As a businessperson, you are likely faced with multiple contract issues on a daily basis. The more contracts you read, the more numb you can become to the words endlessly flowing down, page after page. It’s easy to become complacent about the provisions in each contract, especially if you have not faced a breach of contract action. Even business and commercial lawyers can start glazing over after too many hours going over contract provisions. This can be highly detrimental to your business.

If you’ve been in business long enough, you likely have a series of staple contract provisions that you include in every contract. That is a smart move. no sense in reinventing the wheel. However, these staples should be reviewed periodically to ensure your business model has not outgrown them or that the laws haven’t changed. Additionally, there are certain provisions that need customization and careful attention. We’ve identified the top five things you need to consider when drafting or reviewing any contract document.

1. Identify Key RisksBusiness contracts are all about balancing potential risks with potential benefits. For each contract you enter into, think carefully about the risks that might occur if things start to go sour between you and your contracting partner. Typical risks may include:
   • “It’s not you, it’s me…” – people break up all the time, whether it’s a romantic relationship or an economic one. Sometimes we’re just better off without that other person. If faced with this type of economic breach, ask yourself: what does that risk look like and how can you mitigate it?
   • “You lied to me…” – sometimes parties don’t live up to the promises they make in their contracts. Services aren’t up to par, significant deadlines are missed or some other material breach affects the relationship.
   • “I’ve found someone else…” What happens when your contracting partner starts cavorting with one of your competitors?Other risks may involve risks to third parties, such as customers you serve. What happens when your client’s data is breached or your company cannot continue a contract due to the other party’s failure to pay?
2. Limit Your LiabilityEvery contract should have provisions to allocate risk between the parties by limiting damages. Some companies choose to limit non-economic damages or strictly prohibit punitive damages. So long as the limiting provisions do not violate public policy, just about anything goes.
3. Consider Damages CapsDepending on the type of contract you are entering into, you might consider capping your damages to the total contract amount, or some other amount that makes sense given the transaction, yet does not violate public policy.
4. Choose Your RemediesWhen looking at your potential risks, consider whether simply suing for breach of contract is sufficient for your needs. Might you also want liquidated damages, termination rights, or injunctive relief? Do you want the other side to pay your litigation fees? What about Jury trials vs. binding arbitration?
5. Elect Indemnity Style
   Indemnification is one of the most critical provisions in a contract, so review it carefully. There are two general indemnity structures:

• Defend and Pay – the indemnifying party covers the defense or cost of defense, as well as paying damages.
• Insurance Style – makes the indemnified party whole following a breach.

Determine whether all risks warrant indemnification and carve out exceptions as necessary. If there is ever a provision you don’t want to skim over, the indemnity provision is the one.

If you are in need of sound contracting advice, contact Willcox, Buyck & Williams, P.A. today for a consultation.

Contracts are the backbone of our society. They represent promises made and provide recourse to promises broken. People place a lot of value on contracts and rightfully so. However, with the advancement of the Internet and so-called do-it-yourself legal services, any document with the term “Contract” emblazoned on top has taken on some talismanic powers that may be undeserved.

As convenient as these ubiquitous template agreements may be, problems arise when individuals seek to enforce those agreements, only to find that the contracts are not valid. Having a knowledgeable contracts lawyer on your side can help avoid this issue, particularly when it comes to business contracts.

Granted, running to your lawyer anytime you want to draft a simple contract, perhaps for the sale of a car, may not be the best use of your time. We get that. So for those times when the contract is relatively simple and the stakes are relatively low, we will talk about what the required elements of a contract are, for it to be considered “valid” in South Carolina.

Basic Elements of A Valid Contract in South Carolina

Every contract has certain, essential elements that need to be present to be considered valid in a court of law. At the heart of every contract is a promise between two or more persons to do or not do a particular act.

Consideration

These promises are bound by both parties by what’s called “sufficient consideration.” In the normal parlance of our times, or for the sake of simplicity, we can call it “money.” A simple contractual promise, backed by sufficient consideration could be: I promise to purchase your 1974 Ford Mustang for $5000.

