Sign Arkansas Banking Contract Myself

Industry sign banking arkansas contract myself

welcome everybody to contracting collection issues for the Arkansas small business today's panelist is Ellen mizani of the mizani firm in Fayetteville Arkansas Alan is a solo practitioner at the mizani firm in Fayetteville Arkansas and he's licensed to practice in Arkansas and his practice areas include entity consultation and formation business and commercial litigation contracts and real estate law Alan focuses a good deal of his practice in consulting business clients who are looking to buy and sell their businesses assisting them determining proper proper business valuation lining up potential buyers and sellers as well as drafting necessary documentation to ensure a smooth friends transaction ellen has a bachelor's degree in international business from Arkansas State University and a master's degree in business administration from the Sam M Walton College of Business after obtaining his MBA Alan attended the University of Arkansas school of law in Fayetteville and received a juris doctorate and has been practicing law for the last 11 years consisting of both litigation and transactional cases Wow take it away Alan Thank You Timothy I appreciate it and I appreciate everybody joining us this morning for contracts and collection collection issues I'm coming to you as Timothy said today from Fayetteville what appears to be a sunny beautiful day here in Fayetteville and go into straight into the you let's see you'll see on here my email address is Alan mizani @ yahoo.com and that is my personal email address currently I'm a just left of the gun law firm and set up my own law firm so I'm still switching over the IT somewhat so right now the the best place if anybody has questions or needs to get ahold of me after the webinar today then the Alan mazzanti @ yahoo.com is probably the best place to get me right now so with that being said let's go into our main topics the first topic we're going to hit is going to be contracts and collection issues these are the ones that I see pop up most in my practice and that I have most of my clients that come in usually have these these issues so that's this is going to be one that we spend a bit of time today on and I'll emphasize but other than that will go into non-compete agreements as you can imagine these seem to be in the news a lot and a lot of people have them in their employment contracts and they don't really understand it or understand you know what makes a good one or what makes the bad one or what makes it enforceable or unenforceable so we'll go through that a little bit today and hopefully everybody will have a much better understanding of those those types of agreements when we get done the third topic is going to be curing clauses some of you may know what curing clauses are I personally think they're very beneficial to have in any contract and most of the contracts that I draft you know especially if you have a servicing company that actually goes out and provides a service i always put those in there and we'll discuss a little bit about that in more of the details on that here in a few minutes so what are the most frequent ways small business owners get themselves into trouble with contracts for goods and services that one is obviously they don't get it in writing this is by far in a way the the biggest thing that I deal with it is an attorney when I have a client come in because I can't tell you how many times I've had clients come in and they always have a sad story about trusting the customer and in providing the service without a contract and you know when it goes south you know they're in a bad situation and they need help but it's frustrating because your hands are tied as an attorney because you don't have a document you don't have a writing that you can rely on to to get the relief that your client needs and in that and that's a that's the biggest one and we'll spend quite a bit of time on that the next one is they don't get the agreement in the correct names of the individuals or businesses this this is another problem you know you you spent money going to an attorney to get your your business set up correctly then you want to make sure that that you don't do something while contracting that's going to actually limit your the liability that that you've you've kind of sheltered by starting the business and getting into the right entity and then you could expose yourself personally to the debts if you don't get the contract if you're not listed right on the contract the the next one they can't prove the individual or business ever saw her accepted agreement the agreement so we'll kind of touch on that again as well later on going into the contracts and like I indicated insufficient evidence is single biggest issue you face as an attorney when a client comes into your office needing help so this is it this is something that I always tell tell my clients and I usually especially my business clients that come in and don't have a good contract I always talk to them and try to urge them to get a good contract and make sure every every time they go out and then they go to to a customer they get a contract with them if it if it involves a service I usually always tell them it's not what happened or what was agreed to that's important the important question especially when they come into my office is what can we prove or or better what what can we improve was agreed to by the parties and again that all comes down to that writing you know i'll mention for the first time I in in you just heard me talk about the importance of contracts but it doesn't always have to be a contract and I'll touch on this more later as well but you know get something is even if you get a email follow-up in writing or you get a text message from them verifying you know the the price you agree they agreed to pay you for the service or even a scribble on a napkin will do something that you can show the judge or a jury in a courtroom if if something happens and there's a dispute over what was agreed