statute of Frauds, will be based on the terms or form (i.e. oral versus written) of a contract; others, such as lack of legal capacity or the doctrine of unconscionability, will focus on the broad factual context which led to the creation of the contract. The precise method of attacking the validity of the contract should be chosen by a Minnesota contract litigation lawyer (if you live in Twin Cities, try locating a Minneapolis contract litigation attorney or St. Paul contract litigation attorney).

3. Contract Construction

The third method is to reinterpret the contract in such a way as to modify parties’ obligations. Here, the issue is the contract construction – interpretation of contractual terms based on the rules of contract construction and the facts of a specific case, including the parties’ course of dealing. If this is a contract for a sale of goods, UCC terms may determine the outcome. This method requires a very deep understanding of contract law. Therefore, only Minnesota contract litigation lawyers should be involved in implementing this strategy (again, if you live in Twin Cities, try locating a Minneapolis contract litigation attorney or St. Paul contract litigation attorney).

It should be noted that contract construction is involved to a varying degree in all of the methods described in this article. This is why it is crucial to retain a Minnesota contact lawyer as soon as possible.

4. Excuse for Non-Performance

The fourth method is to find an excuse for the non-performance of a party’s obligations under the contract. Notice the difference between the fourth and the second method – in the fourth method, the contract is assumed to be valid, but a party’s breach of this contract is discharged for some reason. Examples of this method include: doctrines of Impossibility and Frustration of Purpose, discharge by a later contract (for example: rescission, release, et cetera), change in law, and so on. It is up to your particular Minnesota contract litigation lawyer to determine which of these excuses applies and how to prove it in court.

5. Breach

Finally, the fifth method is to just breach the contract. Generally, there are two situations where a Minnesota contract lawyer may advise this course of action. First, whether the benefits of the breach of contract are likely to substantially outweigh the damages the breaching party will need to pay. Second, where the contact is breached in such a way as to significantly reduce the damages. Again, the circumstances of a particular case will determine whether this method should be utilized.

Conclusion

Getting out of contract in Minnesota is not easy. Yet, it may be possible if there is a right combination of facts and legal strategy. Once the plan of attack is established, its implementation will require skillful implementation by your contract lawyer.

Sherayzen Law Office can help you analyze your case, choose the legal strategy right for you, and vigorously and skillfully implement this strategy in negotiations as well as in court.

Call NOW to talk with an experienced contract law attorney!

Contract Litigation Lawyers Minnesota | Understanding Contract Litigation

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Contract litigation permeates the very fabric of advanced economic societies. The primary reason for this widespread presence of this type of litigation is because contracts provide the most common and basic means of conducting transactions between individuals and especially businesses. Contracts, whether written or oral, govern the everyday economic relations. Every time you buy something for a certain price at a store, you agree to a contract. Every time your business hires a worker, it enters a contract.

Since contracts can be found almost everywhere in our economic lives, it is little wonder that disputes often arise between the parties about the exact terms of what they have agreed to or what their contractual obligations are.

Contract litigation is a civilized way to settling these contract disputes. It is a process where the parties to a contract, usually represented by contract litigation attorneys, present their respective arguments to an impartial judge of the relevant jurisdiction the laws of which govern the interpretation of the contracts and even which laws apply. Usually, the parties’ arguments revolve around three common themes. First, interpretation of the contract and the parties’ rights and obligations. Second, enforcement of a party’s contractual rights or obligations. Third, obtaining remedy for whatever damage produced as a result of the other party’s breach of contract. Usually, the remedy is limited to recovering damages, but there are situations where a party will seek an order from the court to compel the other party to perform as promised (this is known as “specific performance”). In some situations, an injunction prohibiting a party from doing something may be appropriate.

A lot of people unfamiliar with contract litigation commit a common mistake of thinking that contract interpretation is limited solely to the language that can be found in the contract itself. While ambiguous, competing or contradictory clauses may form the core of a party’s argument, contract litigation lawyers usually have to also analyze the particular facts of a case which may be relevant to the interpretation of the disputed language of the contract.

