Is there really any difference between the terms “best efforts” and “reasonable commercial efforts” when used in contracts? Yes. Under certain states’ common law, “best efforts” may require the party agreeing to use “best efforts” to come out of pocket and spend money to make a promise happen. By contrast, “reasonable commercial efforts” are considered a step below that and do not normally require a party to spend monies. The difference between the terms could mean whether you are in breach of an agreement or not, and responsible for the other ... Read More »
WHY IS A LETTER OF INTENT IMPORTANT IF IT IS TYPICALLY NON-BINDING?
Deal points in a Letter of Intent are typically non-binding; however, they frame the proposed deal, and it can be difficult to re-negotiate major points. For example, you should not “agree” in an LOI to structure the acquisition as an asset sale, or a stock sale with a 338 (h)(10) election, until you discuss the tax effects of those choices with your CPA. Picking the wrong structure could result in your paying much higher taxes, and the other party will be reluctant to surrender any tax advantage they have gained. The amount a seller will ... Read More »
STARTING A BUSINESS
Five Legal Points to Remember in Starting a New Business 1.Delaware or Georgia - Measure Twice? As a business founder, when it comes to entity selection you will hear about Georgia and Delaware (mostly). You will hear terms like “S Corporation” or “Limited Liability Company”, or “C Corporation”. Don’t follow the crowd, instead take some quiet time to review with your lawyer the (often many) pros and cons, and practically evaluate your business goals and methods, all so that you can carefully determine which type of entity best fits YOUR ... Read More »
5 Things to Know About Entity Selection
5 Things to Know About Entity Selection So you’re starting a business? Here are some threshold things to consider when choosing the entity: Often the choice is between an S corporation and a limited liability company, which is a type of partnership with liability protection. Both are considered “pass-through entities” for tax purposes. Both entities provide the same protection against the company’s trade creditors, assuming the business is properly operated. Generally, neither entity protects its principals from personal ... Read More »
Entity Liability Insulation – A Rugged, Eloquent Voice From 1929 – Behind the “Corporate Veil”
Many of my friends know that the late Justice William O. Douglas, a rugged outdoorsman, rail hobo, eloquent author, world traveler, environmental activist, FDR’s poker buddy, and brilliant jurist, is one of my heroes. His iconic autobiography, Go East Young Man, rests on my office shelf. So I was delighted when I discovered that he had written the words excerpted below, which remain Georgia’s black letter law on the subject, in 1929 as a Professor in a Yale Law Journal article titled “Insulation from Liability Through Subsidiary ... Read More »