Offer & Acceptance

Contracts must also consist of a clear offer and acceptance. If an offer is made, but has not been accepted, there can be no contract.

Capacity

Contracts must be entered into by two adults of sound mind. This doesn’t just mean that you must be free from mental incapacity, it also means that if you enter into a contract while under the influence of drugs or alcohol, you may be deemed incapacitated and the contract may be void.

No Duress

Contracts must also be entered into freely. If you are signing your name to a contract with a gun to your head, that contract is said to be entered into under duress and may be deemed invalid. While the terms of the duress may not be so dramatic, other signs of duress may be financial or emotional coercion.

To Write or Not to Write

While contracts can be either oral or written, the law requires that certain contracts be written in order to be enforceable. Contracts for the sale of real property, for example, must be in writing. Oral arguments can be valid, but they are also rather difficult to enforce.

If you’ve got contract questions in South Carolina, talk to the experienced business attorneys at Willcox, Buyck & Williams. Solid legal advice awaits you in Florence at (843) 536-8050 or Myrtle Beach at (843) 461-3020.

Starting a business with someone can be an exciting endeavor. Spirits are high and hope springs eternal. Rarely is there a thought about what happens when things don’t go so well. Partnerships are like marriages that way.

Any good business formation lawyer will tell you that the key to a successful partnership is to communicate all expectations, hopes and fears in the beginning of the process. With proper business planning in advance, your partnership can weather any storm. This is particularly true with regard to limited liability partnerships.

What is a South Carolina Limited Liability Partnership?

A limited liability partnership is a business structure in which the partners have limited liability. This means that the partners will not be held liable for the negligence or wrongdoing of the other partner, nor will they be held liable for certain business debts. This type of structure provides more of a shareholder-type liability of a corporation, but without the double taxation.

How do I Form a Limited Liability Partnership in South Carolina?

Limited liability partnerships must be registered in South Carolina with the Secretary of State and are actually called “Registered Limited Liability Partnerships.” This distinction must also be included in the name of your partnership.

Before you get to registration though, there are a number of things you want to do to prepare. These steps include:

1. Determining who will be in the partnership & what their contribution will entail (capital vs. sweat equity)
2. Deciding how profits and losses will be allocated and whether distributions are appropriate
3. Choosing a principal office and a registered agent for service of process
4. Checking with the Secretary of State to ensure your name is available
5. Talking to an experienced South Carolina business formation lawyer

Once you have registered your South Carolina LLP, you will need to register with the Department of Revenue and obtain an Employer Identification Number (EIN) from the IRS.

Does my South Carolina LLP Need a Partnership Agreement?

While South Carolina law does not require a limited liability partnership to have an agreement in place, it makes good business sense to draft one in advance of forming the partnership. This agreement will govern how the partnership operates, and should touch on things like:

• who is responsible for what aspects of the partnership
• what capital contribution requirements are
• who is entitled to partnership distributions and at what time
• what happens when a partner wants to leave
• what happens when the partnership ends

Engaging the services of a business formation attorney is invaluable at this stage of the game.

Who are LLPs Good For?

In South Carolina, any two or more people may form a limited liability partnership. Most commonly though, we see professionals like doctors, lawyers and accountants using this type of business structure because it protects each partner from liability for the professional malpractice of another partner.

If you are considering forming a limited liability partnership in South Carolina, talk to the experienced business formation attorneys at Willcox, Buyck & Williams. Solid legal advice awaits you in Florence at (843) 536-8050 or Myrtle Beach at (843) 461-3020.

Should South Carolina have a uniform standard for issuing business licenses?

If you are starting a business in South Carolina, there are a number of steps you must take, starting with selecting the right business organization, filing foundational documents with the state, crafting a business plan, and obtaining the necessary business licenses.

While this seems straightforward, these matters can become complicated, particularly when it comes to licensing. This is because there is no uniform licensing law and the state’s 270 cities and towns (and some counties) have different classifications, forms, due dates, term and renewal dates, and fees. So if you intend to operate in more than one municipality, there are many bridges to cross.

