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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!

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.

Fee Agreement Arrangements with Contract Lawyers in Minneapolis: 5 Most Important Issues

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In this article, I will discuss five most important issues that you need to know before you sign a fee agreement with contract lawyers in Minneapolis.

1. How is the lawyer’s fee paid? There are three main models of payment that lawyers use: hourly fee, contingency fee, and flat fee. The hourly fee is the most common form of contract lawyer compensation and it is fairly simple – the contract attorney is paid only based on the time he spends on the case. If you’re paying your contract lawyer by the hour, the agreement should set out the hourly rates of the contract attorney and anyone else in this attorney’s office who might work on the case. The contingency fee, where the contract attorney takes a percentage of the amount the client wins at the end of the case, is almost never used by contract attorneys in Minneapolis. In the unlikely case that this latter type of fee arrangement is used, the most important issue to understand is whether the contract lawyer deducts the costs and expenses from the amount won before or after you pay the lawyer’s percentage. Obviously, you will pay more in attorney fees if your contract lawyer deducts the litigation costs based on the latter scenario (i.e. after you pay the lawyer’s fee). Finally, in a flat fee arrangement, you pay an agreed-upon amount of money for a project. For example, you pay $3,500 to your contract attorney to create a standard independent contractor agreement. While a flat fee arrangement is possible in a small project, it is generally disliked by contract lawyers in Minneapolis because it often lacks the necessary flexibility to account for the client’s individual legal situation. Usually, some sort of an additional payment arrangement is built into such fee agreements to make sure that the balance between the client’s legal needs and the contract attorney’s fees is maintained.

Remember, usually, you will have to pay out-of-pocket expenses (e.g. long-distance calls, mailing costs, photocopying fees, lodging, etc.) and litigation costs (such as court filing fees) in addition to your contract lawyer’s fees.

2. Does the agreement include the amount of the retainer? Most contract lawyers in Minneapolis require their client to pay a retainer. Retainer can mean two different fee arrangements. First, retainer may be the amount of money a client pays to guarantee the lawyer’s commitment to the case. Under this arrangement, the retainer is not a form of an advance payment for future work, but a non-refundable deposit to secure the lawyer’s availability. Second, a retainer is simply the amount of money a contract attorney asks his client to pay in advance. In this scenario, the lawyer usually deposits the retainer in a client trust account and withdraws money from it for the work completed according to the fee agreement. The fee agreement should specify the amount of the retainer and when the lawyer can withdraw money form the client trust account (usually, on a monthly basis).

3. How often will you be billed? Most contract attorneys in Minneapolis bill their clients on a monthly basis. Sometimes, however, when the project is small, the fee agreement will specify that you will be billed upon completion of the case. In a flat-fee scenario, it is likely that the client will be obligated to pay either a half or even the whole amount immediately as a retainer. It is wise for a client to insist in paying some part of the fee upon completion of the case to retain a degree of control over the case completion.

4. What is the scope of the contract attorney’s representation? Most contract lawyers in Minneapolis will insist on defining their obligations in the contract. The most important issue here is to state what the contract attorney is hired for without defining it either too narrowly or too broadly. Usually, a fee agreement should specify that a new contract should be signed if you decide to hire this contract lawyer to handle other legal matters.

If you are hiring a large or a mid-size law firm, beware that the partners in a law firm often delegate some or all of their obligations to their associates or even their staff. While the partners retain full responsibility for the case, there is a danger that important parts of it may be delegated to far less experienced associates. Besides the potential quality issues, there is also a concern that you would be paying a large hourly fee for a first-year associate’s work. It is important to insist that the fee agreement specifies what, if any, type of work is being delegated to the associates, the corresponding billing rate of each associate involved, and who carries the responsibility for the whole case.

5. Who controls what decisions? Whether this information should be included in the fee agreement really depends on the case and on an attorney. Generally, contract attorneys in Minneapolis let the client to make the important decisions that affect the outcome of the case (such as: acceptance or rejection of a settlement offer, commencement of a lawsuit, financial and personal contractual issues, et cetera). All of the decisions with respect to the legal issues (such as: where to file a lawsuit, what motions should be filed, what should be in the contract, negotiation tactics, etc.) are usually taken by the contract lawyers. If there are any changes to this arrangement (for example, you want your lawyer to make certain decisions with the respect to the outcome of the case), you should insist that these modifications be reflected in the contract.

Generally, before you sign the fee agreement, contract lawyers in Minneapolis will discuss with you many more topics than what is covered in this article. The five issues explained here, however, are crucial to your understanding of how the business relationship with your contract attorney will work. Before you sign the fee agreement with your lawyer, you should ask at least these five questions and make sure that the answers are complete and to your satisfaction.