As a business owner, you create contracts that specify certain expectations and requirements agreed to by both parties. When one party purposefully makes a false statement to get another party to sign a contractual, legally-binding agreement, this is known as fraudulent misrepresentation. Understanding what constitutes fraudulent misrepresentation can help you determine if you should seek recourse regarding the false statements in your contract.
What is Fraudulent Misrepresentation?
Fraudulent misrepresentation is actually a type of civil action that arises from contract law. When one person lies to another or makes a misrepresentation of any material fact that persuades or induces the other party to sign a contract, it can be considered grounds for a fraudulent misrepresentation lawsuit in California.
The following elements are required to prove fraudulent misrepresentation in a court of law:
- A false representation or lie was made by one party.
- That misrepresentation was related to a material fact or component or the transaction.
- The party making the misrepresentation did so with malice, meaning they did so with the knowledge that the statement was false, or with a reckless disregard regarding the truth of the statement.
- The misrepresentation or lie was made as a direct attempt to induce the other party to sign the contract.
- The other party relied on the misrepresentation and used it to make a decision to sign the contract.
- The misrepresentation was the cause of any injury suffered by the other party.
Examples of Fraudulent Misrepresentation
It is important to note that a fraudulent misrepresentation typically regards an actual fact, not someone’s opinion, intention, or some future occurrence. Some examples of fraudulent misrepresentation in contracts can include the following:
- A completely false statement
- A partially true statement, in which the other part is a misrepresentation that affects a material fact of the transaction
- The omission of some details that would create a misunderstanding or false belief by the other party
- Remaining completely silent, or the failure to disclose material issues that would affect the contract, or that are legally required to be stated according to the law.
Remedies and Damages for Fraudulent Misrepresentation
If you discovered that your contract included fraudulent misrepresentation by the other party, you may have suffered financial or other types of damages. Oftentimes, the court will allow the harmed party to rescind the contract and make it voidable. However, making a contract void does not always bring complete restitution to the victim of fraudulent misrepresentation. Therefore, monetary damages are also awarded by the court. However, in order to bring a claim, you must have suffered actual damages, and the severity of those losses will be used by the courts to determine remedies regarding your case.
Contact an Experienced Business Attorney
Fraudulent misrepresentation in a contract can cause catastrophic financial losses. Courts take these cases very seriously, and there are significant legal consequences. If you have been a victim of fraudulent misrepresentation, contact business law attorney in La Jolla, Law Office of Kris Mukherji at (858) 442-5747. We can help you with your business law and business contract needs, and also help you if you find yourself a victim of fraudulent misrepresentation.
If you are considering buying someone else’s business, there are many important legal and financial issues to consider. Research needs to be done regarding the financial health of the company, along with ensuring that all state or federal contracts are filed on time to ensure the legality of the sale. The entire process of purchasing a business can be complex and challenging. Here is a due diligence checklist of serious items to consider requesting, obtaining, reviewing carefully before buying a business.
- Articles of Incorporation
- Certificate of Good Standing from the Secretary of State
- Minutes of Meetings
- Organizational Chart
- Listing of Shareholders
- Agreements regarding shareholders rights and responsibilities
- Listing of all states where the company does business, owns or leases property, and/or maintains employees.
- Annual reports
- Audited financial statements
- Auditor’s notes to the financial statements
- Analyst reports if available
- Schedules of all accounts receivable and payable, inventory, indebtedness and contingent liabilities
- Description of any depreciation or amortization methods and accounting practices
- Analyses of fixed and variable expenses, as well as gross margins
- Company’s general ledger
- A description of internal control processes.
Corporate Physical Assets, Real Estate and Intellectual Property
- A listing of all assets and the locations of all assets and equipment.
- Listing of any sales or purchases of major equipment
- All real estate transactions
- All trademarks, trade names, copyrights, patents, and patent applications
- All trade secrets and the methods used to protect them
Corporate Employees and Benefits
- Listing of all employees
- Employee handbook
- Schedule of all employee benefits, including sick leave, vacation leave,
- Summary Plan Descriptions and Plan Documents for any ERISA covered retirement benefits plans
- Employee Stock Ownership Plan documents
- Any government investigations either closed or pending
- Collective bargaining agreements
- Any discrimination or harassment lawsuits
- Any labor disputes
- Workers compensation policy, along with any workers’ compensation claim history
Corporate Environmental Issues
- Environmental permits, licenses, and audits
- A listing of hazardous substances, and disposal methods
- A description of the Company’s disposal methods.
- Any EPA investigations either closed or pending
- All federal, state, local, and foreign tax returns.
