California Business Lawyer Blog

Are you having problems with your mortgage payments since you have been delayed on paying them? Or you might have doubts that you can have problems on settling your monthly dues in the coming days? Well, if you are currently on this state, then you are on the verge of welcoming foreclosure right in front of your door step. But there can be so many ways on how to prevent this from happening, and that is to opt for a short sale.

Now, what is this short sale all about? It is a given fact that foreclosure is the last thing that a struggling homeowner would want to happen to his property. When you have already been failing to settling your dues because of some unexpected happenings in your life, you can always open it to your lender and offer to do a short sale instead.

Short sale describes a property that is being sold at a price that is lower than the outstanding balance of the owner. This is like asking permission from the bank of the lender to dispose the property at a low value. The profit for this transaction will be used to settle the debt. Getting their approval to do a short sale transaction is just like giving you a reward that you exactly need as of the moment. Isn't it very fulfilling?

However, it is always not a happy ending for these poor homeowners since some lenders do not allow this arrangement. Alternatively, this option is not only good for those negligent borrowers. There are particular requisites before the lenders allow short sale to take place. There is a need for the borrowers to prove to the bank or lending company that they are indeed qualified for short sale. But take note, the process is definitely not as easy as you think.

Short sale does not only benefit the seller but the buyer and other parties involved. For most real estate investors, this is one of the most practical options for everybody.

For the two parties the seller and borrower, it can settle the remaining credit balance. And you can also stay away from getting a foreclosure. Hence, it can save you from staining your reputation because you are evicted from your house due to your own negligence.

Aside from that, lenders are also satisfied to receive the payment for the overdue balance instead of spending more for possible foreclosure procedure. This is a better option than selling the house through an auction. There is a tendency that the property will only sleep in the market for a long time.

Home buyers also love to invest on short sale properties since they come out cheaper than a regular house. They can have a chance to check out the place thoroughly before they finally decide to buy it.

Of course, you can not deny that opting for short sale will give you negative impact especially in your credit rating. This is just like a foreclosure but not that worst. But do not feel too bad since there are some considerations. If the seller decided to do a short sale but did not fail in his payments, you can have a stable credit standing.

However, if it is made due to several failed payments, this will surely leave a terrible effect to your credit record. Even if you have settled you debt, it can still show a negative impression to your reputation as a borrower. So always be responsible in your finances to prevent getting into trouble such as this.

Continue reading "Short Sales: What Are They All About???" »

Every business should protect proprietary information when dealing with independent contractors, vendors and other businesses. The best way to do this is to use a non-disclosure agreement, often referred to as an "NDA."

What is an NDA?

An NDA is an agreement between two parties to protect confidential information disclosed in a business transaction. The proprietary information can include business methods, finances, client lists, and anything that isn't already readily available in the public arena. If a party subsequently breaches the NDA, the injured party can sue for damages, an injunction against further disclosure and attorney's fees.

Directional NDA

In many situations, only one party requires the protection provided by an NDA. If you invent a new product, you are going to need an NDA from manufacturers, distributors, etc., before you discuss the product with them. While this may seem like common sense, most businesses fail to carry the thought through to their daily activities.

Practically every business hires independent contractors, but they rarely obtain NDAs prior to disclosing information to the contractors. For example, do you use third parties to create or maintain your websites? Did you obtain NDAs from any of them? If not, what's to keep that party from using your business methods on other sites? A directional NDA can keep this from occurring.

Mutual NDA

As the name suggest, a mutual NDA allows two parties to protect confidential information. The mutual NDA is typically used when two businesses are negotiating a joint venture. Each party must disclose enough information to make the negotiations viable, but neither wants that information made public if the negotiations fail. If negotiations go well, additional non-disclosure information will be incorporated into the joint venture agreement to protect additional information revealed during the joint venture.

Refusing to Sign an NDA

Alarms and warning lights should go off if a party refuses to sign your NDA. Unless they can provide a very compelling reason for the refusal, you should walk away from the business relationship.

