Force Majeure Defenses to a Contract in New York

When negotiating a business contract, smart companies try to include all possible defenses in the contractual language to excuse nonperformance through force majeure clauses. In situations such as the unexpected outbreak of the coronavirus (COVID-19), companies find themselves unable to do business as usual, produce as promised, or deliver on agreed upon deadlines. New York’s mandated shelter in place orders for non-essential workers and voluntary self-quarantine for essential workers showing symptoms of the virus or exposed to it have put businesses’ abilities to perform to the test. Due to this, businesses are examining whether they can excuse performance under force majeure either temporarily or permanently. 

What is Force Majeure?

Force majeure is a provision included in a contract that excuses performance of obligations by either one or all parties if circumstances out of the parties’ control arise, making it impossible or impractical to perform on contractual obligations. It’s typical to see clauses enumerating force majeure events such as:

  • Strikes or labor disputes,
  • Acts of terror, wars, and epidemics,
  • Acts of God including acts of nature like earthquakes and fires or weather events such as floods and hurricanes, and 
  • Government actions such as condemnation or law changes.

Generally, force majeure doesn’t include economic hardship, but the language of the specific contract at issue will decide if the clause may be invoked as an excuse for nonperformance. 

New York Force Majeure Requirements

When it comes to impossibility or impracticability of performance due to coronavirus, New York has specific standards to evaluate. To invoke force majeure, the specific event must generally be listed in the contractual clause. There are a few possibilities invoke the clause.

Epidemics and Pandemics

The World Health Organization has labeled coronavirus a pandemic. If a pandemic is listed in the clause, the nonperforming party may claim force majeure applies. However, some clauses choose the phrase epidemic, so it would be up to the nonperforming party to argue coronavirus still falls under that definition and nonperformance is excused. 

Government Action

If, however, neither pandemic nor epidemic were included in a force majeure clause, the nonperforming party may argue coronavirus is covered by the clause of “government action” in that the State of New York has mandated a lockdown to prevent further coronavirus cases. 

Foreseeability

New York further requires that even if a force majeure event included in the contract took place, the event was unforeseen – an argument likely to succeed in the case of coronavirus’ sudden, explosive spread. Further, the nonperforming party has to try to perform their duties even after the event occurred.  

New York Civil Litigation Lawyer

Creating a contract is an important event both for both a business and any other parties to the contract. It’s important to negotiate for as many protections as possible for your business, but it’s also important to fight for those protections when unforeseen circumstances make performing your obligations impossible. To have someone looking out for your best interests and fighting for your business in uncertain times, speak with the New York civil litigation lawyers at MOWK Law today. Contact us today with your questions—we are all working remotely and fully available to new and potential clients.

Buying and Selling a Business

Buying and Selling a Business in New York

Buying or selling a business in New York can be very profitable for everyone involved – if you take the steps to maximize sale benefits and reduce risk of loss or liability. There are many steps to take that evaluate and address all parts of the transaction and omitting or mishandling any one of them can be a costly mistake. The assistance of an experienced New York business attorney at MOWK Law can help the process run smoothly and result in a successful transaction.

Letter of Intent

A buyer who wants to begin acquisition negotiations often drafts and delivers a letter of intent or term sheet to the target company – essentially, a preliminary outline for the rest of the transaction and not a final sales contract. LOIs should be reviewed by an attorney first to ensure they aren’t legally binding and, if the buyer wants, include the ability to walk away and not be bound to negotiate in good faith if the buyer wants to stop.

Non-Disclosure Agreements

For sellers, it’s important to have a prospective buyer sign a non-disclosure agreement to protect confidential information such as their operational processes, customer information, financials, and trade secrets. The process of selling a company requires providing a large amount of information to a buyer that would otherwise be kept private and whose disclosure could severely harm the company.

If, for some reason the transaction isn’t completed it’s important for a seller to protect themselves and their businesses by keeping the buyer from disclosing or using confidential information against them. Additionally, public discovery of a prospective sale can affect customer loyalty and employee retention, which can harm the business even if the sale isn’t completed.