However, this patchwork of laws reportedly can cost the state about $300 million, which is why there is a growing movement for a statewide uniform law. At the same time, business licenses are a crucial source of revenue for cities, towns and counties. In addition, licensing requirements at the local level allow municipalities to monitor the types of entities that set up shop and also serve as a means to enforce building codes, zoning laws, and environmental ordinances.

But a uniform law will support business customers, and there are several advocates who support the law, including the South Carolina Chamber of Commerce, and the Municipal Association. Nonetheless, plans for a uniform law have been in the works for five years as business leaders, lawmakers and officials try to carve out a compromise.

With the next legislative session underway, some are hopeful that a uniform standard is within reach. At the same time, a bill has yet to be crafted. However, the bill could include provisions such as a uniform application, fewer classifications, and a definition of gross income for purposes of calculating the license tax.  In addition, the Municipal Association also supports the creation of a centralized computer system and a clearing house through which applications would be submitted and processed. However, cities are opposed to having a state agency run this portal.

The Takeaway

At this juncture it is uncertain if and when lawmakers will draft the needed legislation, and how long it may take to approve a uniform licensing law. While the objective is to streamline the business licensing process, it remains to be seen how the measure could affect the income streams these municipalities have long relied on. In the meantime, if you need assistance with obtaining a business license or any related start-up matters, you should engage the services of an experienced business law attorney.

How can I prepare a business plan?

If you’re planning to start a new business in 2017, having a well-designed business plan is essential for attracting investors or other sources of capital. Moreover, creating a business plan is an essential first step in launching a new venture. This document establishes what your business does, where it plans to go, and how it plans to get there. In other words, it’s your roadmap to success.

In short, a well-crafted business plan will include a description of the business and the leadership team, the target market, what sets you apart from the competition, and last but not least, financial projections. These are all key considerations for potential investors.

Company Description

The description of your company should not only provide information on what the business does, but how it is different from other businesses in your space, and what the target market is.

The Business Team

Business teams are usually comprised of people with varying skill sets. Some have expertise in product development or a history of providing a particular service, others may have executive capabilities to run the operation while others have a proven track record of delivering goods or services to the market. It is vital to have a well-rounded team.

Market Analysis

It is crucial to do your due diligence on the industry, the market, and competitors and demonstrate there is a need for what you plan to sell, and that you will attract customers.

The Competition

The road to success means having a competitive advantage. Your product or service must be unique, or failing that, your marketing plan will differentiate you from your competitors.

Financial Projections

If your goal is to obtain funding, you must be able to provide financial projections of your profit and losses during the first few years, and how you intend to grow revenues. This estimate provides both investors and the leadership team with realistic goals you intend to achieve.

The Takeaway

In the end, a business plan should be a three-to-five-year projection of where you intend to take your venture, that also considers risks, barriers to entry, and how you will respond to these challenges. By having a well-thought-out plan, your investors will have confidence in knowing that you are prepared and committed to achieving success. Before launching your venture, you are well advised to engage the services of an experienced business law attorney.

Many businesses have customer lists that they consider their own private property.  It is common, however, for sales representatives and other employees to regard customer lists as theirs too, something they can take to a new employer. Employment agreements, confidentiality agreements, non-competes, and non-solicitation agreements can all be used to eliminate confusion over whether a customer list is transferable or not.

In the absence of clear contractual protections, however, case law and state trade secret laws may decide whether a list is the exclusive property of a business.  If the list is a “trade secret,” a business owner may have an easier time protecting it and obtaining damages for its use by ex-employees and competitors. The Uniform Trade Secrets Act, that has been adopted by most states and the federal Defend Trade Secrets Act provide for penalties and remedies for the misappropriation of trade secrets.

When is a list a trade secret?

Generally, a list receives “trade secret” protection if, first, it contains information not readily ascertainable from public sources.  Merely listing customers and general contact information is usually not enough to elevate the information to trade secret status. Second, owners must usually take some measures to keep the information confidential.

What steps can a company take to ensure that a list is viewed as a trade secret?

The following are elements which, when present, can lead to a customer list being deemed a trade secret.

