Category: Contract Law

What Role Do Indemnification Clauses Play in Contracts?

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Our Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Will Help You Navigate Indemnification Clauses

Understanding the significance of indemnification clauses can be the key to safeguarding your interests. The indemnification clause stands out as a critical element designed to protect parties from financial loss and legal complications. This blog explores the role of indemnification clauses in contracts, shedding light on why they are indispensable for business owners in Philadelphia.

Understanding Indemnification Clauses

At its core, an indemnification clause is a contractual agreement between parties where one party agrees to compensate the other for the losses suffered due to the actions of the indemnifier or another specified party. It is a risk-transfer mechanism that plays a pivotal role in managing liability and mitigating potential financial risks within business operations.

Indemnification clauses serve several vital functions in commercial agreements:

  • Risk allocation: They clearly delineate how risks are allocated between parties, ensuring that each party understands their liabilities and the extent of their financial responsibilities.
  • Protection against losses: These clauses offer protection against losses arising from lawsuits, third-party claims, or breaches of contract.
  • Legal defense: Indemnification clauses often cover legal expenses, providing crucial support in litigation.

The Importance for Business Owners

For business owners, the incorporation of indemnification clauses in contracts is essential for several reasons:

  • Minimizes financial risks: By transferring certain risks to the other party, businesses can protect themselves against significant financial losses.
  • Clarifies responsibilities: These clauses clarify legal and financial responsibilities, preventing disputes related to liability and compensation.
  • Enhances contractual relationships: By setting clear expectations regarding risk management, indemnification clauses contribute to more stable and predictable contractual relationships.

However, the effectiveness of an indemnification clause depends on its precise wording. Ambiguities in the language can lead to interpretations that might not align with your protective intent. Therefore, it is crucial to draft these clauses carefully, emphasizing clarity and comprehensiveness.

When drafting indemnification clauses, keep the following in mind:

  • Scope of indemnification: Clearly define what types of claims, losses, and expenses are covered.
  • Notice and defense: Specify the requirements for notice of a claim and control over the defense, settlement, or negotiation.
  • Limitations: Consider including caps on indemnification or time limits within which claims can be made.

Navigating Legal Complexities

The legal landscape surrounding indemnification clauses is complex and varies by jurisdiction. In Philadelphia, as in other regions, the enforceability of these clauses is subject to state laws and judicial interpretations. Businesses must be cognizant of legal standards and requirements to ensure that their contracts are fair and enforceable.

Business owners should seek legal guidance when incorporating indemnification clauses into their contracts. A skilled attorney can help you understand the nuances of these provisions, tailor them to your business needs, and ensure that they comply with applicable laws.

Indemnification clauses are indispensable tools for managing risk in business contracts. They provide a safety net, protecting businesses from financial and legal hurdles. However, the effectiveness of these clauses lies in their careful drafting and the understanding of their legal implications.

For business owners in Philadelphia, incorporating well-crafted indemnification clauses in contracts is not just a matter of legal prudence but a strategic business decision. By allocating risks appropriately and ensuring legal compliance, you can safeguard your business against potential liabilities and foster stronger, more reliable business relations.

Our Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Will Help You Navigate Indemnification Clauses

Navigating the complexities of indemnification clauses requires experience and foresight. If you want to protect your business interests through effective contract drafting or need assistance understanding the legal implications of indemnification clauses, Sidkoff, Pincus & Green P.C. is here to help. Our team of experienced Philadelphia business lawyers is adept at crafting tailored legal solutions. Contact us online or call us at 215-574-0600 to schedule a consultation. Located in Philadelphia, we serve clients in New Jersey and Pennsylvania, including South Jersey.

What Are the Legal Ramifications of a Company Merger?

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Company mergers involve intricate legal processes. Understanding these legal ramifications can ensure smooth transitions and minimize potential pitfalls.

Structuring the Deal

The structure of a merger deal has profound legal implications. It can be an asset purchase, where one company acquires assets of another, or a stock purchase, where one company buys a controlling stake in another. Each type has unique legal aspects.

In an asset purchase, liabilities may not transfer to the acquiring company. In a stock purchase, the acquiring company usually assumes all liabilities. The choice between these two affects tax consequences, regulatory approvals, and third-party consents.

