Articles Posted in BUSINESS CONTRACTS

As an Atlanta Lawyer I have many clients that come to me to help them set up their businesses. Business entity formation, partnership and operating agreements, employment contracts and agreements, and employment law are all areas that I frequently work on for my clients. There are other times, though, when I do represent my business clients in court. In fact, according to a 1997 ruling by the Georgia Supreme Court, any Georgia business that is facing litigation must hire a licensed attorney to represent the company. Thus, if you do not have a business attorney and become involved in litigation, you must retain one. What is more, many of my Atlanta, Business Law Clients who work with our Atlanta Attorneys out of our Atlanta or Marietta Offices, often comment on how glad they are to have us nearby for piece of mind, prosperity, profitability, but most of all, that they know we are there for them when something inevitably and/ suddenly arises. I have engaged in dialogue with many of my clients, on more on a few occasions, to find out what makes having a good Local Atlanta, Georgia Business Attorney essentially, on call (or on staff). Virtually all of the answers I received were statements about how a prudent businessperson cannot just go out and find a business lawyer their business can work with and trust at the last minute . . . like a Starbucks.

It is always prudent to have Atlanta Attorneys on hand who is familiar with the company and can step in if litigation arises. But, there are other very good reasons to hire a business lawyer. The first is to properly set up the business. Deciding on which type of business entity will work for the business model is important before filing the proper paperwork. A knowledgeable Georgia Business Attorney is invaluable at this stage in business formation. Personal liability issues and tax consequences need to be considered and an experienced Atlanta, Georgia business lawyer will have good insight into which options are best for the business. An hour could be all that is required to complete an initial assessment of this step, but doing it right can help you avoid future financial and legal issues and serious tax problems or lost tax benefits.

Before hiring employees at the new company, it is essential to draft solid Georgia employment contracts. Job duties, payment terms, non-disclosure agreements and non-competition clauses all need to be considered. These documents will ensure that future litigation is kept to a minimum. This is especially true given the most recent proposed changed to The Georgia Constitution wherein Judges will be allowed to “blue pencil” in changes to employer-employee agreements to make them enforceable so long as they are no less favorable to the employee. (This subject matter is a whole new set of Articles/Blogs which will be coming soon. The fact is, the fallout from this legislation has yet to be seen).

An Atlanta, Georgia business attorney and Atlanta, Georgia employment attorney can also help with the hiring and firing or the process of “laying off” employees and can assist with setting up a system to measure employee performance. The guidelines and contracts that are established early on will help protect the company if any employee ever files a lawsuit against the company. Besides paying employees, many companies purchase services from suppliers, have leases on property (for example, vehicles and commercial real estate) and sign distribution or licensing agreements. A business attorney will safeguard your company against one-sided agreements by negotiating favorable terms for the company.
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As an Atlanta, Georgia lawyer, I have noticed that failure to disclose defects in Georgia real estate (mainly in residential homes), are on the rise. In fact, some cases of ‘failure to disclose‘ serious defects in real estate rise to the level of real estate fraud in Georgia, and even involve action on the sellers behalf to hide, cover up, and disguise defects so the buyer or inspector will not notice them.

As an Atlanta Property Attorney who advises clients on the purchase and sale of real estate, I make sure and advise the sellers of real estate it is illegal to fail to disclose to potential buyers, major and/or material construction defects, in the ‘home for sale’. While sellers may view these disclosures as a burden, these laws exist to protect sellers and homebuyers.

By being upfront about your home’s defects in Georgia, a home seller can avoid serious lawsuits and legal liabilities in Georgia for failure to disclose defects. Your seller’s disclosure form shows both parties exactly what the defects are, so you can be exempt from future problems.

As an Atlanta, business lawyer, I deal with non-competition (non-compete) and Non-Solicitation laws on a regular basis. The Atlanta Small Business Lawyers at The Libby Law Firm specialize in Georgia Contract Law for small to medium sized businesses. The Libby Law Firm is a well-known and well-respected Atlanta Law Firm. Our Firm represents a numerous small and medium sized businesses in an abundance of capacities. In this Blog, I analyze the “Georgia Restrictive Covenants Act”, which I believe will significantly change relationships between employers and employee in small and medium sized businesses. I believe this will be especially true in small to medium sized businesses and businesses that employ in specialty areas.

THE “GEORGIA RESTRICTIVE COVENANTS ACT” – THE “BLUE PENCIL” COMES OUT

I write this Blog as an Atlanta Attorney, to let you know a most recent change in Georgia Contract Law, which is bound to have a profound affect on Atlanta Small Business Employer – Employee relations. Georgia voters have favored a constitutional amendment on November 2nd, 2010, which speculated on stringent trade laws; thereby setting constraints on trade and its laws for workers in Georgia. The newly enabled law allows Georgia Courts to repair Restrictive (Non-Compete) Covenants in Georgia Contracts, which bind the employee. In the past, any illegality in the Georgia Restrictive Non-Compete Covenants would have caused the whole contract to fail.