• The list contains unique, non-public information about each customer, such as ordering history, needs and preferences, and private phone numbers and e-mail addresses.  The more a customer list contains valuable details compiled about each customer, the less likely a court is to say that the list could have been readily assembled from public sources.
• The list is marked “private” or “confidential,” and employees are informed that it the property of the company.
• Electronic versions of the list are password-protected, and access is limited to certain users.
• Printed copies are kept under lock and key.
• When the list is shared with third parties, there is a confidentiality agreement.
• The owner can show that time and effort were invested in building and maintaining the list.

A recent case involving former employees of an insurance company shows how these factors can influence a court.  In that case, the customer list contained more than just customer names, birth dates and drivers’ license numbers.  It also contained laboriously compiled information about the amounts and types of insurance each customer had bought, the location of insured property, the personal history of policyholders, policy termination and renewal dates, and other potentially valuable details.  The list conferred a powerful, competitive advantage and the court deemed it a “trade secret.”

Meeting the criteria spelled out in that case and in the suggestions above does not guarantee that a customer list will be deemed a protected trade secret.  It could, nonetheless, increase the odds.

How can I protect my business from employment discrimination claims?

Business owners need to be aware of a variety of state and federal laws, not the least of which are employment discrimination laws. In short, these laws prohibit employers from discriminating against employees and prospective job applicants when making any employment decision, including hiring, firing, promoting, demoting or compensating employees. These laws also make it illegal to discriminate regarding any other terms and conditions of employment. While state laws vary, let’s take a look at the federal laws governing many employers.

Title VII of the Civil Rights Act of 1964

Workplace discrimination based on race, color, national origin, religion, and gender is prohibited by Title VII of the Civil Rights Act of 1964, a law that also established the Equal Employment Opportunity Commission (EEOC). This agency is responsible for investigating claims of employment discrimination.

Before a lawsuit can be brought under Title VII, an employee or job applicant must first file a claim with the EEOC. Even if the agency finds there is no basis for a claim, a lawsuit can still be brought against an employer. Lastly, this law only applies to employers with 15 or more employees.

The American with Disabilities Act (ADA)

Employers with 15 or more employees are barred from discriminating against or harassing disabled employees by the Americans with Disabilities Act. In addition, this law requires employers to make reasonable accommodations to enable a qualified disabled worker to complete his or her job functions.

The Pregnancy Discrimination Act (PDA)

The PDA prohibits discrimination against, or harassment of,  women based on their pregnancy status regarding any aspect of employment. In short, women who are temporarily unable to perform their jobs due to pregnancy must be treated similarly to other temporarily disabled workers. The PDA also applies to employers with 15 or more employees.

Age Discrimination in Employment Act (ADEA)

This law prohibits employers with 20 or more employees from discriminating against individuals who are 40 years or older. An employee’s age cannot be used as a factor in any employment decision.

Retaliation

Lastly, employers are also barred from taking retaliatory measures against employees who file a complaint about discrimination or who engage in other protected activities. Retaliation can include firing or demoting an employee, changing job assignments, or work shifts. Other forms of behavior, such as hostile attitudes by supervisors or coworkers toward an employee who has filed a discrimination complaint are also considered retaliation.

The Takeaway

It is essential for business owners to be aware of their responsibilities under state and federal discrimination laws. A business that violates these laws can be fined by the government and face costly lawsuits. Even if a business prevails in these actions, discrimination claims can damage its reputation, and hinder its success in the marketplace and its ability to attract talented employees. By consulting with an experienced business and employment law attorney, you can establish policies and procedures that ensure your business adheres to these laws.

These days you can do almost everything online- grocery shop, find a date and even get an eye exam. If you are outside of South Carolina, that is. This State just passed a hotly contested law banning the practice.

Opternative is a web-based company that offers online eye exams. The eye exams are administered using a computer display and a wireless device, such as a smartphone. The user is asked to step away from his or her display and a wireless device is used as a remote. He or she is then asked a number of questions and to submit certain medical records. The results of the exam and the other information is then forwarded to a licensed ophthalmologist who reviews it and issues a prescription. Many are drawn to the online-based service because it is less expensive than a traditional in office exam, which is usually not covered by health insurance.