to so one of the questions I get a lot do you have to get a contract or agreement in writing for to be legally enforceable and this is usually i usually do do this presentation live and it's it's a little easier because people can actually answer and i can take a polling audience so i'll just play in my mind and see everybody's answers i guess the first day you're in law school every law students taught that the answer to almost any question is it depends I and that's the exact answer to this question dude does it have to be in writing to be legally enforceable so I think with that I want to go into an example and I've tried to put in some examples in here that to kind of break it up and kind of give you a basis of of context so and I'll read through this year so let's say your client Tim walks into your office and tells you he and his neighbor bill have had cattle farms next to each other in Washington County for 50 years recently one of Tim's ponds dried up and his cattle were beginning to die because they couldn't get enough water so bill agreed to sell ten acres a piece of land with a pond on it to Tim for a hundred thousand dollars on December 31st 2015 now this agreement was heard by numerous parties and they heard bill tell Tim he would selling the land however now bill is refusing to sell the land to Tim and Tim wants to sue for specific performance and mcneil follow through on his agreement so let's let's take a look at this this situation you know the parties have obviously made a verbal agreement between themselves so you know would you think this would be enforceable or not i usually get some mixed responses doing this in a live seminar and I get pretty decent arguments on both sides i get several people that let's say enforceable on they'll you know read through this and allude to the fact that it was an oral agreement between the parties and it was even witnessed by several witnesses to the agreement between the parties usually get some unenforceable responses and say yeah but you know nothing was in writing here so go into it the answer is unenforceable the biggest reason why this is unenforceable is based on the statute of frauds okay so some of you may be familiar with the statute of frauds some of you may not the statute of pursuant to statute of frauds certain contracts must be in writing in order to be enforceable now I will make a small point here in that example that I gave it that agreement would be unenforceable as to you know a action for specific performance actually making the land transfer happen but now that's not to say in that example Tim may still be able to prevail in a equitable lawsuit you know claiming some equitable theories such as promissory estoppel or detrimental alliance those those theories essentially rely on the fact that you know a promise was was made one of the parties relied on it to their detriment and you know some type of money damages could be could be available in that situation but as far as specific performance goes based on the statute of frauds judge would not force the land sale so that that's a small distinction there but I wanted to at least make that note so going to the statute of frauds and a little more about that contracts that must be in writing pursuant to the statute of frauds include as the example just a few minutes ago real estate sales also agreements to pay someone else's debts real estate leases for longer than one year contracts that will last longer than the life of the party performing the contract and transfers a property at death of the party performing the contract now the the theory behind all of this it involves somewhat equity and the fact that you know the law looks at this and says you know if if the if the transaction involves a big asset like land or if it involves a deal that is going to take a substantial amount of time to perform then you have to look at witnesses and their memories fade and they forget they forgive the details of the contract or agreement that they made between them and in those situations the law prefers to have that in writing and actually requires it based on the statute of frauds so a common question that I get from my business clots is an oral contract ever okay if so then how do i as a business owner know if the contract or agreement should be in writing and this is a very good question and it's it's something that is not necessarily a clear-cut lon my rule of thumb that always tell my clients is you know if the agreement is for you for someone to provide reoccurring services to your business then it's a good idea to get it in writing for example nightly janitorial services now one one of the things that that was not necessarily my bio is the fact that my wife and I actually own a preschool here in Fayetteville and so a lot of the examples that I've used in my presentation I've actually i extrapolated out of my experiences with the preschool and we did have nightly janitorial services or still do but we had some issues with that and we've actually had three or four different companies over the last five years and and they always they always want to contract and obviously I'm not opposed to that but the janitorial services will want a contract because they'll want you to commit to at least 8 12 months or a period of time and that always is concerning for me and for my clients one when we look over these contracts and you want to make sure if you're doing this and you're getting this contract you want to make sure you you get the scope of the services meaning you know what all is going to be cleaned how many days a week is it going to be cleaned you know are they going to sweep them off every day or every other day make sure that you get the scope of work clearly defined because you know if you have that contract in front of you and and you sign it and they are they're not living up to their into the bargain then if you don't have all of that clearly defined you you won't be able to get rid of them and that's something that I would always I've had to do two or three different times as go to them