When an NDA isn't really an NDA

Just because a document is titled, "Non-Disclosure Agreement", does not mean it provides you with protection. You should ALWAYS read the language of an NDA because the document may establish that you are WAIVING all confidentiality rights. The waiver might be very direct and read something like, "The disclosure of information pursuant to this Agreement shall not be considered confidential." Alternatively, the language may be more indirect and read, "The parties acknowledge and agree that all information exchanged pursuant to this agreement has previously been established in public forums." Regardless, the "reverse NDAs" strip you of protection and should not be signed.

Continue reading "Non-Disclosure Agreements Useful In Protecting Confidential Business Information" »

The Commercial Collection Agency Association (CCAA) reported that its members received a record volume of business-to-business accounts for collection in 2009.

Emil Hartleb, Executive Director of CCAA reported that in 2009 CCAA members received $17, 762,139,514 in accounts placed for collection.

This represents an increase of 33.4 percent over 2008. Account placement in 2008 held the previous record, $13,311,932,553.

Hartleb pointed out that the gain in placement for the Fourth Quarter of 2009 compared to the same quarter in 2008 was particularly strong registering a gain of over 48 percent.

He indicated that the problems in the economy's business sector are not behind us yet, particularly for small and medium sized businesses.

In addition to reporting their account placement statistics, members are surveyed quarterly on their outlook for account placement and the collectability of that placement. Hartleb stated that in the survey conducted for the Fourth Quarter of 2009, 70 percent of CCAA's membership believed that a lackluster economy, marked by high levels of account placement and declining collectability, will continue for at least the next six months. This is an increase of approximately 27 percent from the Third Quarter Survey where 55 percent of the CCAA membership believed that account placement would continue to rise and collectability decline.

Continue reading "ACCOUNTS PLACED WITH COLLECTION AGENCIES SET A NEW RECORD" »

The Ninth Circuit affirmed the district court's ruling in Office Depot v.
Zuccarini agreeing that a creditor may levy against a domain name in the jurisdiction
where the domain name registry is located. The decision is significant for two
reasons. First, it affirms (or reaffirms) that domain names are property
subject to the claims of creditors. Second, it allows creditors to proceed
against domain names where the registry is located, thus allowing creditors to
proceed against domain names in one proceeding and more importantly levy
against domain names located abroad (where the registry is located in the
United States). Overall, this makes getting at a domain name much easier for
creditors says California Collection Attorney Steven C. Peck.

Background: Office Depot originally obtained a judgment against frequent cybersquatting defendant John Zuccarini. Office Depot then assigned the judgment to DS Holdings. Office Depot obtained the judgment in 2000 and it's surprising that 10 years later the judgment is finally being enforced against something. Although Zuccarini is proceeding pro se, it seems
like he was or became well versed in putting up roadblocks and delaying resolution of the litigation.

DS went after 190 .com domain names that were registered in Zuccarini's
name. DS originally tried unsuccessfully to have the domain names transferred
directly to it. (This was the technique successfully used by the plaintiff in Bosh
v. Zavala.) Later, DS sought to have a receiver appointed over the domain
names. The district court granted DS's request to have the receiver appointed,
and Zuccarini appealed. Zuccarini's appeal focused on whether it was proper to
appoint the receiver in the Northern District of California, since the domain
names were not necessarily "located" there.
The court's ruling: The court runs through basic principles
of in rem jurisdiction and what rules apply. The court then looks to federal
rules to determine where the receiver should be appointed in this case. Finding
no applicable federal rule, the court looks to California law. California law
provides that a writ of execution may be issued "in the county where the
levy is to be made." With this in the background, the two questions
presented by the court are: (1) "are domain names property that is subject
to execution?" and (2) "if so, where are the domain names located for
purposes of execution?"