Due Diligence

It’s important for any buyer to perform a thorough check on the company they want to buy. Due diligence allows a buyer to understand the business and make an informed decision before closing the deal. During the due diligence period, buyers will usually ask for, receive, and analyze information related to:

  • Assets and financial accounts
  • Debts and liabilities
  • Leases, real estate, or other property holdings,
  • Tax returns
  • Financial statements and projections
  • Commercial agreements of major accounts doing business with the seller
  • Legal and compliance issues
  • Employee base
  • Customer base
  • Reason for selling

A skilled business attorney can help the seller gather and disseminate all information, as well as answer any follow up questions based on the information provided. The buyer may also find an attorney helpful in evaluating the information and ensuring all information has been received.

Purchase and Sale Agreement Negotiation and Drafting

When both parties are ready to proceed with the transaction, the buyer and seller must negotiate and draft a purchase and sale agreement. This agreement is a binding contract laying out every term of the sale. This can include price, payment terms, sale structure, representations and warranties, indemnification provisions, escrow details, and purchased assets and liabilities, among other terms.

New York Business Transactions Lawyer

Acquiring or selling a business is an important event both for the business itself as well as the old and new owners. To make sure you are following all the right steps, maximizing your sale and protecting yourself and your business during and after the transaction, it’s a good idea to speak with the New York business transactions lawyers at MOWK Law before closing any deals. Contact us today with your questions and start making the transaction you pictured a reality.

What Is a Trade Secret and How Is It Created?

Anyone going into business needs to have a product or service others want in order to be successful. For some people starting a New York business, they have certain critical proprietary information that isn’t quite eligible for protection by patents, trademarks, or copyrights, but is still necessary to their success and would be extremely harmful if it was publicly available. Coca-Cola, for example, has protected the exact recipe for their signature drink for years through another avenue – trade secrets. Here’s what you need to know and how to create a trade secret in New York.

Trade Secret Defined

A trade secret is information that remains secret to others through reasonable means to protect its secrecy and creates actual or potential economic value for its owner. That secret can be nearly any type of information kept secret by its owner which is neither readily known nor easily gotten by others, including:

  • Formulas
  • Patterns
  • Techniques
  • Programs
  • Processes
  • Plans

To keep the information a trade secret it must remain secret, so disclosure by the owner to others is generally not permitted. In fact, the owner of a trade secret must take measures to protect it – whether it is locking the information in a vault or safe deposit box, using electronic security, protecting it on a computer through passwords and other cybersecurity, or other means. The information must usually also generate either an actual or potential economic value for the secret’s owner; today, that most often means it has monetary value of some kind.

Creating a Trade Secret

Creating a trade secret has the simplest process of all types of intellectual property. Once you have met the definition of a trade secret – taking information that remains secret to others and has actual or economic value and taking reasonable means to protect its secrecy – you’ve done it. A trade secret exists. There is no other technical process to follow or steps to take.

What Isn’t a Trade Secret?

Basically, anything that doesn’t meet the definition of a trade secret is not one. Having information that is kept secret from others doesn’t mean you have a trade secret if it has no value. Even if it did have value, if you publicly revealed it or made it available when conducting your business, the information doesn’t remain secret and trade secret has not been created.

New York Business Lawyers

Unique information is often the crux of a successful business, so keeping that information from becoming public or falling into the hands of competitors is critical. Taking the right steps to ensure your valuable information stays in your hands is important, so having experienced counsel in your corner to make sure you properly protect it can make all the difference. Contact the experienced business lawyers at MOWK Law today to let us answer your questions and work with you to make sure your business continues to run smoothly and give you peace of mind.

Business Contracts

Questions to Ask When Negotiating Business Contracts in New York

Contracts are the cornerstone of doing business in New York. Entering one means you and the other party agree to fulfill certain obligations to each other. Though some contracts may be created informally through a handshake or orally, they are ideally well-negotiated written documents that clearly define each party’s responsibilities. Whether you’re negotiating, reviewing, or drafting an employment contract, contract for sales of goods, professional services contract, supplier contract, or any other type of agreement or contract, there are some best practices you should observe every time to protect yourself and make sure you’re signing a document that meets your needs. The talented team at MOWK Law can help.

What to Ask

It’s important to ask the right questions when forming a business contract to avoid lawsuits, a slowdown in conducting business, or loss of income – here are questions to consider when negotiating any New York business contract.