and say based on this scope of work you weren't performing correctly you weren't getting the job done and and that gave me an avenue to terminate the contract so that's you know that's if you have something for reoccurring services like that in a lot of small business owners do then that's that's a big plus if you make sure you get the scope well defined also if the agreement involves a substantial amount of money get it in writing the follow-up question to that is always what's a substantial amount of money and it's a good question I always tell my clients a substantial amount of money is any amount of money that you would file a lawsuit to collect so if if that's you know five hundred dollars or a thousand dollars or ten thousand dollars whatever you know if there was a a breach of that contract what amount would you feel comfortable actually getting an attorney and filing a lawsuit and going and trying to collect from them this was back if you're a company that provides services to your customers you want to get it in writing this you know if you're some roofing company you you definitely want to get a contract with them that again describes the materials to be used to describes the the services and how the job will get done and then I told you one of the aspects or the topics that will cover will be curing periods and we will get to that here in just a few minutes and these are just a few obviously there's there's thousands of different situations where you want to get a contract or get good a get a writing again like I said before it does not have to always be a contract it could be an email confirmation or it could be a text or something that reduces the terms of the agreement into written form alright so if you take nothing else away from this today remember this every agreement you make is a small business owner with customers or companies should be evidenced by some type of writing again I keep going back to that because that's that's the most important thing it doesn't mean you have to have an attorney draft a contract forever every agreement you make with somebody obviously that would be very cost prohibitive but get some type of writing again an email confirmation a text confirmation a follow-up letter jotting it down on a napkin some type of writing is very very important one thing that I always tell my client is to get into the habit after every important verbal conversation with a client or even another company maybe it's a vendor that provides you know some type of service or good to your small business after every important conversation with them get in the habit of sending a follow-up confirmation just to make sure you you know exactly what was stated for even for your own records for your future follow-up you you may six months down a load Road be thinking you know how much did he say he was going to charge me for this or you know how many times a week was he supposed to come you know you always want to have that confirmation in your records I told you that my wife and I that preschool and this was one of the hardest things that that I had to convince her to do she would come to me several times with you know stories of her conversations with companies that for whatever reason didn't do what they said they were going to do but obviously at that point if you don't have some type of confirmation or a follow-up there's not a whole lot you can do you just because you're going to you're not going to the same representative or you're not going to get the same person with that company if it's a larger company twice so getting that confirmation follow-up confirmation as far as an email is very important in that situation and remember an ounce of prevention is better than a pound of cure that's always a saying that I've always liked especially in my profession going into kind of an example here you know if you're a roofing company you agree with their prospective customer to reduce roof price you know let's let's say you quote you're a customer on putting the roof on when you quote them five thousand dollars and the customer comes back and says you know that's that's a little bit more than I wanted to pay can you use lower grade of shingle and do it for three thousand and you know wanting the work you agree to do it and you use the lower grade shingles instead of the mid grade shingles well in that case often times and I've actually had that case before where there was not a writing of the work order change and of course my client went ahead and performed the services put the roof on and the customer just didn't want to pay which obviously that that happens so the customer comes back and says well you know you didn't do what you were supposed to do you used a low-grade shingles which is not what you quoted me and even though they had agreed to it the customer tried to get out of paying for it by using that the problem the problem was my client didn't get it in writing that was a work order change that that should have been reduced to a writing to show that they the agreement of the parties to reduce the price for reducing the grade of shingles used to perform the work and that was that was than we had to fight quite a long time for and ended up having to settle and my client actually had to take a lesser amount then they probably should have because they didn't have the writing to to prove that they had made the alternative agreement with them so that's that that's how you know getting that writing can mean the difference between you know having to settle for something lesser than you think you were owed and being able to go to court and get everything that you're reserved so we're going to change topics a little bit and go to how you're listed in reference in a contract is a big deal and it is I said earlier that you know if you're going to go to an attorney you're going to go through your business needs to figure out exactly what type of entity is best for you and your business once you've done that and most people do that too to limit their liability to only their business assets and then they