Contract Consideration – FAQ

What does it mean for a contract to be not enforceable because of a lack of consideration? Answer: In order for a contract to be enforceable, the mutual promises of the parties must be supported by "consideration." Considerations means each party gives something of value to the other.  The reason that the courts and legislatures generally require some form of consideration is to insure that the promises being made are not merely a casual statement, and accident, or gratuitous – in short – to make sure the people making the agreement really mean it. Consideration looks at whether the parties have assumed an obligation on the condition of an act or forbearance of another. Except in cases of employment matters, Minnesota courts generally do not look at the adequacy of the consideration being offered – only whether some consideration has been exchanged. For written agreements, the court presumes valid consideration. While adequacy of consideration is not usually analyzed, vague or indefinite terms...
Read More

Minimizing Your Risk Related to Administrative Tasks and Payroll

Thinking of adding an employee but not sure how to handle the day to day administrative issues related to pay and insurance?   Employees are a responsibility for any business.  When you take one on, they may be there to make you money, but in return you have an obligation to treat them right.  As a result there are a variety of administrative and bureaucratic rules to help make sure things go smoothly. One option to consider to avoid this extra burden is to hire a reputable payroll services. On time payment and record keeping: While it may seem obvious, small business owners often forget that their employees expect to be paid on a regular schedule and may not care that the boss is on vacation and hasn't gotten around to writing out the checks.  Services handle this for their customers automatically and will mail out checks or make the appropriate online deposits upon request. Withholding: One major issue overlooked by many businesses...
Read More

Considerate Contracts

While it may seem like a simple question, sometimes its worth reviewing just the same – when is a contract a contract? General speaking it is when two or more parties exchange mutual promises. Often the determining factor is whether the mutual promises of the parties are supported by consideration. Consideration involves the giving of something of value, rather than a mere promise. The reason that the courts and legislatures generally require some form of consideration is to insure that the promises being made are not merely a casual statement, an accident, or gratuitous – in short – to make sure the people making the agreement really mean it. Consideration looks at whether the parties have assumed an obligation on the condition of an act or forbearance of another. Except in cases of employment matters, Minnesota courts generally do not look at the adequacy of the consideration being offered – only whether some consideration has been exchanged. For written agreements,...
Read More

Piercing the Corporate Veil in Minnesota

The term “piercing the veil” is a reference to a method of holding a company or individual responsible for the liabilities of a corporation or other business entity despite the company being a separate corporate entity with limitations on its liability.  Saint Paul attorney Jack Roberts on his Minnesota Business & Real Estate Law Blog recently had a great post laying out many of the issues related to piercing the corporate veil and some sound advice on preventing it from happening. Jack’s article can be found here....
Read More

8th Circuit Adopts Fair Housing Council CDA Analysis.

When Cozy Kitten Cattery spotted what it felt was defamatory comments concerning their business on complaintsboard.com it raised their hackles and the fur started flying.  After a series of complaints were filed in state and federal courts, the district court dismissed the complaint against InMotion after raising, Sue Sponte (on its own), the issue of whether 47 U.S.C. 230 of the Communications Decency Act shielded InMotion as the ISP which hosted the offending website. (on its own), the issue of whether 47 U.S.C. 230 of the Communications Decency Act shielded InMotion as the ISP which hosted the offending website. Noting that the case was the first opportunity for the 8th Circuit Court of Appeals to hear a case involving Section 230, the court adopted the reasoning of of the 9th Circuit that it interpreted as holding that CDA immunity did not apply to websites that are designed to encourage or facilitate defamatory, or other wrongful speech, however, CDA immunity does apply...
Read More

Ringtone Copyright Royalty Rates

"Answer the phone, answer the phone" - that's what my cell phone screams in the voice of my daughter whenever someone tries to reach me. I recorded it a while back and it amuses me and everyone around me every time it plays. What happens, however, when you record someone else's creative work as your ring tone?Under US copyright law, users of compositions must pay copyright owners when recording a composition. When the recording party and the copyright owner do not negotiate a license, Section 115 of the Copyright Act provides that the Copyright Royalty Board can establish a predefined rate which allows the recording party to record the composition without the explicit permission of the owner of the composition's copyright. In traditional recording settings, this is often refereed to as a mechanical.In the recent decision DC Circuit decision Recording Indus. Assn. of Am. v. Library of Cong., No. 09-1075 ruled that the Copyright...
Read More

Who can Sue when a Freelancer is Discriminated Against?

Freelancers take note: Under Minnesota Law if you have formed an LLC or other business entity and you experience discrimination at the hands of one of your clients, as an individual you cannot make a claim under Minnesota's Human Rights Act (Minn. Stat. § 363A.17 (2008)), which authorizes parties to a business contract to sue for business discrimination in the performance of that contract.The Minnesota Supreme Court reasoned in Krueger v. Zeman Construction Co. that the focus of the statue was the relationship of the parties, not on the individual subject to the discrimination. As a result, the court argued that an individual employee, even one that is a single member owner of an LLC, is not the intended beneficiary of the statute and therefore they cannot file a lawsuit in their individual capacity.While I generally believe freelancers should consider business entities like LLC over that of sole proprietorship, this case provides a stark example of how there...
Read More

Bringing Conciliation Court Cases

Conciliation court was created to allow citizens to bring legal actions for smaller claims that would normally be difficult to bring due to the expense and knowledge needed to bring a suit in district court. Generally, these courts allow individuals to bring claims of up to $7,500 ($4,000 in cases involving commercial consumer credit transaction), or order the return of property. However, these claims may not include claims for title to real estate, libel or slander, class actions or medical malpractice. Additionally, since these are state courts, they can not hear matters of federal law such as disputes over copyright ownership. They can, however, hear cases involving breach of contract that involves copyrighted material. This means that the conciliation court can not hear a case involving ownership of a copyright, but it can hear a case involving whether a party has paid what they owe for the creation of copyrighted material. An important thing to remember before you file a conciliation court...
Read More

Audit & Record Keeping Provisions

Whether you have partners, or are contracting for royalties from another party, one of the most common provisions in any licensing & partnership contracts is one that provides a means and method of keeping financial records of the project or business. The exact language will differ slightly depending on the specifics of your circumstances, but common terms will include what types of books are kept, how and when audits may occur, and a description of what is to happen in the event of a problem with the records.RecordsWhile there are a variety of record-keeping methods, typical contract provisions regarding record-keeping will simply provide that the books are complete and accurate. In most cases it is understood that the books will be kept in accordance with “generally accepted accounting principles.” Furthermore, in some circumstances, state statutes may regulate how the books are kept.AuditsOnce it is decided what and how records are kept, one of...
Read More

Tax Deductions for Creatives

As Tax day approaches its important to take into account targeted deductions that benefit Creatives. One such deduction is the Domestic Production Activities Deduction (AKA Section 199 deduction) which was meant to encourage U.S. job creation. The deduction was created in 2004 as a part of the American Jobs Creation Act of 2004 and is one of those nice benefits that is targeted at small businesses operating as sole proprietors, partnerships, LLC, or S Corps. So What? For many creative based businesses, this deduction may provide a significant deduction on gross income, based on the amount of W-2 wages spent in the production of their work. The deduction specifically singles out wages paid out in the sound recording, software (including websites), and film (excluding porn) industries, as well as producers of personal tangible items (clothing, books, etc.) for an additional tax credit against profits. What to do? Simple - if you are engaged in one of these categories, had a profit, and paid W-2...
Read More
12