  • Do all the terms of the contract comply with legal requirements in New York?
  • Have all contract terms and conditions been set out completely and clearly?
  • Has the contract defined what constitutes a material breach and clearly set out all related penalties?
  • If it benefits you, have you included a clause mandating binding arbitration and/or a choice of law clause?
  • Would you benefit from including a confidentiality or nondisclosure agreement or a non-complete clause? If so, has it been set out clearly in the contract?
  • Have you included considerations to address an unexpected change in circumstances or allow for the growth of your business?
  • If you did not draft the contract, did the other party include boilerplate language, undiscussed terms, or any other unfavorable language or terms that are detrimental to you and need to be removed or altered?
  • Is the contract consistent with your business’s strategies and goals, and will it help you fulfill them?
  • Are there any concerns about the other party’s willingness or capacity to fulfill any terms of the contract?

Your business contracts define your relationships with other companies, service providers, clients, employees among others – these questions will help you ensure a thoughtful, strategic legal agreement is the result of your negotiations. It’s important to consider how the contract will help you further and protect your interests for both the short and long term.

New York Business Transactions Lawyer

Your business is an asset and should be something you care about greatly– this is why it’s important to take proper precautions and approach committing to any contract with care. To make sure you’re protecting yourself and your business, as well as doing the right amount of due diligence, it’s a wise idea to speak to an experienced New York business transactions lawyer at MOWK Law before entering any agreement. We will work to make every contract achieve your goals and protect your interests. Contact us today to have your questions answered and get started today.

Infringement Law Files

Do I Need a New York Patent, Trademark or Copyright?

When someone creates a new form of intellectual property, it is important to protect this valuable innovation through legal channels. Depending on the type of intellectual property you have created, there are different legal protections available to you that safeguard different rights. Because the law is complex, we are providing you with a brief guide to patents, trademarks, and copyrights that will help you understand the best route to pursue when protecting your creation and managing your New York business.

Patents

The United States Patent and Trademark Office (USPTO) can grant an inventor the property rights to their invention by issuing a patent that gives them the ability to exclude others from “making, using, offering for safe or selling” their creation without their express permission for a period ranging from 14 to 20 years. Patents cover new, useful technical or industrial processes, chemical compositions such as pharmaceutical drugs, machines, manufactured articles, or a useful improvement in any of these categories. The USPTO most often issues design patents, plant patents, and utility patents. Utility patents protect the utility or functional aspects of an invention such as processes, compositions, and machines. Design patents protect an invention’s aesthetic appearance and can include its general appearance, shape, or design; for example, Microsoft received a design patent for the unique “X” on its Xbox. Plant patents are relatively rare and are granted for invented or discovered plants that reproduce asexually – hybrid plants are a common recipient of these patents.

Trademarks

The USPTO will also register trademarks for words, names, symbols, devices, or any combination of these that identify, convey, and/or differentiate the goods or business of a person or business to the public. This can include distinguishing a product from those made or sold by other people. A trademark can also indicate the source of any goods created by the inventor. Even though some trademarks are limited in scope and highly recognizable like the Starbucks mermaid, they can also protect larger items like specific designs that identify a business. If a trademark is registered by the USPTO, it puts the public on constructive notice that you are currently the owner of the registered mark. This means if someone uses it without your express permission, known as infringement, you may file suit in court for monetary damages.

Copyrights

Unlike patents and trademarks, copyrights are registered by the Copyright Office of the Library of Congress and provide protection to the owner of an “original work of authorship.” The work may be a book, poem, movie, song, website, painting, jewelry design, fabric, architectural structure, or even computer software. However, it’s critical to understand that a copyright does not protect the functional elements or underlying of the work – only the original “expression” that is contained within the item. A copyright gives the originator or their assignee the exclusive legal right to print, publish, sell, perform, film, or record their work. It also gives them the right to authorize others to do the same with their protected creation. If another person does this without the copyright owner’s express authorization, they owner may sue the offender for copyright infringement.

New York Business Lawyers

Looking for a New York business attorney? MOWK Law can help with all your business needs and questions to make sure that you hard work and ideas are protected. Get in touch with us today to learn more.