shield their personal assets and once they do that it's it's it's a good thing but if if you're contracting and you're not paying attention to how your referenced in the contract you can completely undermine everything that was done and actually expose yourself to personal liability based on the way that you're listed on the contract and in a lot of times you know that how you're listed is something that a lot of people just kind of gloss over and don't pay a lot of attention to but I'm going to show you a couple of examples of how that can how that can really make be a big deal alright so so how do you do that if if you do not consistently keep yourself separate from your company then your creditors may be able to what we call piercing the corporate veil which is the the court could allow a creditor to actually go through the the liability protection of your company and go after your personal assets that's something that obviously nobody wants but you need to make sure that that that you're dealing in in business in a in a manner that prevents that so we're going to go through some of those I want to make sure that's that's clear and everybody understands that premise all right so I kind of what I did is I went through and I did a couple of simple contracts here's one that that I did and I'll read it this agreement for this is a contract that I did and it's just a sample again this isn't a real one this is just something I typed up for the purpose of an example this agreement for vending services hereinafter referred to as agreement it's executed on the first day of April 2015 by and between John Doe and doe retail store LLC hereinafter referred to as vendee and coke company hereinafter referred to as bend or the sale agreement shall be effective when all relevant parties have a fixed their signatures here to which date shall hereinafter be referred to as effective date of the sale agreement whereas bindi is the owner-operator of a retail store that wishes to enter into an agreement to host coke machines at their store location pursuant to the terms and conditions stated herein you know the terms pretty simple then vendor or shall deliver nd3 coke machines to put in their store after VIN door delivers the coke machines Vindi is responsible to protect them from vandalism and then you have your your signature blocks with John Doe and then coke company so after reading that a couple of things that stand out that that would should make you pause to Tucson that and and the next slide here I've got highlighted some of that language now the agreement is by in between John Doe and no retail stores that action the way the parties are listed on that John Doe personally is actually becoming a party to this agreement because they are listed as themselves personally and the store so you know let's say now that something happens in the store and the coke machines are destroyed you know and there's you know five or ten thousand dollars worth of damage coke wants to go and Sue John Doe and no retail stores well at this point since John Doe is listed on the contract individually and even the signature block you'll see at the bottom of the contract they're under signatures it's just john doe coke would have a very good chance of going to court and actually getting a judgment against both him personally and all of his personal assets as well as any business assets that the dough retail store LLC may have so that's you know this this is an example of how you're identified on a contract can really make a difference as far as liability goes and you'll want to make sure you don't just gloss over those first few lines and you know start looking at the terms and conditions right off because how you're listed can be a big deal so the the third one here is is how it how it should be should the agreement should be between doe retail stores LLC as the vendee and then coke is the vin door and then down in the signature you'll see it has dough retail stores LLC by John Doe representative so that tells you that John Doe is is signing that contract in his representative capacity to know retail stores and he is not signing this agreement in a personal capacity so the the other two were kind of ways not to do it things to look out for and this third example is is the the proper way that it should be listed on the contract so you don't have personal liability again talking about piercing the corporate veil this you know when I set up a a company for somebody I usually kind of have a checklist of things to go over with them to make sure they understand so that they don't set themselves up for a possible attempt by a creditor to get to their personal assets which is what piercing the corporate veil means allowing the creditor to get to the debtors personal funds the biggest one and one that a lot of small business owners don't think about when they're setting up their business is setting up their operating account and making sure that all business assets in monies go into the operating account a lot of you know the depositing company funds into a personal bank account is one method or one thing that creditors will try to show a court to allow them to get to the the the business owners personal funds if there's insufficient funds in the corporate account and if the business owner has you know deposited personal funds in the account or withdrawn personal funds or or let's say you're you're the roofing company again that just got five thousand dollars or putting on a roof and the customer hands you a check for five thousand dollars and you go immediately deposit into your personal bank account well the court mates may say that you know there's no distinction between the corporation and you personally that you're using you know your personal bank account for both your corporation and your personal assets and they've become intermingled and the court can allow the creditor to go after your entire the entire amount or however much money you have deposited into the account your personal account the other way is entering to verbal contracts where the