To put it plainly, a fatally drafted Georgia Non-Compete clause or Non-Solicitation Clause drafted by an employer will be given effect as if it were drafted within the limits of the law. Thus, it alters already existing law, which previously rendered the entire restrictive covenant ineffective. This means if any of the restrictive covenants in the contract were unenforceable, whether because of geographical restrictions, scope of work restrictions, or time constraints, the whole contract will be held void ab initio. Now, the Judge can write in the restrictive covenants so that they are enforceable. This action is referred to as “blue penciling” and is tantamount to the judge correcting the contract so that the restrictive covenants are enforceable.

The new law is viewed as dubious, given the incongruity/discrepancy in the date of it being effective. While those who drafted the Georgia House Bill 173 declared that it would be enforced from November 3rd, 2010, the Georgia Constitution asserts that new laws should come into effect from the beginning of the coming year, January 1st. How this drafting error will affect anyone legally is uncertain and chances are that it may have to do the rounds of the courts to determine how it will be applied.

In its most practical aspect, what concerns those employees who intend to start a new business venture, is that; (a) An employment contract implemented before November 3rd, 2010, consisting of a restrictive covenant (a Georgia Non-Compete or Non-Solicitation Clause) will not be qualified for the new law; and, (b) Conversely, any employment contract implemented after November 3rd, 2010, with restrictive covenants; in particular, the restrictive covenants referred to as Non-Compete or Non-Solicitation Clauses, will fall under the new law. However, given the discrepancy in the dates, employment contracts may not be carry the power of this law as the date of commencement, or the new law may be held unconstitutional. This grey area in Georgia Contract Law may be of great concern to those workers aspiring to compete with their previous employers. This is particularly true in a densely populated competitive area such as Atlanta.
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As an experienced ATL Business Lawyer and Real Estate Lease Lawyer, I always recommend that my clients have a lawyer review all lease agreements. This is especially true with Georgia commercial leases in Atlanta, which when entered into carelessly can severely limit your success. Without the proper due diligence, your business may suffer if the Georgia commercial lease prevents you from addressing important issues such as signage, parking and physical expansion. This is definitely where spending money to protect your interest is a good idea. Of course, this is my opinion, but I have seen Commercial Landlords become more and more ruthless. The reason? This economy has them losing money and scared, like the rest of us. Therefore, I tender to you the following suggestions:

Keep an eye out for leases that contain the following five pitfalls, and remember to always consult with a qualified real estate contract attorney before signing any lease.

1) Short lease term with a vague renewal clause. It is risky to sign a short lease that gives you no option to renew or that has only vague renewal terms. Lease renewal options give you flexibility and should be clear and concise. The renewal clause should state when you must renew and the percentage that the rent may increase when renewing. Long-term leases are fine for established businesses, but if you are signing a lease for a start-up, then a shorter lease with an option to renew may be ideal.

2) Unfavorable relocation terms. In a relocation clause the landlord states his right to move your business to a different part of the building in order to accommodate another tenant. It is not always possible to avoid this clause, but you can make sure that you have a written agreement that states the terms of the relocation. In the clause you can ensure that the rent will not increase and that the landlord will pay for moving expenses and any required renovations to bring the space up to the same standard as the previous space. It is a good idea to make sure that the clause gives you a minimum of one-month notice if relocation is required.

3) Undefined Fees. All fees to be paid must be stated in the lease agreement. It is not uncommon for landlords to charge fees that were not agreed upon in the lease. In these cases, it is best not to pay these undefined fees. Consult an attorney if the landlord insists.

4) Restrictions that limit growth of your business. All businesses grow and change. Your lease should not restrict you from improving and modifying your space to meet your business needs. This should be negotiated with the commercial landlord and written into the lease before signing.

5) Verbal Agreements. All negotiated terms should be included in the written lease agreement. Verbal or handshake agreements are hard to enforce and can risk your business. Put everything in writing.

Georgia Commercial Leases are generally landlord friendly. Our Firm’s specialty practice areas. From our Atlanta-based Main-Office, Our Atlanta Lease Lawyers handle Georgia Contract Drafting, Negotiating, and Disputes, all over Georgia. Some of the counties and cities include Atlanta, Buckhead, Sandy Springs, Fulton County, Gwinnett County, Duluth, Lawrenceville, Forsyth County, Cumming, Cobb County, Marietta, Acworth, Kennesaw, DeKalb County, North Atlanta, Decatur.
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Imagine the scenario: you and your partner establish a new business entity in Atlanta and after some minor adjustments to the layout of the new office space, you are finally ready to move in and begin day-to-day operations. You quickly realize that your current office equipment is inadequate and outdated. Furniture and computer equipment is required. Because this is a new business venture, there is little cash available and it is decided that each one of you will buy some of the equipment for the office. You both pay for the equipment with personal funds. You buy the furniture at a cost of $12,500 and your partner buys computer equipment for $18,200. As time passes, you and your partner enthusiastically focus on generating business and the exact amount that each of you spent on the equipment is a fading memory.