With respect to the first question, the court cites to Kremen v. Cohen, and
easily concludes that (under California law) "domain names are intangible
property subject to a writ of execution." Kremen undermined Network
Solutions, Inc. v. Umbro Int'l, Inc., 259 Va. 759, 770 (Va. 2000), a Virginia
case widely cited for the proposition that creditors cannot get at domain names
because domain names are contract rights rather then property. To the extent
Kremen did not refute Umbro, this decision definitely provides the necessary
ammunition to creditors. (Again, collection is state-specific, and apart from
the analysis of the nature of domain names, the outcome in these cases turns on
the statute in question, which vary from state to state. That said, I think
given the robust marketplace in domain names, Umbro's conception of the domain
name as a personal services agreement seems outdated, and most courts will
easily recognize this.)

With respect to the second question, the court acknowledges that
"attaching a situs to intangible property is ... a legal fiction,"
and the determination must be made in a "context-specific" manner.
Fairness was relevant to the court's determination of the appropriate situs,
and the court was understandably not receptive to Zuccarini's policy arguments
that allowing a court to issue an order directed to the registry would mean
that every .com and .net domain name could be levied through courts in the
Northern District of California. The court also looked to the ACPA, which
provides for in rem jurisdiction over certain cases where the "registrar,
registry, or other domain name authority" is located. Although this was
not an ACPA case, the court found the structure set up by the statute
persuasive and that the writ was appropriately issued from Northern District of
California since VeriSign (the registry for .com domains) is located there.
The decision clears up two things: Although
post Kremen v. Cohen there shouldn't have been much dispute that domain names
are property which are subject to the claims of creditors, the case clears up
any lingering doubt that may have existed. (Kremen and this case applied
California law, but the result shouldn't vary much across other states.)
Second, the decision makes clear that a court which has jurisdiction over the
registry can issue an order allowing the creditor to get at the domain names.
The case also implicitly affirms that getting a receiver appointed to sell the
domain names is the appropriate route for the creditor. Getting the name
transferred to the creditor is not a remedy allowed under California law
(Palacio Del Mar Homeowners Ass'n, Inc. v. McMahon). Additionally, a transfer
of domain names from a cybersquatter to a judgment creditor raises some issues
around potential infringement of third party rights through sales or other
exploitation of the domain names. (See this
post on Bosh v. Zavala for some discussion of those issues.) The method
ultimately used by DS in this case (a receiver) avoids all of these issues, or
at least shifts them over to the receiver rather than the creditor.

As mentioned above, this ruling makes clear that regardless of
whether a domain name is registered through a foreign registrar, a court having
jurisdiction over the registry can issue an order directing transfer of the
domain names to a receiver. With respect to .com and .net domain names, this
means that creditors can try to get at these domain names through proceeding in
the Northern District of California (as the court notes, VeriSign is the
registry for .com and .net domain names and is headquartered in Mountain View).
While the ACPA allows plaintiffs to file in rem suits where the registry is
located, it's nice (for creditors) to have a similar ruling in the
post-judgment context, and one from the Ninth Circuit as well.

Will this cause a rush of similar claims to be filed in the Northern
District of California? It's tough to say, but even post Kremen, it does not
seem like there's been a ton of post-judgment collections activity with respect
to domain names. From a practitioner's standpoint, it's certainly nice to have
this rule on the books.

Continue reading "Creditor May Levy Against a Domain Name in the Jurisdiction Where the Domain Registry is Located" »

Whether you're starting a business from home or opening a large-scale operation, you'll need to decide on the best legal structure for your new company. Don't underestimate the importance of your choice, as the legal entity you choose will affect how much personal liability you face, how much you pay in taxes and how in- depth your new company's record keeping will need to be. Your business structure can take one of five basic forms: the sole proprietorship, the partnership, the regular or C corporation, the S corporation, and the increasingly popular limited liability company or LLC.

The best entity for you will depend on the type of business you'll run, your potential exposure to lawsuits, the number of owners and whether you want the ability to raise capital or transfer shares. It's smart, and in many cases necessary, to consult a lawyer or accountant when making your choice.