other party believes they are contracting with you personally if you're a roofing company and you go out and you talk to a customer and you don't ever identify what company you're with and you don't have a actual contract or a proposal or a work order or anything that shows your company name and the person's person thinks you're just a sole proprietor and you're you're going to put on the work the roof personally the court may say you know you didn't draw that line between yourself personally and your business and that's another way that they can pierce the corporate veil the last one at least that I'll talk about there's obviously numerous ways but the last one that I'll mention here is transferring assets from the company to owners or share holder's personally at anything less than fair market value an example of that is you know if the company owns a truck and that the company purchased the truck brand new last year for forty thousand dollars and then the company that that you're the majority shareholder of transfers it to you for a dollar you know the the court can look at that and say that it was a sham deal and that you know you're using the corporation personally and there's no distinction between you personally and the company anymore and allow predators to go after your personal assets so that those are those are things you want to keep in mind especially when you set up a new entity you want to make sure that you're running the entity correctly to continue to limit your personal liability I want to go over to the collection side now and to collect or not to collect that is the question so clients come in to me all the time tell me about how one of their clients did not pay but they listen to me and they have a contract and they believe everything is going to be okay well that very well may be true and I'll always tell them I'm certainly very happy that they listen to me and get a contract but is it a smart move to try to collect so the first question or the first issue that I always go over with clients that they're coming into my office that have customers that that haven't paid is you know do you want to try to collect and then that's not always always a yes and it's not always a slam dunk many of times my client knows that you know their customer who's you know who's that who's the better in this situation they have no money or assets and a lot of times they still want to assume they want to make sure you know they go to court they get a judgment regardless if the debtor has any assets to click on or not you know my advice is if you know the debtor is a turnip then do not throw good money after bad you can't get blood from a turnip and and this is because as an attorney there's there's nothing more unrewarding than you know a client coming in that was stiffed on an invoice that wants to collect and you spend time and resources and spend their money and getting them the judgment when you know that there's no way they'll ever be able to collect on it so that's that's usually what I'll tell them that they're you know that's an emotional decision they're making wanting to you know collect out of spite just to to make the the debtors life more difficult which you know is an emotional response and it's not so much a business response because all you're doing is you're throwing good money at bad at that point so you know the first decision is do we think we can collect from our judgment and and that sometimes takes some investigative work you know trying to do an asset search or what have you to see what the likelihood that you can actually collect against the debtor is now if you sudden you'll forward the collections having an actual contract in writing is it puts you way ahead of the game and you know that ties back to the first part of the presentation of always get something in writing get the terms in writing something that you can take to court you know with a written contract you can send a copy of the contract to the customer with a letter reminding him of her of the actual agreement so and that's actually the best way if you can get the customer to pay without actually having to get an attorney or actually having to go to court and spend any additional money this is the best way if you have a contract and you have something that you can rely on in the letter that you're sending to your customer who hasn't paid and and it can be very effective I have you know some class come in and they want me to to send the letter and I always do you know that they want to what would I call a nastygram to the debtor from on an legal letter head with the contract to you know to show the debtor that you're serious that you've hired an attorney that you're going to go forward with this if they don't pay and a lot of times they do but again if you don't have that contract to give your attorney you're going to severely hamstring him on you know being able to show what the agreement was and showing the debtor that you're serious as far as collections go another thing you can do if you have if you actually have the contract is you can attach it to court pleadings or bring it to court to show the judge the relief that to which you're entitled in in contracts this is you know a little bit outside the scope of our discussion today but you can get pre and post-judgment interest you can get attorneys fees you can get filing fees you can get court costs and a lot of that stuff is written into the contracts and again isn't the reason you want to have a good contract is it will specifically spell out all those things and there won't be any issues as far as collecting those items also if you have the contract and you show the court the actual contract that puts the the ball in the debtors court to show that to show the the judge or the court why the judge should not enforce their agreement so that puts you in a much better position when trying to collect another thing that that you want to think about is your contract should specify the state law and court system to be used in collections and you obviously want to be want the