Asset Purchase

In an asset purchase, one company acquires the assets of another. These assets can include physical properties, equipment, inventories, intellectual property rights, customer lists, and more. In this scenario, the acquiring company chooses specific assets it wishes to buy. It has the advantage of avoiding unwanted liabilities.

However, this type of deal could lead to legal complexities. For example, third-party consents may be required if specific contracts or licenses are not assignable. Legal issues may also arise if there is disagreement over the valuation of assets. Also, hidden liabilities linked to the purchased assets might surface later if not carefully examined. Therefore, comprehensive due diligence is crucial in an asset purchase.

Stock Purchase

In a stock purchase, the acquiring company buys a controlling stake in the target company. Here, the acquiring company steps into the shoes of the target company, assuming all its assets and liabilities. This deal generally simplifies a business transfer as it requires fewer third-party consents.

However, this simplicity also carries potential legal pitfalls. The acquiring company inherits all existing legal issues of the target company. These could range from unresolved litigation and regulatory violations to tax liabilities. Moreover, any undisclosed or undiscovered liabilities become the responsibility of the acquiring company post-acquisition. Hence, in-depth financial and legal due diligence becomes even more critical in a stock purchase.

Due Diligence of Financial Issues and Intellectual Property

Due diligence serves as a protective measure for companies considering a merger. It thoroughly examines financial records and intellectual property. Overlooking financial irregularities can lead to severe penalties post-merger. Similarly, failure to identify intellectual property can result in lost opportunities for revenue generation. Thus, due diligence is crucial to avoid future legal complications.

Documentation and Performance Review

Documentation plays a vital role in any merger process. It includes merger agreements, representations and warranties, indemnification provisions, and disclosure schedules. Any mistake in documentation can lead to legal disputes. On the other hand, performance review helps assess how well the merged entity is achieving its objectives. Regular reviews can help identify and rectify legal issues that may arise post-merger.

Nuances of Merging Two Companies

Merging two companies involves more than just combining resources. It also includes integrating cultures, systems, and procedures. Any misstep can lead to employee dissatisfaction, attrition, and even legal disputes related to employment rights. Therefore, careful planning and execution are necessary to ensure a smooth transition.

Emotions Involved

Emotions run high during mergers. Employees fear job loss, while leaders may struggle with losing control. Such feelings can lead to resistance, conflicts, and legal issues. Hence, managing emotions through transparent communication and reassurance becomes imperative in any merger process.

Tax Implications

Mergers have significant tax implications. The deal’s structure can impact the tax liabilities of both the acquiring and the acquired company. Non-compliance with tax laws can lead to penalties and legal disputes. Therefore, understanding and planning for tax implications is essential in any merger process.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Support You Through Business Changes

A company merger can suit everyone involved, but you must ensure it is done correctly to avoid legal issues. To get the legal support you deserve, speak with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we proudly serve clients in Pennsylvania and New Jersey.

Is Severance Guaranteed to Terminated Employees?

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Severance refers to the compensation that some employees receive upon termination of their employment. It is intended to provide financial support to former employees during their search for new employment. However, severance is not always guaranteed to terminated employees.

Severance can include monetary payments, benefits continuation, or other assistance forms. The primary purpose of severance is to help the terminated employee transition to new employment or retirement. Sometimes, severance is also offered as a goodwill gesture to maintain a positive relationship with the terminated employee.

In most cases, severance is not required by law. Employers are generally not obligated to provide severance unless they have agreed to do so in writing. This written agreement can be in the form of an individual employment contract or a collective bargaining agreement with a union. Some jurisdictions may have specific laws governing severance, but these are typically limited in scope.

It is important to note that employers are not required to offer severance to terminated employees for cause, such as misconduct or poor performance. In these situations, the employer may terminate the employee without additional compensation.

Severance in Written Agreements

If an employer chooses to offer severance, it is essential to have a written agreement outlining the terms and conditions of the severance package. This agreement can be part of the initial employment contract or a separate document created at the time of termination.

The written agreement should specify the amount of severance, the method of payment, and any conditions that must be met for the employee to receive the severance. For example, the agreement may require the employee to return all company property or complete a specific project before receiving severance.

A written agreement can help prevent disputes and misunderstandings between the employer and the terminated employee. It also provides a clear record of the employer’s commitment to severance, which can be valuable in legal challenges.

