Preparing for Business Contract Litigation in Minnesota: Recordkeeping Techniques

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Since most of the business-to-business relationships are organized on the basis of written business contracts, it is inevitable that contract disputes would arise between businesses. Frequently, these disputes are serious enough to lead to business contract litigation between the relevant parties

Therefore, it is important for any business to prepare for such a possibility ahead of the actual commencement of the contract litigation. One of the most crucial (to the success of such litigation) tasks of a business owner is to maintain good records. Proper recordkeeping is essential to successful contract litigation, and, hence, this article lists the following five techniques for the business owners on what type of business records should be kept and how to best organize them.

1. Keep an original copy of your contract

Keeping your original copy is the most basic step in preparation for a contract litigation. Yet, it is shocking how many business owners ignore this. By “original copy” of a contract, I mean one of the counterparts of the contract which bears the original signatures of all parties. Where only one copy of a contract is signed, then you should keep this original. If, for some reason, the decision is made that the other party would keep a copy of a contract, you should request a copy of the contract for your records. This situation is especially common in joint ventures and inter-corporate agreements, but it is very unusual in business-to-business dealings.

The contract should be kept in a separate folder in a safe place. However, do not file your contract in a place that you would not remember. If your business has designated an officer of your company to keep business records, you should make sure that you know the filing system adopted by that officer and where the most important files are.

2. File “negotiation” notes and documents

In addition to the contract itself, you should file all notes, documents, and printed copies of e-mails that were produced in connection with the negotiation of a contract. “All” means “all” – any of these documents may be important to resolve an ambiguity in the contract later as well as to demonstrate a party’s intent.

There are two types of “negotiation” materials: exchanged and internal. The exchanged materials are the notes and documents that were shared with the other parties to the contract during the negotiation process. Generally, in a business-to-business setting, these types of documents are not covered by the attorney-client privileged. Absent a non-disclosure agreement stating to the contrary, it is likely that these documents would not even be considered as proprietary.

The internal materials are the notes and documents that were produced in connection with the negotiation process but were never shared with anyone outside of the company (with the exception of the company’s business lawyer). Examples could include: internal profit-loss assessments, corporate documents (such as board memorandums), assessment of risk, and so on. These documents should be marked as “proprietary information” and filed in a separate folder also marked as “proprietary information.”

Moreover, the internal documents produced by the company’s lawyer should be marked as “attorney-client privileged”; such documents should be filed in a separate folder also marked as “attorney-client privileged”.

All folders of exchanged and internal materials, including the folder containing attorney-client privileged information, should be kept together with the contact. Such organization of documents will be very useful for discovery purposes during the litigation and can save you thousands of dollars in attorney and accounting fees.

3. File Contract-Modification Materials

Documents discussing and potentially modifying the already executed contract should also be filed in a separate folder and kept together with the rest of the documents described above. While some of these documents may be obvious (such as a letter entitled “Request for Contract Modification), others may be much more difficult to classify, especially if the potentially modifying circumstances are not explicitly discussed in the contract.

Therefore, in order to take full advantage of this advanced recordkeeping technique, the business owner should consult his lawyer. An experienced legal professional with deep understanding of contact law and the facts of a specific case is in the best position to determine which documentary materials may be construed as contract modification.

4. Document Contract Performance

This is another sophisticated recordkeeping technique that requires understanding of the term “usage of trade”. Armed with this knowledge, your business lawyer will be able to determine how to document the parties’ contract performance and whether this performance is modifying or has modified the contract.

5. Record Your Company’s Intent and Understanding

This is probably the most flexible advanced recordkeeping technique aimed specifically at the possible future contract dispute. Basically, this is a technique that uses the management structure of the company to create business records regarding the intention and interpretation of a contract. As business records, this evidence of intent and understanding will most likely be admissible in court. The most common example of this technique are corporate board minutes (in the corporate context) or Board of Governors resolutions (for the LLCs).

Again, due to the level of sophistication and legal knowledge required to accurately record a company’s intent and understanding of a contract, it highly advisable that you hire a business lawyer to draft the relevant documents.

