What to Do When a Client Doesn’t Pay

This is the first post in a new series called “What to Do” where I will discuss “what to do” in various common situations that come up in small and medium sized businesses. Feel free to send me your “what to do” question. Today’s topic is what to do when a client doesn’t pay. This is a common problem that businesses big and small face and if you’re in business, you’re selling services or products in exchange with the expectation that you will be paid for those services or products. The cost to your business of unpaid invoices is not just the dollar amount on each invoice but the opportunity cost of the investment you could make in your business from that income. Additionally, it costs your business time and money to collect on unpaid balances. Thus, the cumulative effect of multiples unpaid invoices, even for small outstanding amounts, is detrimental to your business’s viability and growth. Before starting work: For the proactive business here are some tips to help you avoid or minimize the change of having a client … Continue reading

In: California Civil Litigation, Contracts, Starting a Business, Uncategorized, What to Do | Leave a comment

Lease vs License Agreement

If you are opening a brick and mortar store and are about to sign your first lease on a space or if you are moving to a new space, congratulations! Committing to a location for your business for a number of years is a big commitment. Before you put your signature on that document, let’s clarify whether you are holding a lease or a license agreement and what that means. A lease gives exclusive possession in the premises. Regardless of whether the agreement is labeled a “lease” or “license agreement” the test of whether the law considers an agreement to use real estate is a license or a lease is whether the contract gives you exclusive possession of the premises “against all the world, including the owner.” If it does, then you have a lease. If the agreement only gives you the privilege to occupy the premises under the owner, in which case it is a license. An example of this would be, someone who rents a home for a 1 year term, who has the homeowner’s agreement that the … Continue reading

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Independent Contractor Misclassification

A few days ago, Uber agreed to pay up to $100 million to settle class-action lawsuits in California and Massachusetts claiming that its drivers are employees not independent contractors. Paying out $100 million is by no means the end of this story. The settlement does not affect other drivers’ ability to sue on the same grounds nor does it preclude the Labor Commissioner from determining that individual drivers are in fact employees (which it has done in at least one case). The U.S. Department of Labor also recently issued a formal interpretation of the federal Fair Labor Standards Act as it pertains to the classification of independent contractors. This advisory opinion signaled the intention of federal regulators to scrutinize independent contractor classifications and treat most workers as employees. Most companies do not have enough independent contractors to be subject to class action lawsuits worth $100 million, but how will a $1 million lawsuit or even a $100,000 lawsuit affect your business? If your company uses independent contractors, here are some steps you could take to minimize your exposure: Closely examine … Continue reading

In: California Civil Litigation, Contracts, Employment Law | Leave a comment

Breach of Contract in California

Breach of contract is likely the most common claim alleged in civil litigation cases. Contracts are the glue that holds our society together and we all enter into agreements (i.e. contracts) in one form or another on a daily basis. When the breach of that agreement results in injury, many look to the court system for a remedy. Here are a couple of the more memorable recent breach of contract cases include: Bill Cosby filed a breach of contract lawsuit against a woman who accused him of sexual misconduct, her mother, her lawyers, and the publisher of the National Enquirer. The lawsuit claims that they “disclosed information that they promised to keep secret” in return for a financial settlement. Donald Trump sued Jose Andres’s organization for breach of contract after the celebrity chef canceled his plans to open a restaurant in a Trump group building after Donald Trump’s comments on immigration. What is a contract? Simply said, “A contract is an agreement to do or not do a certain thing.” (Cal. Civ. Code § 1549.) The essential elements (parts) of a … Continue reading

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Basics of a Photography Contract

Any provider of services, especially those that aren’t provided immediately at the time of hire should have a binding photography contract outlining the terms of both your and your client’s expectations. Outlining the terms of the relationship not only protects both parties but it ensures that you get paid and can collect if there is a problem. Most importantly for the growth of your business, taking out the element of surprise results in a satisfying experience. Happy clients are happy to refer your services. What is a contract? A contract is an agreement with specific terms between 2 or more persons or entities (parties) where there is a promise to do something (performance) in exchange for something of value (consideration).   What should be in a photography contract? The 5 Ws and 1 H, or 6 Ws, we learned in high school English. (I went to an international school abroad but I’m sure we learned the same things.) Who, what, when, where, why, how. If you are a wedding photographer, the “why” would likely be obvious so we’ll focus on … Continue reading

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Are Electronic Signatures Valid?

Many have asked “are electronic signatures valid?” The answer is YES. Section 1633.7 of the California Civil Code states that an electronic signature has the same legal effect as a handwritten signature.  The problem is proving who signed that electronic signature in court. Technology has made it so easy to sign our lives away with merely the click of a mouse.  It’s so easy that most of us don’t read the documents nor do we remember if we clicked our agreement.   But what happens when you as an employer wants to use that electronic signature as proof of an agreement?  Are you able to establish in court that this particular employee clicked the mouse that caused the electronic signature to appear?  If your answer is “no” or “probably not” you may have wasted the money you paid an attorney (or Google) to draft that arbitration or confidentiality agreement that a court will not enforce. Just last week, my favorite California Court of Appeal issued an opinion in Ruiz v. Moss Bros. Auto Group, Inc. upholding the trial court’s finding that Moss Bros., … Continue reading

In: Contracts, Employment Law | Leave a comment