Sole Proprietorships
The vast majority of small businesses start off as sole proprietorships, which are the simplest and least expensive vehicles to create and operate, according to the SBA. With a sole proprietorship, the owner and the business are essentially one and the same, meaning you have complete control, you can make decisions as you see fit and the profits from the business flow through to your personal tax return as Schedule C income. (If you don't have profits, you may be entitled to a business loss that can help offset other income.) To launch a sole proprietorship, you don't need to file legal forms or paperwork, such as articles of incorporation, but you might have to obtain a business license, or file a fictitious name document, depending on your state law. A sole proprietorship can only be used by an individual who owns the company, unless it's a husband- and- wife team, in which case it can be shared.

The main drawback of setting up a sole proprietorship is that you have unlimited personal responsibility for all debts or judgments related to the business. That liability, in turn, may make it difficult to attract investors or raise funds for your business.

As a sole proprietor, you'll also be responsible for paying the full burden of Social Security and Medicare taxes-- a cost normally split between employer and employee. For 2010, the first $106,800 of self- employment income is taxed at 12.4 percent for Social Security and 2.9 percent for Medicare. Any amount over $106,800 continues to be taxed at 2.9 percent for Medicare only

Continue reading "The Sole Proprietorship Business Entity" »

Bailment is the delivery of property from one person (bailor) to another person (bailee) who holds the property for a specific period of time under an express or implied-in-fact contract. To be distinguished from a contract of sale or a gift of property, bailment only involves the transfer of possession and not of ownership. An example of a bailment is taking your car to a parking garage and leaving the car and the keys in the possession of the parking garage attendant states California Business Attorney Steven C. Peck.

Bailments may be of several types: a bailment may be gratuitous when the bailee receives no compensation (as when you borrow your friend's notebook computer to work on an open source online encyclopedia project because he believes in the open source movement and wants to help you out), or a bailment for hire for which the bailee is compensated as in the parking garage example above, another common example is the coatcheck person.

A constructive bailment is a legal obligation that is imposed upon someone who has possession of property to return that property to the rightful owner as when the bailment is involuntary (done without intent or by accident but without negligence). An involuntary bailee may be liable in conversion if they do not return the property on the request of the bailor.

Continue reading "Bailments" »

Agency is an area of law dealing with a contractual or quasi-contractual relationship between at least two parties in which one, the principal, allows the other, the agent, to represent her or his legal interests and to perform legal acts that bind the principal. Agency can be created in a variety of ways, such as through the grant of a power of attorney also known as a mandate in civil law jurisdictions, it can also be implied from the conduct of the parties. says California Business Attorney Steven C. Peck.
The law of agency is used in many professional areas, from contract negotiation (business management), employment procurement (i.e. modelling agencies), by financial advisors, in the buying and selling of real estate, the negotiation of entertainment and sports deals and in many day to day transactions where one person (the "agent") is allowed to stand in for another individual to fulfill their wishes. Agents can represent the interests of one party, or they may represent the interests of several, conflicting or potentially conflicting parties. In the case of such dual agency the agent must either disclose information received by one party to the other or act in a limited agency capacity to prevent a situation where the agent's loyalty to the multiple principals is compromised.

Continue reading "Agency: Allowing an Individual to Perform Legal Acts That Bind the Principal" »

What exactly is a surety bond and why should small business owners care?
A lot of people like to sum up a surety bond as insurance, but in reality, surety bonds are a financial guarantee. They are a part of the insurance industry but they serve as a financial guarantee for the obligee (or person requiring the bond which is usually the state)

How do I know if my business/start-up needs a bond?
Almost every small business is required or can utilize a surety bond in some way. For instance, many states require a sales tax bond for stores to operate. Almost every business that requires a license to operate in the state will be required to post a surety bond. Some of the more common industries include car dealers, mortgage brokers, and even insurance brokers. If you aren't required to post a bond to operate, many companies look into getting a fidelity bond or a dishonesty bond which protect the owner against employee theft.