Conclusion

Good recordkeeping is crucial to successful business contract litigation. The techniques listed above do not constitute an exhaustive list of recordkeeping suggestions, but they should provide the minimal necessary structure that is likely to be cost-effective and highly efficient in a contract litigation context. Not all of the techniques cited in this article can be implemented by a business owner. Therefore, it is crucial to retain the services of a business contract attorney to fully protect from and prepare your business for the possible contract litigation in the future.

Sherayzen Law Office can help you create and implement a recordkeeping system appropriate for your industry and compatible with your business model.

Call NOW to discuss your case with an experienced business contract lawyer!

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!

Minnesota Business Lawyers: Applying for a Business License

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In many industries, obtaining a business license is one of the most significant prerequisites for doing business in Minnesota. Paradoxically, despite its importance, too many businesses resist involving Minnesota business lawyers in this process from the very beginning – at the stage of the business license application preparation. Instead, attorneys throughout Minnesota (including Minneapolis business attorneys and St. Paul business attorneys) are involved in the process only after the business license application is rejected by the relevant state agency.

There are two primary reasons for the late involvement of Minnesota business lawyers in the process. First, business owners believe themselves perfectly capable of filling-out a license application. Second, small businesses are always looking for a way to cut costs and think they are saving money by involving business lawyers only by the time of an administrative appeal hearing.

Both motivations are flawed. A business license application often involves much more than simply filling out the basic information and gathering the supporting materials (such as financial statements or criminal records). The key to a successful application is the ability to spot potential issues and fix the problems prior to the submission of the application to the government agency. It is true that Minnesota business owners are smart and energetic individuals perfectly capable of filling out an application. However, they often lack the necessary legal experience and training to identify potential problems and know how to fix them.

Second, it is much cheaper to involve an attorney at an early stage of the business license application process than to deal with the problems at an administrative appeal hearing. Prior to the submission of the application to the agency, the attorney should be able to review the application filled-out by the owner and all of the supporting materials, spot potential problems, and advise on how to fix these problems immediately. Even after the application is submitted and the relevant Minnesota government agency raises an objection, involving an attorney who may be able to negotiate the solution to the problem prior to the final agency determination may prove to be very cost-effective.

By the time the application is rejected, however, Minnesota business license appeal lawyers will have to deal with a prolonged process defending the business owner’s interests. Even worse, in many cases, the burden of proof may be on the initial applicant, which means, for example, that a business lawyer would have to prove that the government more likely than not committed an error of judgment (or some other legal theory).

In sum, litigation is almost always more expensive than the prophylactic measure of involving a Minnesota business license lawyer at an early stage of the business license application process. At the very latest (i.e. the last opportunity to save the application while lowering legal expenses), the business owners should involve Minnesota business lawyers at the time when they receive the first request for additional information from a relevant Minnesota government agency.

Sherayzen Law Office can help you at every stage of the business license application process, starting from the initial review of the application to dealing with the government agencies , handling the administrative appeal hearing, and litigating further appeals to the district court and higher appellate courts if necessary.

Call  to speak with an experienced Minnesota business license application lawyer!

Minnesota Unemployment Insurance Appeal Hearing: Top Five Preparation Strategies

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Minnesota Unemployment Insurance Appeal Hearing (“UI hearing”) is a serious legal event for many small- and mid-size businesses that may have far-reaching tax and employment law consequences for these businesses, especially when the hearing is about such a delicate and important issue as classification of workers as independent contractors. Yet too many business owners are completely ignorant of the rules and procedures of the UI hearings. Too often they think that it is enough to just show up and tell their story. As a consequence, these business owners often lose a case even when the facts seemed mostly favorable to the employer.

In this essay, I will list and discuss top five strategies that business owners should adopt in order to adequately prepare for their UI hearings.

1. Accept the Need to Prepare for the Hearing.

Too many business owners (and even some inexperienced attorneys) accept the wrong myth that the UI hearings are so straightforward that there is no need to prepare for them. It is very convenient for a busy business owner to believe that he needs not spend any time preparing for the hearing.