Severance and Release Agreements

When offering severance, employers should consider using a severance and release agreement. This type of agreement requires the terminated employee to sign a document stating that they accept the severance package and, in exchange, agree not to pursue any legal claims against the employer related to their termination.

Severance and release agreements can provide several benefits for the employer and the employee. For the employer, the agreement can help protect against potential lawsuits or other legal actions by the terminated employee. It can also provide a sense of closure and finality to the termination process.

For the employee, signing a severance and release agreement can provide financial security during a difficult time. The agreement can also serve as an acknowledgment of their service to the company and a demonstration of the employer’s commitment to supporting them in their transition to new employment.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Your Business

When terminating an employee, there is much to consider, including whether to provide severance. Speak with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. to learn more. Call us at 215-574-0600 or contact us online to schedule a consultation. Located in Philadelphia, we proudly serve clients in Pennsylvania and New Jersey.

How to Draft Effective Employment Contracts?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Keep Your Business Compliant.

Employment contracts are essential documents that provide clarity and structure to the employment relationship between an employer and an employee. The purpose of an employment contract is to clearly define the terms and conditions of employment, so that everyone – employer and employee alike – knows exactly what is expected of them.

The contract typically covers a range of issues, such as the duration of employment, job duties, compensation, benefits, termination details, and other relevant employment terms. Employment contracts provide numerous benefits to both the employer and employee.

For employers, they limit the scope for  disputes or misunderstandings. An employment contract ensures that both parties are aware of their obligations and expectations, which can reduce the likelihood of legal disputes.

For employees, employment contracts provide peace of mind and job security. A well-drafted employment contract can make it clear what is expected of them and what they can expect in return.

The following components should be included in an employment contract.

Employee Details

The employment contract should include the employee’s name, job title, starting date, and other basic information, such as contact information.

Job Duties

The employment contract should clearly define the employee’s duties and responsibilities. This can include details about tasks, targets, and goals expected from the employee.

Compensation

Employment contracts should address compensation, including salary, benefits, and other forms of compensation, such as bonuses or stock options. The contract should detail how and when the employee will be paid and what benefits will be included, such as vacation time or insurance policies.

Termination Details

The contract should outline the circumstances in which employment can be terminated, such as resignation, retirement, or dismissal. An employment agreement should specify what the process is for resolving disputes, including mediation, arbitration, or litigation.

At-Will Clause

An “at-will” clause is a provision in an employment contract that indicates that either the employer or the employee can terminate the employment relationship at any time and for any reason, without any legal consequences, provided there is no illegal discrimination or contract violation. The at-will status clearly outlines the terms of the employment relationship so that employers and employees alike understand their relationship and corresponding expectations.

The at-will status gives both parties the freedom to end the employment relationship at any time for any reason. However, it is important to note that having an at-will clause does not exempt employers from being held liable for wrongful termination under certain circumstances. Wrongful termination can occur if the employer violates federal, state, or local anti-discrimination laws, or violates any provision of an employment contract.

Other Terms

Apart from employee details, job duties, compensation, benefits, and termination details, there are other provisions that may be included in an employment contract, depending on the employer’s requirements and the nature of the job:

  • Confidentiality and non-disclosure: The employer may include clauses that prohibit employees from sharing confidential or proprietary information. This clause is especially important for companies that deal with trade secrets, client lists, or other sensitive information.
  • Non-compete and non-solicitation: Employers may include clauses that restrict employees from competing or soliciting business from clients for a certain period after their employment is terminated. Be aware that several states have begun invalidating non-compete clauses.
  • Intellectual property: If an employee is expected to create intellectual property during their employment, the contract may specify who owns it and how it can be used.
  • Performance expectations: Employers may set performance expectations and provide consequences if employees do not meet them.
  • Work schedule and hours: The employment contract can specify the work schedule and hours of the employee based on the employer’s requirements.
  • Benefits: Employers may specify the benefits offered to their employees, such as vacation days, sick days, health insurance, and retirement benefits.
  • Entire agreement: Employers may include clauses that specify that the employment agreement contains the entire agreement between both parties and supersedes any prior agreements, verbal or written.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Keep Your Business Compliant

To stay compliant, it is important to have effective employment contracts. Protect yourself and your business by speaking with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we proudly serve clients in Pennsylvania and New Jersey.