law and the course of your state you want to make it easier for you in court if you have to sue somebody and you want to make it more difficult for the other party alright so what if you get a judgment well if it's a local person or company then you can start trying to collect immediately the judgment will actually attached to the debtors property within the county that the judgment is issued but if it's an out-of-state person or company then you'll have to register that judgment in the state as a foreign judgment that's that's something that is is not the easiest thing in the world to do it's it's you most likely will need an attorney to do that it's very it's the easiest way to say it is it's very technical on exactly how it has to be done and you want to make sure it's done right and that your judgment actually attaches so the best way to do that is actually get an attorney to get it filed as a foreign judgment so clients will ask what their collection options are any Arkansas judgment again will automatically attach the property in the debtors name the judgment is good for many years and if they try to sell real estate in that state then they will have the usually what happens is the closing company will contact you and to satisfy the judgment typically the judgment will remain in full force effect for a period of ten years at least in Arkansas I'm not sure where everybody out there is from but at least in Arkansas typically your judgments good for 10 years after that you can extend or renew the judgment but it requires you to go back to court in in order to do that another option is garnishment you know once you have the the judgment creditors can garnish the debtors wages and or bank accounts that's subject to certain federal and state limitations such as minimum wage limitations and obviously you have certain homestead exemptions that apply to that but most of that is is pursuant to the garnishment statute especially the garnishment on this one's collection law is very technical and requires various notices to be issued throughout the process the garnishment is averted is the same way it's very there's a there's a way to do it you have to provide the defend nt with notices that you are actually going to garnish his employer or you're going to garnish an asset like money and make and a bank account typically even if you obtain a judgment on your own it's better to find an attorney who's willing to do collections on a percentage of money collected I typically do collections on a percentage of basis for my clients you know if they hire me to obtain the original judgment a lot of times attorneys don't want to take these these types of debt collections on a percentage basis I just due to the fact that it's it's often very difficult to get money out of debtors and there's there's other avenues you could use debt collection companies and what have you that that also can assist you in that process so that takes us into non-compete agreements we're running kind of way behind schedule here so we'll kind of go through pretty quickly here so we'll Arkansas courts enforce non-compete agreements again the answer is it depends what courts have said is they'll enforce reasonable non-compete agreements and you know the question becomes is is what's reasonable and the courts will actually determine what's reasonable and it'll be done on a case-by-case basis they look at the facts to determine the best way to do that there is no Arkansas statute that governs non-compete agreements it's completely a case-by-case basis for the corpse but the course have stated that you know any agreement that restrains trade and or competition they will view with a skeptical eye and what that means is the courts are going to make sure that the agreement the non-compete is fair and it's not detrimental to the employee I when looking to enforce it I and then also any ambiguity is construed against the drafter which typically you're your non-competes will be drafted by the employer so it's up to the employer to make sure that their agreement is good and that the court will actually enforce it again there's no hard and fast lines as to you know that i can give you that that says if your non-compete has x y and z it will be upheld the court is going to look at it on a case-by-case basis so looking let's look at a couple of examples real quick Allan Coe is in our company the designs manufactures and sells which madhu's in fayetteville ted is an industrial engineer at Allan Coe and signs a non-compete agree with the state Ted shall not for a period of two years following the termination of his employment either directly or indirectly render services to a business competitor of Allen COE again this is a non-compete ten years later Ted begins to fear he might I'll be replaced at Allen Coe and Ted then takes a job at Allen Coast competitor where he starts immediately Allen COE filed suit and claimed Ted violated his non-compete agreement and should pay Allen COE damages so in this situation is the non-compete enforceable I in this instant it would be unenforceable and that takes us into our first relevant factor of not i have non-competes is the reasonableness as to whether the non-compete has a geographical limitation so that's the first thing the court is going to look at when it looks at your non-compete is you know is there a geographical limitation that is reasonable and if not then they're going to say it's unenforceable again in that situation Allen ko's non-compete did not state any type of geographical limitation thus the court found it was over broad and again I'm going pretty quickly through these slides as we're kind of running out of time another example on this one Allen Coe is a company that sells liquid feed to farmers Ted only has a high school diploma and no other marketable skills whatsoever Ted is a salesman for Allen COE who goes around and tries to convince farmers to use Allen ko's liquid feed product Ted signs a non-compete that states upon the termination of employment Ted shall not compete with Allen COE for a period of