How do I obtain one?
Most of the time, it's a simple process. If the bond required is $25,000 or less, often just submitting an application is all that is necessary. With the application process there is a credit check and depending on how the credit check comes back, they may or may not need to submit and any sort of financial data or bank letter of credit. For most people with a good credit background, they only need to submit an application and they will be on their way with a bond in hand. This process usually takes anywhere from 24 to 48 hours. If there is a cosigner, letter of credit or collateral needed, or you want to do a premium financing surety bond then the process will usually take a little longer to complete.

One thing to consider before you get a surety bond that will save you time in the long run is that when you first submit an application, if there is another partner (or anyone with more than 10% share) in the company, they also need to be underwritten on the bond. So if there are three partners, there need to be three applications with three signatures.

What do surety bonds cost?
The cost is determined by examining the credit of the person needing the bond and what type of bond it is. A person with good credit will normally get standard rates that can range anywhere from .05% to 5% of the full bond amount. If the person has sub-standard credit, then they normally have to pay anywhere from 5% to 15% of the total bond amount.

Do I have to get a new one every year?
Most license and permit bonds are required to be renewed every year. There are thousands of types so it really depends on the specific bond that your company needs and the requirements that the obligee puts on the bond.

This guest post was written by Kevin Kaiser of Surety Bonds .com[link:http://www.suretybonds.com]. If you want to learn more about how surety bonds are involved in small business check out our podcast with David B. Willis on Texas Small Business Law[link:http://davidwillislaw.com/texassmallbusinesslaw/surety-bonds-for-small-businesses/] or visit the Surety Bond Education Center[link:http://www.suretybonds.com/edu/].

Arbitration, in the law, is a legal alternative to the courts whereby the parties to a dispute agree to submit their respective positions (through agreement or hearing) to a neutral third party (the arbitrator(s)) for resolution.
Since arbitration is based either upon contract law or, in the case of international arbitration, the law of treaties, the agreement between the parties to submit their dispute to arbitration is usually a legally binding contract. All arbitral decisions are usually considered to be "final and binding." This does not, however, void the requirements of law. Any dispute not excluded from arbitration by virtue of law (e.g. criminal proceedings) may be submitted to arbitration.

Arbitration exists under both domestic and international law, and arbitration can be carried out between private individuals, between states, or between states and private individuals. In the case of arbitration between states, or between states and individuals,
Various bodies of rules have been developed that can be used for arbitration proceedings.

When arbitration occurs under state of federal law, either party to an arbitration may appeal the arbitrator's decision to a court, however the court will generally not change the arbitrator's findings of fact but will decide only whether the arbitrator was guilty of malfeasance, bias, or whether the arbitrator exceeded the limits of his or her authority in the arbitral award. Some jurisdictions have instituted a limited grace period during which an arbitral decision may be appealed, but after which there can be no appeal. In the case of arbitration under international law, a right of appeal does not in general exist, although one may be provided for by the arbitration agreement, provided a court exists capable of hearing the appeal.

Some domestic jurisdictions have stipulated that judges may require either arbitration or mediation of certain disputes as a first step toward resolution, familiy law (particularly child custody) being a prime example.

Arbitrators are not bound by precedent and have great leeway in such matters as: active participation in the proceedings, accepting evidence, questioning witnesses, and deciding appropriate remedies. Arbitrators may visit sites outside the hearing room, call expert witnesses, seek out additional evidence, decide whether or not the parties may be represented by legal counsel, and perform many other actions not normally within the purview of a court. It is this great flexibility of action which, combined with costs usually far below those of traditional litigation, makes arbitration so attractive, although very risky as you are deprived of the constitutional right to Trial by Jury.

No definitive statement can be made concerning the credentials or experience levels of arbitrators, although some jurisdictions have elected to establish standards for arbitrators in certain fields. Several independent organizations offer arbitrator training programs, such as the American Arbitration Association, and thus in effect, credentials. Generally speaking, however, the credibility of an arbitrator rests upon reputation, experience level in arbitrating particular issues, or expertise/experience in a particular field. Arbitrators are generally not required to be members of the legal profession.