The Role of Contracts in a Business Relationship

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A contract is a legal document that outlines the scope of the agreement between two or more parties, as well as their respective rights and responsibilities. It also serves as a legal protection for both parties involved in case of a dispute or disagreement.

Why Use Business Contracts?

Contracts help define the scope of an agreement between two or more parties, as well as their respective rights and responsibilities. They also serve as a legal protection for both parties involved in case of a dispute or disagreement. Without a contract in place, either party may take advantage of the situation by not fulfilling their end of the bargain—with no recourse available to the other party.

In addition, contracts provide details about payment terms and other key items related to the business relationship. This includes information such as how long the agreement will last (or when it will expire), what happens if one party fails to perform according to expectations (legal repercussions), who owns any intellectual property created during the course of working together (copyrights) and more. Without these details laid out clearly in a contract, it is much easier for misunderstandings and disagreements between two parties to arise.

Contracts also help protect businesses from unexpected liabilities and unforeseen costs associated with entering into agreements with third-party vendors or partners. Having a contract can help protect your interests if you do end up facing unexpected liability or cost issues later on down the road.

Contracts are essential for any business relationship because they define each party’s rights and responsibilities while providing legal protection against potential disputes or disagreements that may arise during the course of working together. They also provide details about payment terms and other key items related to the business relationship which can save businesses from unexpected liabilities or unforeseen costs associated with entering into agreements with third-party vendors or partners down the line.

General Terms to Include

Every business contract should include, at a minimum, the following terms:

  • Parties Involved: All parties involved in the contract must be identified, with their name and address, as well as any relevant contact information.
  • Subject of Contract: The contract should clearly identify what is being agreed on, such as services rendered or goods supplied by each party.
  • Duration of Contract: The duration of the agreement should be specified and accepted by both parties.
  • Payment Terms: Payment terms for any goods or services provided should be detailed in the agreement. This will include any payment due dates and refund policies, if applicable.
  • Obligations of Parties: Both parties must understand their roles and responsibilities outlined in the agreement, which might also state how long a party has to perform its service or provide its goods before breach occurs.
  • Conditions of Termination: All contracts should detail procedures for termination of the agreement, including how either party can legally end the contract and any obligations that remain after it has been terminated.
  • Governing Law: It is essential to specify which law governs the agreement and where any disputes will take place if necessary.

The Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Protect Your Business

To make sure your business is protected, speak with the Philadelphia business attorneys at Sidkoff, Pincus & Green P.C. Contact us at 215-574-0600 or inquire online. With offices in Philadelphia, we proudly serve our neighbors in South Jersey, Pennsylvania, and New Jersey.

How Often Do Business Contracts Need to Be Updated?

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Philadelphia Employment Lawyers at Sidkoff, Pincus & Green Protect Clients and their Business Contracts.

The use of contracts is standard and necessary practice among most businesses. When businesses allow lawyers handle major aspects of a company’s contracting process, or there is a contract management team to oversee the business portfolio, oversights that could have become problematic for businesses can be avoided.

Managing business contracts can be more complicated that many realize. It is easy for finer details to slip through the cracks when circumstances change without the contract being appropriately adjusted. When running a business or working on a specific project, it is essential to keep business contracts clear, up-to-date, and understood by all parties involved.

What Types of Business Contracts Need to Be Updated?

There are many kinds of agreements that businesses rely on to keep operations and projects running smoothly. Some types of business contracts that should be updated regularly include:

  • Buy-and-sell contracts
  • Client or customer agreements
  • Commercial leases and real estate contracts
  • Employment agreements
  • Equipment leases
  • Financial agreements, including loan documents
  • Non-compete agreements.
  • Non-disclosure and confidentiality agreements
  • Privacy policies
  • Service provider or supplier agreements
  • Shareholder or partnership agreements
  • Software licenses
  • Terms of use contracts
  • Website contracts

Why Should Business Contracts Be Regularly Updated?

Even when business contracts and related agreements are drafted by a lawyer, they still to remain living, breathing documents. A document that gets written for a business today may not always be the document needed tomorrow, as neither business nor laws are stagnant. The terms and conditions of a business contract need to evolve and vary with the growth and development of the company.