The new South Carolina law prohibits the practice of providing prescriptions for glasses and contacts based on an eye exam administered online. Governor Nikki Hayley opposed the law and vetoed it, but her veto was overridden and the law was passed anyway. Some representatives, such as Senator Ray Clearly have defended the law by stating a public health concern.  Specifically, that individuals should submit to an in office eye exam as this is the only type of exam that can detect serious problems, such as tumors. But, not everyone believes that is the real purpose of the law.

Opternative has filed a lawsuit against the South Carolina Department of Labor. The company claims that the law has an ulterior motive. Namely, to protect the profits of those who offer traditional eye exams. They allege that this law is unfair in what is supposed to be a free market existing in the United States. The company seeks to have the law declared unconstitutional so that they can resume business in the state. If you are a business owner and have a law related issue that you would like to discuss, contact an experienced business and corporate law attorney today.

Small businesses are the heart of the American economy. If you are a small business owner and you hold certain beliefs, you might want to use your business property to put those beliefs on display. As long are you are not discriminating against anyone, you should be able to do that. Right? Maybe not, as one South Carolina business owner is finding out the hard way.

Around the Fourth of July holiday, Bob Michaelis, the owner of the Michaelis Mattress Company, which operates four stores, put up 10 American flags outside his Lexington store. He claims that he put the flags up to because he wants a “return to patriotism in America” because he feels it has been lost. After putting up the flags, he was visited by officers of the Lexington Police Department. They informed him that there is an ordinance in effect that allows only three flags of the same kind to be displayed at one time. The ordinance was passed in 1999 after an incident involving the Confederate flag. The police allegedly asked Michaelis to take the flags down. Although Michaelis could be subject to fines for breaking the rule, and he stated that he believes the ordinance is a good thing, it is unclear whether he removed the flags.

The Mayor of Lexington responded to the situation by saying that Michaelis had an ulterior motive for putting the flags up: a Fourth of July sale. He also mentioned that he did not want to interfere with business.

As a small business owner one of the most important aspects of day-to-day operations is compliance with the myriad of rules and regulations, federal, state and local, that your venture is subject to.  Non-compliance can cause you to be sanctioned and fined. But, being aware of and ensuring that you are in compliance with these rules can be a handful. That is why it is in your best interest to retain an experienced business law attorney.

What business entity is right for me?

Choosing a corporate entity is one of the most important initial decisions you will make for your business.  Your entity selection can affect your control and management of the business, funding eligibility, the number of shareholders and partners, taxes, and much more.  When forming a new business, you should keep two important things in mind:

• Entities are state specific.  When you incorporate or organize, it is done at a state level, and your entity will be subject to the laws of the individual state.
• Your corporate entity selection may not match your tax entity.  You can incorporate or organize as a certain entity at the state level, but elect to be taxed by the IRS as a different entity.

Entity selection is complex, and there are numerous factors you must consider.  Potential entities available to you include:

1. Sole proprietorship:  This is a popular entity choice for home-based businesses.  It is the simplest entity to form and has the least formalities, but it also provides minimal legal protection.  It usually involves one owner who also operates the business.
2. Limited liability company (LLC):  Probably the most popular business entity today, LLC’s combine the benefits of corporations and partnerships.  They offer protection in the event of a personal lawsuit and flexibility in membership.  It can, however, be difficult to offer stock options to investors with an LLC.
3. Partnerships:  Partnerships can be either general or limited.  In a general partnership, partners manage the company together and assume equal responsibility for debts.  In a limited partnership, limited partners invest, but do not have control over the company.  Partnerships can be complex to set up due to the often multiple parties involved and differing roles of some partners.
4. Corporations:  A corporation is typically used for larger entities, especially when a business will have shareholders or investors.  Corporations can shield owners from liability for the debts of the company.  This entity allows for ease of funding and has tax benefits, but forming a corporation is an involved process.

For assistance creating your business, contact the South Carolina business organization attorneys at Willcox, Buyck & Williams, P.A.