A growing trend among employers whose employees are not represented by a labor union is to establish an organizational problem-solving process, the final step of which consists of arbitration of the issue at point by an independent arbitrator. Most collective bargaining agreements in organizations where employees are represented by a labor organization stipulate that the final step of any grievance procedure shall consist of arbitration.

To ensure effective arbitration and to increase the general credibility of the arbitral process, arbitrators will sometimes sit as a panel, usually consisting of three arbitrators. Often the three consist of an expert in the legal area within which the dispute falls (such as contract law in the case of a dispute over the terms and conditions of a contract), an expert in the industry within which the dispute falls (such as the construction industry, in the case of a dispute between a homeowner and his general contractor), and an experienced arbitrator.

Critics of arbitration argue that arbitration can be unfair to the individual when faced with a dispute with a corporation. In these cases, the choice of arbiter may be spelled out in a contract in which the individual has no power to negotiate. The arbitration panel may contain industry experts who may be more sympathetic to the industry than to the individual. Also, some have argued that the fact that an arbitration company may handle many cases for a corporation while an individual rarely goes through arbitration twice may bias the arbitrators in favor of the company. The fact that most arbitral procedures are not public, and that there may be no provision for an individual to be represented by counsel, may also work to the disadvantage of the individual. These potential disadvantages make the ethics and professionalism of arbitrators even more important.

Continue reading "Arbitration: A Practical Overview" »

Fiduciary duty is one of the duties that corporate directors and officers have towards a corporation, as well as the duties that partners have to a partnership and trustees have to a trust.
Broadly speaking, fiduciary duties can be grouped into three categories:

Duty of Loyalty. A fiduciary must act in accordance with the interests of the beneficiary, and not his own interests.

Duty of Candor. A fiduciary must not withhold information from the beneficiary, particularly with respect to the fiduciary's dealings with the beneficiary.

Duty of Care. A fiduciary must act with some degree of care with respect to the beneficiary. This is usually formulated as a duty to take the care that an ordinarily prudent person would in similar circumstances.

A variety of other duties, and legal doctrines, are subsumed in these three duties. For example, the duty of care includes a duty of confidentiality, i.e. that the fiduciary will not disclose the beneficiary's information. The duty of loyalty includes the corporate opportunity doctrine. Fiduciary duties take into account the nature of the relationship in which they are formed, and, in some circumstances (such as in limited liability companies) may be modified by contract.
Also related is the Business Judgement Rule which provides that the decisions of a corporation's board of directors will not be second-guessed unless a decision is self-interested (a violation of the duty of loyalty) or (more rarely) the board acted in an imprudent manner (a violation of the duty of care).

Continue reading "Fiduciary Duty" »

A standard form contract (sometimes referred to as an adhesion contract or boilerplate contract) is a contract between two parties that does not allow for negotiation, i.e. take it or leave it. It is often a contract that is entered into between unequal bargaining partners, such as when an individual is given a contract by the salesperson of a multinational corporation. The customer in no position to negotiate the standard terms of such contracts and the company's representative often does not have the autonomy to do so. While adhesion contracts, in and of themselves, are not illegal per se, there exists a very real possibility for unconscionability says California Business Lawyer Steven C. Peck.

Standard form contracts are rarely read
Lengthy boilerplate terms are often in fine print and written in complicated legal language which often seems irrelevant. The prospect of a buyer finding any useful information from reading such terms is correspondingly low. Even if such information is discovered, the consumer is in no position to bargain as the contract is presented on a "take it or leave it" basis. Coupled with the often large amount of time needed to read the terms, the expected payoff from reading the contract is low and few people would be expected to read it. Sometimes a standard form contract may literally be dispensed from a vending machine to drivers sitting in line to enter a parking garage, which means that stopping to read the contract risks provoking road rage.
Access to the full terms may be difficult or impossible before acceptance
Often the document being signed is not the full contract; the purchaser is told that the rest of the terms are in another location. This reduces the likelihood of the terms being read and in some situations, such as software license agreements, can only be read after they have been notionally accepted by purchasing the good and opening the box. These contracts are typically not enforced, since common law dictates that all terms of a contract must be disclosed before the contract is executed.