When renewing a company’s terms and conditions in a business contract, consideration should be given to the following:

  • Any verbal arrangements in place
  • Implied terms of the contract
  • Regulation and legislation with regard to provision of services and compulsory disclosures to customers
  • Industry practices and professional best practice rules
  • Company policies

It is crucial for businesses to review and renew their contracts regularly to ensure that terms and conditions reflect a company’s current operational feasibility, business arrangements with customers, and regulatory standards in place for businesses.

Terms and conditions of contracts enhance businesses and provide legal protections should any problems arise. There are several reasons companies should continuously update their business contracts, including the following:

  • Keeps company compliant with laws and regulations
  • Minimizes and manages dispute risk
  • Provides alternative methods to mitigate litigation risk, such as arbitration or mediation dispute resolution
  • Protects company’s intellectual property
  • Limits company’s liability and reputational risk
  • Sets expectations, securing a valuable working relationship

How Often Should Business Contracts be Updated?

How often certain contracts should be reviewed and updated can vary depending on the nature and scope of each agreement. The following is a general guideline as to when to update different kinds of business contracts:

  • Every two years: Not many business documents only need to be updated occasionally, but there are a few. Company contracts, such as operating agreements and other general records, usually fall into this category. Certain situations may necessitate a specific review prior to the two-year mark, such as the departure of a partner or change in ownership.
  • Annually: The general rule is, that when in doubt as to when a business contract should be reviewed or updated, the safest practice is once a year. Multiple agreements have one-year terms, including leases, licensing contracts, non-disclosure, or confidentiality agreements.
  • Biannually: Some contracts need to be reviewed more frequently than the most common one-year mark. Financing and professional service agreements warrant additional oversight to ensure the company is on track to fulfill all obligations. Professional services contracts can often involve substantial fee agreements with accountants or attorneys, so companies should check that they are getting an appropriate value.
  • Quarterly: the increased frequency of quarterly contract reviews can catch matters that could lead to bigger issues. Quarterly assessments can also be necessary for budgeting and reporting purposes like payroll and tax matters.
  • Monthly: Some business contracts are simply of a short duration, of an extremely high value, or with relatively unreliable partners. These types of contracts require diligent oversight and frequent communication.

All updates to business contracts should be discussed, agreed upon, and signed by every involved party. Hiring a knowledgeable Philadelphia employment lawyer can help your business avoid serious problems like breach of contract. Having a skilled employment lawyer by your side can ultimately save you time and money, a civil lawsuit, and the reputation of your company.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green Protect Clients and their Business Contracts

Reach out to one of our accomplished Philadelphia employment lawyers at Sidkoff, Pincus & Green for all your legal business needs. Call us today at 215-574-0600 or contact us online for a free consultation. From our office in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

Should I Have My Contract Drafted by a Lawyer?

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When drafting a contract, there are specific agreement concepts and money at stake, and hiring a lawyer for your contract needs can be one of the wisest decisions you will ever make. There are many benefits to having an experienced lawyer help you avoid the common pitfalls of self-written form contracts.

There are several kinds of contracts required for businesses, including those related to employment, services, contractors and leases. In particular, drafting an employment contract or employment agreement can be complex. There are various terms that are important to understand and include. Employment contracts involve certain provisions and specific terms that are unique from the language found in confidentiality agreements. An experienced lawyer will not only identify potential liability issues, but can suggest wording that will protect your legal interests and rights.

Lawyers have specialized knowledge and insight when it comes to using certain language and clauses in contract matters. Contracts must use exact language and meet numerous technical legal requirements in order for it to provide full protection under the law. An experienced lawyer will ensure that you benefit as from the specific terms of the contract. You can also rely on a lawyer to identify and correct any loopholes that would make you vulnerable to any future disagreements.

Additionally, a lawyer will be able to give you an unbiased, outside perspective on your business dealings during negotiations and the contract review period. The parties to a contract often go through many drafts and negotiation sessions before the official contract is signed. Your lawyer will not only draft the contract, but make sure you understand exactly what you are signing and what it will mean for you and your business going forward. 