Initially these expenditures do not seem to pose a problem. Yet without proper documentation, this seemingly innocent scenario can turn into a conflict that, even when business is good, may put a strain on your relationship with your partner. More serious legal consequences may arise if your business is sold or liquidated. Without adequate legal intervention, it may become a matter of “he said, she said” debt that is difficult to resolve.

The good news is that this situation can easily be avoided by property setting up Personal Guarantee Promissory Notes. These promissory notes should reflect the specifics of the business deal in order to ensure fair treatment for all involved, so using a boilerplate agreement is usually insufficient. Seeking the help of an experienced Atlanta, Georgia Business Attorney who will take into consideration the relevant facts specific to your business is critical to having your interests fully addressed and enforced.

Never go it alone. Protect your self and your business by implementing the proper legal instrument through a qualified business attorney. Your attorney will draft a Personal Guarantee Promissory Note that is specific to the unique circumstances and needs of your business and will ensure that your wishes, needs and desires are fully addressed and enforced.
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As a business lawyer, I have had a number of business persons ask me, “do corporations in Georgia need to be represented by an attorney?” The answer is a resounding “Yes”.

First, in Georgia business litigation matters, corporations must be represented by a licensed Georgia attorney in “courts of record.” Eckles v. Atlanta Tech Group, 267 Ga. 801, 485 S.E.2d 22 (1997). The Georgia Supreme Court found that although a corporation may be considered to be a “person” under Georgia law, when the corporation is facing litigation, it must hire an attorney to be represented in court. The Court reasoned that because a corporation can only act through its agent, when that agent represents a corporation in court, he or she is acting as a legal representative and must be a licensed attorney. Thus, a corporation cannot represent itself in court and must hire a business attorney.

Although not required by law, several other essential reasons exist for having an experienced Georgia business attorney involved in your company’s non-litigation matters. Having a knowledgeable attorney represent your business from the outset can save your corporation substantial monies, unnecessary trouble and expense, and protect your business from costly disputes and litigation. Areas in which an attorney can be extremely beneficial include, but are not limited to, ensuring proper corporate entity formation, employment contracts and hiring or firing decisions, entering into third party contracts, and avoidance of disputes and litigation.

• Incorporation: Deciding whether to form a corporation or a limited liability corporation (LLC) can have significant personal liability and tax consequences. Further, many specific legal formalities must be followed in order to incorporate or form an LLC, including the execution of many legal documents. Thus, it’s essential to have a knowledgeable corporate attorney advise you on the type of business entity that is best suited for your company. If you are unsure what steps your business should take, investing in even an hour of an attorney’s time can lead to a huge return on investment. Simple mistakes in incorporating can lead to serious financial and legal issues at a later time.

Employment Contracts: Many employee disputes and lawsuits could be avoided by having an attorney involved at the outset. Claims may arise because of confusion over job duties, payment of wages, and the failure to sign important documents such as non-disclosure of company secrets or non-competition agreements. Having an attorney ensure proper employment agreements and documents are in place at the beginning of an employment relationship can save your company from unnecessary trouble and expense down the road arising from employee disputes and litigation.

• Hiring and Firing: Our Atlanta business lawyers are well versed in the employment law. We know and understand there are legally correct methods to hire, fire, and lay off employees. The business employment lawyers at our firm understand the importance properly hiring new employees and setting expectations of them, executing the proper employment contracts, legally documenting these matters, as well as engaging in an appropriate amount of other protective measures for your business. Likewise, our Atlanta business employment lawyers understand the necessary steps and measures and document employee performance, adherence to business standards, and the proper way to fire or lay off employees should the need arise. The procedures and actions we take can be crucial in case a disgruntled employee decides to file a lawsuit or an action with a governmental entity such as the EEOC.

Third Party Contracts: It is extremely important to have your own Georgia business lawyers draft contracts and agreements in a manner favorable and protective of your business interests. Likewise, contracts offered by third party vendors, leases, and distribution agreements are often one-sided in favor of another party. As such, it is important to have a knowledgeable business attorney review all documents and contracts in order to ensure your company’s best interests are protected. Oftentimes, this includes negotiations concerning essential and material terms of any contract.

• Avoiding Disputes and Litigation: The experienced Georgia business law firm immediately.


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