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Innovative Legal Strategies

Howard County MD Business Law Blog

Legal options for dealing with an uncooperative business partner

Columbia business owners may be interested in some options available to deal with a partner that is not cooperating. Avoiding a deadlock can be accomplished in a few ways, depending on the circumstances.

Many small businesses are owned by a small number of people. This can spell trouble when one of those business partners is uncooperative or not performing. Resolving the situation can depend on two main factors. In business entities that are set up as partnerships or meant to act like a partnership, like LLCs, each partner is meant to have equal control of the business. This means that a majority vote of other partners may not be enough to solve the problem. In corporations, however, having a majority of owners may be enough to get around the lack of consent.

Breaches of contract in Maryland

Companies in the business of buying or selling goods often contract with one another using sales contracts. In such a contract, a seller will agree to provide a specified material or item by a certain date. In return, the buyer will agree to pay money, either as a lump sum payment or in agreed-upon installments. Although sales contracts may seem routine, they are legal documents and as such, may lead to negative consequences in the event a business violates their provisions.

When a contracting party breaches a sales agreement, the breach may be minor or material. Minor breaches are those that can easily be cured and most likely will not lead to litigation. Material breaches, however, are breaches that are so severe that the contract itself is broken. A material breach may lead to the other company's filing a breach of contract lawsuit against the breaching party.

How to buy a company in Maryland

A business is generally acquired in a friendly acquisition or in a hostile takeover. A friendly acquisition involves a buyer negotiating with a seller to be bought for an agreed price. In some cases, the buyer will purchase assets to take control of the company without the need for shareholder approval. However, an acquiring company may buy the acquired company's stock to complete the transaction.

In a hostile takeover, the acquiring company purchases the majority of the acquired company's stock. This makes the acquiring company the majority shareholder and gives it control of purchased company's board. Having control of the board gives the acquiring company effective control of the company regardless of what other shareholders or owners may feel about it. At least 30 days prior to the takeover occurring, a notice must be filed with the SEC.

Effective human resources policies for businesses in Maryland

If you own or manage a business in Maryland, you likely believe that a proactive approach may anticipate potential areas of conflict and could avoid protracted and costly litigation. Disputes cause by the actions of employees or disagreements with former employees are often particularly challenging, but they can often be prevented with clear policy and procedure guidelines and effective employment contracts.

You may be able to prevent many workplace disputes by providing employees with well defined boundaries. Access to the Internet is often necessary for employees to perform their duties, but malicious software can infect networks and impact entire organizations if this privilege is abused. The use of company email accounts may also lead to problems when employees voice controversial opinions or make disparaging comments about customers or suppliers.

Buyout agreements in Maryland

Buy-sell agreements, which are also called buyout agreements, are used in business structures with multiple shareholders as a means of passing shares from one shareholder to another. Depending on the size of the company and the type of corporation, buyout agreements may be more limiting or restrictive. These business planning agreements generally go into effect when events, such as the death of a shareholder, occur. The purpose of the agreement is to protect other shareholders from complications and to deal with the disbursement of assets held by the departing shareholder.

Broadly speaking, the events that may trigger a shareholder agreement include death, divorce, retirement, personal bankruptcy, incapacitation or disability, and termination of employment with a company. They determine a wide range of details, including whether the company must buy out the shareholder's stock, who may buy it, how to measure its value and how payment will be made.

Using a notary to avoid potential contract disputes

Business owners in Maryland will likely be involved in some sort of contract dispute at one time or another. While some of these disputes may be complex in nature and difficult to anticipate, others could be avoided by taking a few straightforward preventative steps. Individuals may sometimes attempt to avoid their contractual obligations by claiming that they never signed the document in the first place, and proving that they did could take time and cost money. This is why it may be prudent to have all signatures on a business contract notarized.

Notaries have a commission from state or county authorities to witness and acknowledge a signature. They check the identification of the individual signing the document and then sign the document themselves before affixing a seal. Should the individual later claim that they did not sign the contract, a notarized signature will usually be sufficient evidence for a court to consider the document valid.

Hormel Foods facing AgFeed lawsuit

Many Maryland residents and businesses have shown interest in the outcome of a lawsuit against Hormel Foods. The suit alleges that Hormel Foods did not disclose issues about a company responsible for raising the livestock used in their products.

The issues that lead to the suit dated back to 2010 when AgFeed Industries was in negotiations to buy M2P2, a pork supplier. Officials from Hormel Foods reportedly gave AgFeed Industries assurance that the company was in compliance with contracts. The suit alleges, however, that Hormel was aware of problems with M2P2 and filed a request for arbitration over a dispute about the reimbursement amount from Hormel. AgFeed Industries shareholders have stated that they would not have gone through with the purchase had they been aware of the M2P2 problems.

Confidentiality agreements can protect sensitive information

Maryland businesses who have important and sensitive information as part of their business process may be reluctant to engage in ventures with other companies. They may be afraid that their proprietary technology or information could be compromised. However, they may also need share that information with other parties. They may need consultation from an outside company or they may need to share that information as part of their sales process to a potential client. One effective way to manage this problem is with a confidentiality agreement.

A confidentiality agreement can help two businesses work together without fear of information being compromised. It can also reduce the risk of future business litigation. An agreement generally specifies who is disclosing the information and who is receiving it. It should also specify exactly which information is confidential and it should define exactly what the term confidential means. In some agreements, confidential could mean that the information has to stay within the company and out of public domain. In other agreements, terms could be more narrow and state that only certain departments or individuals can have access to the information.

Waiver of remedy for a breach of contract

Maryland business owners might be interested to learn about special circumstances when a breach of contract does not require a remedy. In general, a party who was involved in a contract that was breached by another party would be entitled to claim remedies for the material breach. However, the aggrieved party may waive its right to receive remedies in some instances.

One way that remedies for a breach of contract are waived is through a mutual agreement by both parties to the contract. After the breach occurs, the party making the breach and the aggrieved party may sign an agreement that assures no claim will arise as a result of the breach.

Enforcement of the ADA in Maryland

Employers in Maryland are required by federal law to comply with the Americans with Disabilities Act. The law allows employers to offer reasonable accommodations to employees who have a disability. Providing reasonable accommodations protects employers against employment litigation while also maintaining the civil rights of anyone with a disability. The law does provide exceptions for undue hardships regarding an employer's legal obligations to provide accommodations.

Under the federal employment law, a reasonable accommodation may include a change in the physical work environment or in the way that the workplace usually does things in order for an applicant or employee to function in the workplace. The three levels of reasonable accommodation include modifications to the job application process, modifications to the work environment and provision of equal benefits and privileges as employees without disabilities. Examples of what a reasonable accommodation could include are modification of work schedules and enhancing facilities access, such as building handicapped ramps.