It is also important to keep in mind that the employment and industry regulations that you presently understand may not be the most up-to-date laws. A lawyer’s job is to make sure that all contracts your business requires follow the current laws so that you are not disadvantaged or affected by incorrect information. A lawyer will be sure to draft your contract in a way that abides to future rule and regulation changes, which reduces your risk of having to update your contract frequently. The goal of a properly drafted contract is to help to prevent legal disputes from arising in the future. It also serves as evidence of the parties’ original intentions and obligations. If any issues with your contract should arise, you will be able to call upon your lawyer for future advice or questions with regard to that contract and any possible disagreements or breach of contract. 

You want to make sure that your final, official and signed contract is enforceable. Hiring a lawyer to draft your contract will provide you with the expertise of someone who knows how the courts will interpret and enforce the various terms of any kind of contract.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Help Write Employment Contracts

If you need help drafting your employment contract, the experienced Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. are available to help. If you are a business owner and need help with a contract or other legal matters, contact us online or call us at 215-574-0600 today. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

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What Should I Do if I Find an Error in My Business Contract?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You if You Have an Issue With Your Business Contract.

Most business contracts are complex, containing dozens of sections, sub-sections, and countless provisions detailing the requirements by both parties. Miscommunications could happen and something could be put in writing that should not have been. Also, there could be simple typos that happen when a contract is long. It is possible that a simple typo could significantly change the meaning or terms of a contract. If the typo is not caught during a review of the final draft, the parties could be in a tough spot since both parties signed the document.

There are three main categories of mistakes that can happen in business contracts.

Unilateral Mistakes

This is where one side of the contract makes the mistake or misunderstands a term or provision within the contract. This is the most common mistake. There are a few ways a contract can be rescinded if a unilateral mistake has been made:

  • A drafting or clerical mistake that did not lead to gross negligence.
  • If the error was so serious and irrational to be outrageous.
  • If one party to the contract relied on a material fact that the other party knew was a mistake but failed to inform the other party.

The best way to make sure unilateral mistakes are not made is to hire an experienced lawyer who focuses their practice on drafting and negotiating business contracts.

Mutual Mistake

A mutual mistake is when both parties misunderstand a term or provision in the contract. Since both sides have made the mistake, the contract can usually be voided. However, there must be a material fact for a mutual mistake to be void.

Common Mistake

A common mistake occurs if both parties mistakenly believe or misunderstand similar facts. The issue at the heart of the mistake has to be a fundamental aspect of the contract.

How to Prevent Business Contract Mistakes?

You want to make sure you have a lawyer on your side. Make sure your lawyer understands the goals of the contract that is being agreed upon, as well as the minor issues. A good line of communication with your lawyer is extremely important so that there are no misunderstandings and that everyone is on the same page.

Review every line of the contract with your lawyer. If there are any questions, make sure to go over the language in detail to make sure you completely understand the purpose of each sentence.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You if You Have an Issue With Your Business Contract

If you need to have a business contract negotiated and drafted, it is important that you consult with a lawyer. Our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can help you explore your options. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

What Constitutes a Material Breach of Contract?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You With a Contract Breach.

At the heart of every contract are certain conditions that each party must follow. When one or more contractual parties does not abide by the obligations of the contract, a breach of that contract has occurred. There are four main types of contract breaches, and a material breach is the most serious. That is because a material breach permanently breaks the contract.

A material breach of contract causes irreparable damage that makes it impossible to continue the contract. The material breach refers to one or more parties failing to perform the contract. The breach goes to the very heart of the contract itself.

Suppose you have the architectural designs for a particular home that you want to build. You could pay a contractor to build it, but if the contractor builds a completely different home, a material breach of contract would have occurred. In this case, there likely would be no way to continue the contract.

Other Parties Must Be Ready, Willing, and Able

Ready, willing, and able are three important factors in claiming that a material breach of contract has occurred. If you are accusing another party of a material breach, you have to be ready, willing, and able to perform your end of the bargain.

If the contractual agreement were to build a home, you could show that you provided the architectural designs, land, and money to do the job reasonably and effectively. The homebuilder might continually delay or otherwise refuse to do the project as agreed. If so, you could make a strong case for a breach of contract. The homebuilder also could not erect or place a substandard home on the property and declare the contract fulfilled.

Did Bad Faith Play a Part in the Breach of the Contract?