Continue reading "Carefully Read Standard Form Business Contracts" »

Something interesting is happening in California. Anthem Insurance Company is delaying its massive insurance rate increase. Anthem insurance company has been under fire this week because they are going to invoke an average price increase of 25 percent on about 700,000 insurance customers who purchase their own coverage. For some it would be as high as 39 percent. Anthem is getting grief all the way up to the White House.

Anthem has agreed to delay implementing their rate increase from March 1 to May 1.

Insurance Commissioner of California Steve Poizner has been working with Anthem Insurance to determine if they are living up to a law that was passed in 2006. This says that an insurance company must spend 70 cents of every premium dollar on medical care.

I personally think that is whimsical says Los Angeles Business Attorney Steven C. Peck. That means your expenses and administration come out of 30 cents on the dollar. Companies can do that if the expenses go down after the first year but I sincerely doubt that 70 cents on the dollar is realistic. And that can cause this type of problem.

The commissioner has brought in an outside firm to examine the summations of Anthem. He is skeptical that they have come to the right conclusions.

If they did not live up to the law then the Commissioner can make the company reduce the rates at risk of losing their license to sell in the state.
.

Continue reading "Anthem Insurance Company Delaying Price Increase" »

In what could be some of the most significant set of changes in the history of U.S. credit cards, aspects of President Barack Obama's Credit Card Accountability, Responsibility and Disclosure Act of 2009 that most affect college-aged students are set to kick in on Monday February 22, 2010.

"With this new law, consumers will have the strong and reliable protections they deserve," Obama said on May 22, 2009, the day he signed the bill into law. "We will continue to press for reform that is built on transparency, accountability, and mutual responsibility - values fundamental to the new foundation we seek to build for our economy."

Starting Monday February 22, 2010,, credit card companies will no longer be able to market to people on college campuses with free offers, food and merchandise, or through direct mail campaigns, says California Business lawyer Steven C. Peck. Credit card companies will also have to publicly disclose any marketing agreements with colleges and universities.

"(Credit card companies) try to offer students credit cards (saying) it's good for them," Peck says. "But they end up spending too much on it."

Among the most significant changes, people under the age of 21 will no longer be able to take out credit cards under their own names unless they have co-signers, such as their parents. Another provision calls for setting monthly due dates at the same day each month. As of now, credit balance due dates are set from 14 to 21 days after a previous payment has been made.

"It's hard to keep track of the payment day," Peck indicates. "It's a great idea (so) new credit card holders never miss the date."

Currently, anyone over the age of 18 may apply for a credit card, and each credit card company determines verifying a cardholder's ability to pay back the credit.

Under the new guidelines, anyone younger than 21 must get written permission from a parent, guardian or spouse to increase the credit line of an existing account, or to get a new account. They will also need a co-signer to assume the liability on the card if they are unable to pay the bill, unless they can prove their financial ability to pay back the card balance on their own states California Business Lawyer Steven C. Peck.

A growing source of revenue for banks - fees - will be reduced, according to the law. The new law will limit up-front fees to 25 percent of the cardholder's credit limit during his or her first year on the new account. Card companies will also be limited in when they can increase interest rates on existing balances. If cardholders pay their bills on time and do not exceed the credit limit, they may get their interest rates reduced after six months.

"It's a new day in credit cards - both for consumers as well as banks and credit card issuers," Peck says.