Beyond these basic litigation themes, contract litigation involves a myriad of other procedural and substantive decisions: assessment by contract litigation lawyers of whether a case should be litigated, where to file the case, the laws of which jurisdiction of should apply, what evidence should be presented, who should testify, how would a judge interpret the contract given the trends in the laws of a relevant jurisdiction, and so on. Therefore, it is very important to involve a contract litigation lawyer as early as possible in the contract litigation process.

Sherayzen Law Office can guide you through this labyrinth of procedural and substantive issues and litigate the case for you. When you retain Sherayzen Law Office to represent you in a contract dispute litigation, you get a vigorous advocate of your legal position who is thorough, detail-orientated and possesses strong litigation skills, with the analytical ability to identify and achieve effective resolutions. We recognize that litigation is a means to an end and structure our litigation strategies in such a way as to protect and enforce your business interests.

Call NOW  to discuss your case with a Minnesota contract litigation lawyer!

International Contract Lawyers Minneapolis | New Incoterms 2010

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The International Chamber of Commerce (“ICC”) has announced that Incoterms 2010 is scheduled to be launched in September and come into effect on January 1, 2011.

Incoterms is the abbreviation for “International Commercial Terms” and were introduced by the ICC back in 1936 to provide people engaging in international trade a common set of trade terms that would be understood across the world. Incoterms are crucial when trading across borders and should be included in all international sale of goods contracts because they help parties avoid misunderstandings by clearly identifying the obligations of the buyer and seller. They stipulate in one short acronym exactly who will pay for the freight, who wears the risk in the goods at which point in time, who pays for insurance and duty.

In order to keep up with the rapid expansion of world trade and globalization, the Incoterms rules are revised about once a decade. Since the last revision in 2000, much has changed in global trade and the current revision will take into account issues such as developments in cargo security and the need to replace paper documents with electronic ones.

Therefore, the new 2010 edition includes 11 terms instead of the 13 in the previous edition. The following terms from Incoterms 2000 have been deleted from the list: DAF, DES, DEQ and DDU. These two new terms have been added to the list: DAT and DAP.

Another significant change has to do with categories of the Incoterms. Incoterms 2000 had four categories, while Incoterms 2010 only has two categories. The first category can be called “Rules for Any Mode of Transport” (also knows as “multimodal” Incoterms) and includes the following terms:

CIP – Carriage and Insurance Paid
CPT – Carriage Paid To
DAP – Delivered At Place
DAT – Delivered At Terminal
DDP – Delivered Duty Paid
EXW – Ex Works
FCA – Free Carrier

The second category is described as “Rules for Sea and Inland Waterway Transport Only” and includes the following terms:

CFR – Cost and Freight
CIF – Cost, Insurance and Freight
FAS – Free Alongside Ship
FOB – Free On Board

All current and potential exporters should be aware that new Incoterms are expected to take effect in 2011. Sherayzen Law Office will continue to update the readers on the progress of the revisions. In the meantime, we recommend that you ensure, and if necessary seek legal advice to ensure, that your commercial trading terms accurately reflect the transaction.

Call NOW to discuss your contract with an international trade attorney!

Understanding Your Contract: Top Seven Questions to Ask Yourself Before Signing a Contract

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The standard definition of a contract states that: a contract is a promise or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. Therefore, an enforceable contract, whatever its type or form, inevitably creates rights and obligations. This is why it is so important to make sure you understand the contract before you sign it. Therefore, ask yourself the following questions before you bind yourself to an agreement with another party:

1. Do I understand exactly the extent, timing, and nature of my contractual obligations?

2. Do I understand exactly the extent, timing, and nature of the other party’s contractual obligations?

3. Do I understand exactly my rights under the contract and when I can enforce them?

4. Do I understand exactly the other party’s contractual rights and when they can enforce them?

5. Am I personally liable (i.e. your personal assets are at risk) for the promises made in the contract?

6. Is the contract enforceable?

7. If the contract is enforceable, where and under which state’s or country’s laws can it be enforced?

There are many more detailed questions that should be asked before you sign a contract. Never, however, sign a contract without at least positively answering these seven questions.