If the breach of contract resulted from bad faith and the case is brought to court, they will likely presume it to be a material breach of contract. On the other hand, a breach that results from negligence is less likely to be considered a material breach. In this case, it would be considered a minor breach.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You With a Contract Breach

If another party has breached a contract you are a part of, speak with one of our experienced Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Each party involved in a contract must meet certain obligations. We can help you if another party is not following through on their end of the contract. Call us at 215-574-0600 or contact us online to schedule an initial consultation today. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

Should I Have a Lawyer Review My Executive Employment Contract?

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Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Help Executives Negotiate Favorable Employment Contracts.

Executive-level employees are often offered executive contracts or employment agreements. For employers, a contract can ensure that the executive will work for them for a predetermined amount of time, among other commitments. For the executive, a contract allows them to negotiate their compensation, criteria for raises, bonus structure, and severance payments.

It can be beneficial for anyone offered an employment contract to have a lawyer review the paperwork. An experienced employment lawyer can:

  • Demonstrate to the employer that you are serious about negotiating the best package possible.
  • Ensure that a proposed severance package will be adequate should you be let go.
  • Translate the legal jargon into understandable terms, so everything is clear.
  • Negotiate for a salary commensurate with the market.
  • Review noncompete and other clauses to ensure they will not compromise future employment.

In short, your lawyer will craft a complete negotiation strategy to make sure you are favorably covered in all aspects of employment: salary, vacation, bonuses, raises, termination, and postemployment provisions.

A terminated employee, executive or not, who is offered a severance package can also benefit from having a lawyer review the termination or severance agreement. This can help the employee understand all terms and expectations.

Most employers have deadlines for an employee to accept or reject an employment contract. That is why you should speak with a lawyer as soon as you receive the contract. Your lawyer will appreciate the extra time to craft a solid strategy that will include some or all of the following:

  • Compensation: Amount of compensation and timeframes for delivering payment.
  • Bonuses: Bonus criteria, amounts, and timing for payment.
  • Raises: Eligibility for raises, timing, and amounts.
  • Liability protection: A lawyer will review the contract to ensure appropriate insurance protections and agreements are in place to shield the executive from personal liability and indemnification.
  • Responsibilities: Full job description, title, duties, reporting structures.
  • Benefits and perks: Insurance coverages, such as disability and life insurance, medical plan/medical check-ups, 401k, pension, or other retirement plans, meal and entertainment reimbursement, company car, cellphone, housing assistance.
  • Stock rights: Stock amounts, vesting, exercising stock options, dilution of stock value; how stock options and vesting will be managed postemployment.
  • Timeframes: Length of contract and criteria for a contract extension.
  • Performance evaluations: Criteria and timing, benchmarks, and ratings to be used.
  • Post-employment provisions: Noncompete clauses, trade secrets, and intellectual property considerations. A lawyer will review these restrictive covenants to ensure the executive’s future employment is not jeopardized.
  • References: Agreement on what employer may disclose about the employee should they be terminated; how references will be handled.
  • Severance: Items the severance package will include compensation, timing and length of salary payments, benefits, such as insurance coverage and other considerations.
  • Confidentiality requirements: Most employment agreements require that an executive employee agree not to divulge confidential information acquired during employment. A lawyer will ensure that the employer provides for certain limitations, such as information that is publicly known or is already lawfully in an executive’s possession.
  • Continued employment: A contract should include salary, benefits, and perks should the executive remain with the company but in a different capacity. There should also be language that spells out what will happen to the executive and the position should the company be sold, taken over, or if there is a material change in job duties or reporting relationship.

An employment contract will also typically include the grounds for which an employer may terminate the executive’s employment and not pay severance benefits. This is called a “for cause” provision and will include reasons such as:

  • Employee’s felony conviction.
  • Employee has substantially failed to perform job functions.
  • Employee fraud or willful and material misconduct concerning the employer.
  • A willful and material breach of the employment contract.

In summary, an employment lawyer can help ensure that the high-ranking employee is protected both during and after employment.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Help Executives Negotiate Favorable Employment Contracts

Any employee offered an employment contract should reach out to one of our Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. We have helped many executives get substantial compensation and benefits packages. For an initial consultation, contact us online or call us at 215-574-0600. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.