Continue reading "New Credit Card Accountability Act Signed Into Law" »

Reliance-based estoppels--These involve one party relying on something the other party has done or said. The party who did/said the act is the one who is estopped. Under English law, this class includes estoppel by representation of fact, promissory estoppel and proprietary estoppel Although some authorities have used language to suggest reliance-based estoppels are mere rules of evidence, they are rules of substantive law.

Equitable Estoppels:

Estoppel by record--This frequently arises as issue/cause of action estoppel or judicial estoppel where the orders or judgments made in previous legal proceedings prevent the parties from relitigating the same issues or causes of action,
Estoppel by deed (often regarded as technical or formal estoppels)--Where rules of evidence prevent a litigant from denying the truth of what was said or done
Estoppel by silence--Estoppel that prevents a person from asserting something when he had the right and opportunity to do so earlier, and such silence put another person at a disadvantage.
Laches--estoppel in equity by delay. Laches has been considered both a reliance-based estoppel, and a sui generis estoppel.

Reliance-based estoppels

Reliance-based estoppels by representation of fact, where one person asserts the truth of a set of facts to another;promissory estoppel, where one person makes a promise to another, but there is no enforceable contract; and
proprietary estoppel, where the parties are litigating the title to land.
These three estoppels collectively known as estoppels by representation. More simply, one party must say or do something and see the other party rely on what is said or done to change behavior.

All reliance-based estoppels require the victimised party to show both inducement and detrimental reliance, i.e.:there must be evidence to show that the representor actually intended the victim to act on the representation or promise, or the victim must satisfy the court that it was reasonable for him or her to act on the relevant representation or promise, andwhat the victim did must either have been reasonable, or the victim did what the representor intended, and the victim would suffer a loss or detriment if the representor was allowed to deny what was said or done -- detriment is measured at the time when the representor proposes to deny the representation or withdraw the promise, not at the time when either was made, and in all the circumstances, the behavior of the representor is such that it would be "unconscionable" to allow him or her to resile.
Estoppel by representation of fact and promissory estoppel are mutually exclusive: the former is based on a representation of existing fact (or of mixed fact and law), while the latter is based on a promise not to enforce some pre-existing right (i.e. it expresses an intention as to the future). A proprietary estoppel operates only between parties who, at the time of the representation, were in an existing relationship, while this is not a requirement for estoppel by representation of fact.

The test for unconscionability takes many factors into account, including the behavior, state of mind and circumstances of the parties. Generally, the following eight factors are determinative says California Business Lawyer Steven C. Peck.

How the promise/representation and reliance upon it were induced;
The content of the promise/representation;
The relative knowledge of the parties;
The parties' relative interest in the relevant activities in reliance;
The nature and context of the parties' relationship;
The steps, if any, taken by the promisor/representor to ensure he has not caused preventable harm.

Continue reading "Estoppel: Definitions" »

Estoppel in its broadest sense is a legal term referring to a series of legal and equitable doctrines that preclude "a person from denying or asserting anything to the contrary of that which has, in contemplation of law, been established as the truth, either by the acts of judicial or legislative officers, or by his own deed, acts, or representations, either express or implied indicates California Business Law Attorney Steven C. Peck

This term appears to come from the French estoupail (or a variation), which meant "stopper plug", referring to placing a halt on the imbalance of the situation. The term is related to the verb "estop" which comes from the Old French term estopper, meaning "stop up, impede".

Where a court finds that a party has done something warranting a form of estoppel, that party is said to be "estopped" from making certain related arguments or claiming certain related rights. The defendant is said to be "estopped" from presenting the related defense, or the plaintiff is said to be "estopped" from making the related argument against the defendant.

Because estoppel is so factually dependant, it is perhaps best understood by considering specific examples.

Estoppel is closely related to the doctrines of waiver, variation, and election and is applied in many areas of law, including insurance, banking, employment, international trade, etc. In English law, the concept of legitimate expectation in the realm of administrative law and judicial review is estoppel's counterpart in public law, although subtle but important differences exist. The main species of estoppel shall be discussed in our next blog.

Continue reading "The Doctrine of Estoppel" »