two years within 20 miles of Washington County and then that one would be unenforceable as well in that case and that that's a pulled out of Arkansas case law the court actually cited in that case that Ted only had a high school education and no other marketable skills other than selling liquid feed and thus it would severely restrict Ted's ability to earn a living thus the two-year restriction was overly broad in that case now I want to point out there that I've seen numerous cases on the other on the flip side of that that has had a non-compete with a two-year restriction on that was upheld and was enforceable and it takes me back to my point that it all of these cases are going to be determined on a case-by-case basis the court is going to look at the facts and apply the facts to the case law and into the the facts of your case to determine whether or not it's reasonable in this one the two-year was not reasonable because Ted had no other marketable skills so that's the second factor that the courts have put out there is the time duration of the non-compete and it has to be it has to be reasonable all right the last example here Allen Coe is an insurance company that sells personal insurance policies to Washington County Ted is an employee of Allen Coe and was sent to receive specialized sales training upon hire Ted is privy to all of Allen Coast customer lists and calls on these customers regularly Ted signed a non-compete that stated upon termination of employment Ted is not solicited any Allen COE customer Washington County which he previously service in out hit with Allen COE so would this be and that one would be unenforceable to Argus all courts have consistently held that they will look at three main factors when looking at a non-compete agreement again the geographic area limitation limited time duration and the last one was the legitimate business interest to protect they said that there was not an actual business interest to protect because the insurance policies one was a personal policy and the other one was commercial so there was no legitimate business interest to protect in the commercial policy check in time do we want to do okay alright so when drafting non convince you want to be careful you don't want to draft it too narrowly because you may actually have a actual legitimate business interests worth protecting in your in your business but you don't want it to be too broad either because the court may deem it to be you know unreasonable if it restrains trade or competition and this could be unenforceable so that takes this into the last area that I'm going to hit again rather briefly and that securing causes what is a curing calls a curing clause is a contractual right given to the seller to investigate and fix or cure any issues that clients may have with the service or product provided I always try to give my clients to especially in the services industry to put in Kurt curing clauses because it's it sets out a time frame and a process for disputes and if the customer does not dispute the the the services that were provided within those time frames it's it's an added protection to the business especially if you have to go to court all right so why half during clauses the two main reasons to give you a chance to head off problems without being blindsided by lawsuit I if you have a cheering clause the the client actually has to give you notice of a dispute before they can actually go sue you they have to give you time to cure the whatever the alleged problem is before they can actually go to court and sue you based on the curing clause in the contract the other one is to prevent fraudulent claims by customers who simply don't want to pay their bills in anybody that has a services contract or services company has run into that where you'll do work for somebody and the customer just simply doesn't want to pay their bill well if you have that curing clause in your contract it it makes them immediately tell you about any issues they're having or if they're any disputes as far as quality goes they can't just wait a few months and and not send in an invoice then all of a sudden on down the line say well I didn't like the way you did it so a curing clause in your contract will help prevent that also and I believe everybody will get copy of the slides here's some some general curing period language that that I've kind of typed up and this is kind of a generalized language that people can look at to kind of understand exactly how you word and how you organize a cheering period Klaus again the curing clause puts a responsibility on the client to inspect the services or product and notify you if they believe a issue exists and then provides a reasonable procedure for taking care of those issues okay so in summary if you're making an agreements with clients or customers always get it in writing that was the first part of the presentation some type of writing get a letter email text again a scribble on a napkin something reduced to writing if you're an employer if you want to make your employees on a non-compete you must consider those three factors that we went over the geographic limitation the time duration limitation and the legitimate business interest those are the three things that courts are going to look at when deciding whether or not to uphold your non-compete agreement and then make sure you have you as a client and I want to make sure you have a curing clause in your contract especially if you're providing services I prevent you from getting blindsided by lawsuit limits customers fraudulent claims to avoid having to pay your bill and I think that brings us all to the to a close to a very quick close all right I don't know thank you very much Alan there that was a wonderful presentation we've got a couple questions that are have been waiting and just want to let everybody remind everybody again that today's webinar is brought to you by the University of Arkansas a SBT DC office and we do have two questions Patty's been waiting very patiently to ask you and I'm going to queue up a slide here