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The Daytona Law Blog

Understanding contract consideration

Your business partnerships in Daytona Beach are much more clearly defined when you have a contract in place. Yet as many of the companies that we here at Smith Bigman Brock have worked with in the past can attest to, simply having a written contract does not allows mean that such an agreement is valid (and, by extension, enforceable). It is the language and terms within a contract that confirms its validity. 

One of the basic elements that must be present in order for an agreement to be considered a contract is consideration. The Florida Bar defines "consideration" as "the exchange of promises to act and/or provide goods, services or money." Essentially, your contract consideration is the mutual benefits both you and your partner will receive from the agreement. For example, if you are a service provider, then the benefit your partner receives if your services. Your benefit is the payment for those services (or other services received in return). A contract cannot be "one-sided," or have benefits so heavily offered to one party of the agreement in order to be considered valid. 

Copyright protections and the need for clarity

Business people in Florida across a variety of industries may find themselves without a clear understanding of copyrights. This type of protection is one of many forms of intellectual property and may also be one that has the potential for unintentional violations by individuals or companies.

As explained by the United States Patent and Trademark Office, virtually any type of creative work may be covered by copyright. This includes those works developed purely for artistic exploration or enjoyment as well as things created for commercial purposes. One example of a purely artistic work is a painting. Two examples of works created for commercial purposes are a company logo or website.

When do I need a nondisclosure agreement?

If you work for a company in Florida and need to hire an outside vendor to perform some work for your company, you may well need to share sensitive business or industry information with that vendor in order for them to do the work you want them to do. Certainly, this sounds a bit concerning as the information you would share must be kept in confidence and not used incorrectly. This is what a nondisclosure agreement is for.

Sharing information with a vendor is just one of the many situations in which the use of an NDA, also referred to as a confidentiality agreement, is important. As explained by Forbes, you may even find it helpful to have your employees sign NDAs to protect the business while still giving employees access to the data they need to do their jobs. If you have developed a new product, service or technology and want to discuss this with a potential partner or buyer, you should again enlist the protections allowed by a confidentiality agreement.

Understanding an unfair competitive advantage

Most any business in Florida has some sort of competition and that makes it understandable that owners and management teams spend a good deal of energy on finding ways for their companies to outdo their competitors. This is part and parcel of a capitalist society and economy. However, there is a line between what is a reasonable and legal competitive advantage and what is an unreasonable and illegal competitive advantage.

As explained by Quora, a competitive advantage can generally be thought of as anything that allows one company to provide better value to its customers or clients than its competitors. This better value may come in the form of superior product quality, a more pleasing price, faster turnaround and service times or something else.

Tips on creating a business partnership

Many people in Florida have dreams of owning their own businesses. In some cases, this may be achieved by working with another person and establishing a partnership. However, it is important that entrepreneurs proceed with caution before signing up to partner with another person as there may be serious legal and financial ramifications if a partnership does not work out as intended or hoped. 

According to Inc. magazine, there are some things that partners should have in common and some things they should not. Values, a work ethic and expectations for the business and each other should be shared for maximum synergy between partners. Skills, knowledge and even industry contacts may be best if not shared so that each person can bring something unique to the business and provide strength in different areas.

Detailing the Deceptive and Unfair Trade Practices Act

Most in Daytona Beach may anticipate that the business world will be cutthroat and competitive. Yet simply because you and your company are in a state of constant competition with your competitors does not mean that you (and them) are not required to follow ethical practice guidelines. Some might hear the term "unfair competition" and roll their eyes, believing it to only be an accusation made by companies that are falling behind in their markets. Yet several business representatives often come to us here at Smith Bigman Brock asking for specific examples of unfair competitive practices. 

Finding an answer to such a question requires a knowledge of Florida's Deceptive and Unfair Trade Practices Act. Here, it adopts the same standards set forth by the Federal Trade Commission Act. This legislation defines unfair trade practices to be: 

  • Any that harm (or are likely to harm) consumers
  • Any that cannot be reasonably avoided by consumers
  • Any whose benefits are not outweighed by the countervailing benefits to both consumers and competitors

Company alleges client lured away its co-founder

A company's most valuable asset is its workforce. Its employees may be the reason behind its reputation and brand loyalty, which ultimately allows it to compete in its market. For this reason, it may not be surprising to hear that a local business in Daytona Beach is willing to go so far as to litigate in order to ensure that its employees are not poached away by competitors (or in answer to unfair and/or unethical recruiting practices). 

An application development firm recently filed a lawsuit in North Carolina over this very issue. It was approached last year by another company looking for assistance in developing an app as well as creating a website. A stipulation was added to the contract the two companies entered into that the client company would not attempt to hire away any of the firm's employees for at least two years. One of the firm's co-founders was deeply involved in the project, eventually going so far as to leave the firm for a new position with the client company. The firm's lawsuit states that the client company's solicitation of its co-founder was in violation of that agreement. It also alleges that the co-founder and the client company colluded in deceiving the firm that payment for its services would be forthcoming, when in reality the client's aim was to recruit the co-founder to its side in order to finish the project in-house. 

Evaluating whether non-compete agreements are enforceable

Of all of the assets that businesses in Daytona Beach value, chief among them has to be their employees. This is why if you do happen to lose an employee, your greatest fear may be that they will either immediately go to a competitor and share some of your valuable trade secrets, or try and poach some of your other employees. Many clients come to our team here at Smith Bigman Brock convinced that a non-compete agreement will prevent this, yet that depends on the nature of the agreement. If its deemed to be too restrictive, the court may actually rule that it is non-enforceable. 

That actually represents a step up in the legal treatment that such agreements have received historically in Florida. Per the Florida Bar Journal, non-compete agreements were often ruled void for decades due to them being perceived to be restraints on trade under common law. In 1996, however, the state enacted legislation meant to specifically address non-compete agreements. This new standard (found in Section 542.335 of Florida's state statutes) says that non-compete agreements can be enforced provided that their terms are proven to be reasonable relative to time, area and line of business. What this means is that as long as your non-compete agreement is not so restrictive that a departing employee will not reasonably be able to immediately find work, the court may very well validate it. 

Can a client terminate a contract "for convenience?"

Much of the stability of your business in Daytona Beach comes from the confidence in knowing that your clients cannot simply walk away from your contractual agreements. If they do want to cancel a contract, they typically need to have cause to do so. Yet are there exceptions to this rule? 

There may be times when a contracted partner is allowed to terminate an agreement for convenience. Basically, the concept of "termination of convenience" allows a contracted entity to end is contract if it believes it to be in its best interest. Per the Congressional Research Service, government entities are automatically granted this privilege. Some of the reasons that a government agency may cite when terminating an agreement with you for its convenience may include: 

  • It now being able to provide the goods and services needed in-house
  • A breakdown or deterioration in your business relationship
  • If questions of propriety surrounding your being awarded the contract arise
  • When you refuse to renegotiate the terms of your agreement

What are the most common lawsuits against businesses?

In our litigious society, every business must remain wary of lawsuits. No company wants to face a time-consuming, expensive, image-damaging lawsuit. While every business’s level of risk varies, litigation remains a constant threat for most companies.

It is wise for business owners and their attorneys to be aware of some of the most common types of lawsuits against businesses. This way, they can take proper precautions to reduce their risk of litigation.

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