This is exactly the attitude that results in so many lost cases. Indeed the UI hearings are conducted in a manner less formal and more flexible than a district court trial. Yet, these are hearings conducted by an unemployment insurance judge, usually a lawyer with specialized knowledge in this area; there are rules and procedures that must be followed; there is a direct and cross-examination of witnesses; physical and testimonial evidence is presented; and there is a ruling by the judge that determines whether you lose or win.

If this were not enough, the UI hearing is the last opportunity for you to enter your evidence into the record of the proceedings. If you decide to appeal the unemployment insurance judge’s ruling, the Court of Appeal will almost always only consider the evidence on record for the UI hearing; you will not be able to enter new evidence into the record.

This is why your first strategy is to accept the reality of spending time, perhaps significant amount of time, on the preparation for the UI hearing.

2. Hire an Attorney.

There can be no downside to hiring a legal professional to represent you and help you properly prepare for the hearing. While you will know the facts (especially at the beginning of the representation) better than any outsider, your attorney should have the general legal knowledge about and specialized experience in the administrative appeal proceedings. Moreover, your attorney is likely to take advantage of the pre-hearing rules and procedures to better your case. Finally, even a business owner who has had experience in relevant areas of law will be no match for a lawyer’s deeper understanding of the law and procedure.

There is a notion that a cost-benefit analysis shows that an attorney just costs too much money for a business owner to spend on the unemployment insurance hearing. Usually, this analysis is wrong because it compares how much money you would spend on the hearing if you hire an attorney versus how much money you would spend on a hearing without one – the issue at stake is completely ignored in these calculations. The proper comparison would be between the importance of the issue to your business and the higher chance of winning the UI hearing with an attorney on the one side versus the costs of losing the UI hearing. Usually, if you deemed the issue important enough to file an appeal, this means that you assessed the cost of losing the UI hearing higher than the legal representation expenses necessary to properly prepare for the UI hearing.

3. Know and Be Able to State the Facts of Your Case.

There are two sides to this strategy. First, you need to know every relevant fact of your case: remember the exact dates and relevant events, construct a time-line of events, and know what the relevant documents say. Second, you should be able to state the facts of your case in court in a way that the judge understands and using the “verbiage” that clarifies your argument. For example, if the appeal is about classification of workers as independent contractors, you should use the word “contractor” and not “employee” to describe your workers. Your lawyer should educate you in the legal meaning and implications of each relevant term.

4. Submit Relevant Exhibits and Other Records into Evidence

It is almost impossible to over-estimate the importance of having good records and timely submitting them into evidence. Most cases are won on complete favorable documentation that supports a well-prepared testimony.

Your lawyer can help you identify the relevant records, present them in the most favorable manner and timely submit them into evidence. Remember that, pursuant to Minn. Rules pt. 3310.2912, the exhibits for a telephone hearing must be submitted no later than five calendar days prior to the hearing.

There is one more advantage to submitting your own records for the hearing. By the time of the hearing, there is usually already an adverse written report made by the UI auditors that supports their findings. Therefore, by entering your own exhibits into evidence (even better if it is supported by your lawyer’s written brief detailing the legal arguments), you are countering the already written evidence that supports the other side of the argument.

5. Learn the Hearing Etiquette

It is important that your behavior during the hearing leaves the impression of you as a law-abiding, responsible, and courteous human being. Knowing the hearing etiquette is crucial to creating this image. Your lawyer should be able to educate you about how to behave in front of the judge, listen to the testimony of the other side, and general rules of the court etiquette.
Conclusion

Obviously, these five factors described above do not constitute a conclusive list of strategies for a successful preparation and conduct of the UI hearing. There are many other important tactics that may be employed during the hearing. However, these fivw top strategies are designed to provide you with the most basic structure for how to move forward in your preparation for the Minnesota Unemployment Insurance Appeal Hearing.

Sherayzen Law Office has the necessary experience and knowledge to help you prepare for and conduct the UI hearing. We will lead you every step of the way and offer you a vigorous ethical representation during the hearing.

Call NOW to discuss your case with a Minnesota unemployment insurance business lawyer!