Obviously, it is best if a contract attorney reviews your agreement before you sign it. Sherayzen Law Office has extensive experience in drafting and reviewing a wide variety of U.S. and international contracts, including but not limited to: confidentiality agreements, disclaimers, distributor agreements, sale of goods contracts, personal services contracts, general employment contracts, independent contractor agreements, franchise agreements, manufacturing agreements, non-compete agreements, lease agreements, licensing agreements, operating agreements, partnership agreements, and sale/purchase of business contracts.

Call Now at (952) 500-8159 to discuss your contract with a Minnesota and international contract lawyer.

Commercial Lease Negotiation: Priority Issues for Landlords

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It is impossible to know what issues will actually arise during the term of a lease. Hence, it is important for a landlord to hire an attorney to carefully analyze the landlord’s specific situation, spot potential problems and address them in the lease agreement. The process of addressing these issues in the lease, however, can become very contentious since landlords and tenants often disagree about the terms that the other party wishes to include in the lease. This may lead, in turn, to multiplication of disagreements and eventually even ruin the deal altogether.

Therefore, it is very important for the landlord to prioritize the issues in order to know when to concede an issue and when to hold the ground and insist on an agreeable resolution. In this essay, I will identity and discuss six most crucial commercial lease issues for the landlord; these issues are worth fighting for and must be given priority in a commercial lease negotiation.

A. Tenant Payments During the Term of the Lease Agreement

This is the most fundamental part of the lease agreement – the lease agreement (“Agreement”) must require tenant to make the rent payments for the duration of the lease agreement. In order to do so, the landlord should consider adopting four strategies. First, the Agreement should clearly set forth the tenant’s obligation to pay under the lease. Second, the landlord should strive to minimize the number of conditions to the obligation of the tenant to pay rent and operating expenses. Third, minimize the number of events that give the tenant the right to terminate the lease. Finally, eliminate the right of the tenant to set-off payments if the landlord defaults. Similar attitude should be adopted to the rent abatement situations.

B. Control Over the Leased Property

Leasing the property does not automatically mean that the landlord should give up all control over it. Usually, a landlord’s attorney will insist on requiring landlord’s consent to anything that could interfere with the smooth operation or safe condition of the leased property. Another strategy is for the landlord to retain reasonable control over who will occupy the leased property.

C. Unhindered Ability of the Landlord to Finance or Sell the Leased Property

Closely related to the previous topic of control, the landlord should make sure that his ability to finance and/or sell the leased property is left unhindered by the provisions of the Agreement. It is also suggested that the Agreement includes provisions typically expected by lenders, such as subordination and attornment requirements as well as provisions mirroring typical borrower-to-lender covenants.

D. Clear Obligations and Reasonably Enforceable Remedies

This is another priority area for the landlord. The Agreement should set forth clearly both parties’ obligations and responsibilities, conform notice requirements to the landlord’s standard practices, and provide for reasonable remedies such as: adequate security (security deposit, guarantees, letters of credit, etc.), record-keeping of the tenant’s gross sales, realistic late fees and interest, and the landlord’s self-help rights.

E. Insurance and Indemnification Provisions

The Agreement should strive to make sure that there is an insurance against every risk, whether the insurance is provided by the landlord or the tenant. It is suggested, however, to avoid needlessly requiring both landlord and tenant to carry multiple levels of insurance coverage.

F Avoidance of Unexpected Costs

The Agreement should plan for unexpected costs by providing for expenses that vary based on occupancy. The landlord should work toward including in the Agreement provisions reimbursing him for out-of-pocket expenses in connection with attorney’s fees incurred in dealing with tenant requests for lease assignment and sublease. Other professionals’ fees (such as design professionals who review or supervise construction projects) may also be incorporated in the reimbursement provisions.

Conclusion

The purpose of this essay is to familiarize the readers with the very dense and complex landlord issues in a commercial lease negotiation setting. Obviously, in order to achieve better understanding by my non-lawyer audience, I necessarily over-simplified the issues and greatly narrowed the description of the lease provisions. I hope, however, is that I provided sufficient legal background for you to be able to better explain your goals and wishes to the attorney who will be drafting your commercial lease agreement.