- Any IRS investigations either closed or pending.
- Employment tax filings, excise tax filings or any tax liens.
- Any and all contracts, loan agreements, distribution agreements, or other contracts that would pertain to any internal or external aspect of the business.
Other Important Questions to Ask
Ultimately, if you are attempting to purchase a business in California you are wanting to ensure that the business is a sound financial decision. Consider asking the following additional questions.
- Is the business currently profitable? How long has the business been profitable?
- What are the largest customers of the business? How long have they been customers? What percentage of sales do they make for the company?
- Will there be any significant changes between now and the time of sale?
- Are there any pending transactions that would take a substantial amount of money to resolve?
- Is the company involved in any kind of litigation?
- Have there been any articles or press releases related to the company in the past several years?
Contact an Experienced Business Attorney
If you are considering buying a business, this checklist is really just the start. Understanding the legal and financial aspects of purchasing another person’s company can be overwhelming. Contact business law attorney in La Jolla Law Office of Kris Mukherji at (858) 442-5747. We can help ensure that you have all of your questions answered, and all of the correct forms filed on time as you begin the process of buying a new business.
If you have a child who was born with mental or physical disabilities or a child who became disabled later in life and needs someone to manage his or her affairs, you have special and unique estate planning needs. Planning for your child’s financial future is important, and parents want to make sure that their special needs child will be well taken care of when they are gone. A Special Needs Trust (SNT) is one option to consider for your special needs child to help guarantee that his or her health and welfare needs are taken care of after you die. However, there are both advantages and disadvantages to the creation of this type of trust. Listed below are some pros and cons of a Special Needs Trust.
SNTs are typically essential for any special needs person that is unable to independently handle and manage their finances. Some of the advantages of a SNT include the following:
- Your child will still be eligible for government programs like SSI and Medicaid, and the SNT will help fund services and care over what the government will provide.
- All funds are used for the care of the child with the disability. (Your child will not be influenced or taken advantage of by an unscrupulous person looking for financial gain.)
- The funds are tax-deductible.
- The funds are never available for any creditors to pay a judgment, they can only be used for the care of your child.
As with anything, there are also some disadvantages or challenges to creating a SNT for your child, which include the following:
- The cost is high. An SNT has an annual fee, as well as a fee to establish, which can make it financially unaffordable to create for some people. There are minimum amounts required to establish an SNT.
- Your child will lack independence. Your child will have to request funds from a trustee who has complete discretionary control over whether to release the funds or not based on the terms listed in the trust. Some children can feel frustrated due to the lack of independence.
- Some funds must be used to pay back Medicaid in the exact amount that Medicaid paid on the person’s behalf. This can completely wipe out the trust after the child’s death, or when the trust is terminated legally.
You will also need to make a decision regarding who the trustee will be of your SNT for your child. Oftentimes, a trustee is a professional, but the family will also choose a family member to serve as a co-trustee to ensure that their wishes are being followed. The trustee should have the best interest of your child in mind. You also have the option to pay for an audit and have a monitoring service on your trustee after you pass away.
Contact an Estate Planning Attorney
There are many different types of trusts and estate planning tools to choose from. An experienced attorney can ensure that you pick the right vehicle to take care of your special needs child when you are gone, ensure that the trust language is created accurately, and make sure that the trust is broad enough to meet the ever-changing needs of your child as they grow. Contact the Law Office of Kris Mukherji at (858) 442-5747. We can help you determine if a Special Needs Trust is the right kind of trust for your family.
If a deceased person created a last will and testament as part of an estate plan, the last will and testament will have to go through the probate process. The probate process a legal procedure done through a court that authenticates the last will and testament, locates and determines all assets, pays final taxes and bills, and then distributes the remaining portion of the estate to the correct beneficiaries. There are four basic steps to the probate process.
Step 1: File Petition and Give Notice
The first step in the probate process will be the official filing of the petition with the probate court to either admit the will to probate and appoint the executor or, if there is no will, appoint an estate administrator. All of the decedent’s heirs and beneficiaries will be notified that the last will and testament is now in the probate process through an official notice. Typically, a notice is also placed in a newspaper as a matter of public record to attempt to notify any other potential creditors of the decedent.
Step 2: Inventory of Property and Notice to Creditors
The executor will then give a written notice to all of the creditors of the estate. Any creditor that has a valid claim on any assets of the decedent is allowed to do so with the court. A complete inventory will be taken of all the decedent’s property, which can include real property, retirement funds, stocks, bonds, business assets, and more. If there are non-cash assets, the court can hire an independent appraiser to determine value.
Step 3: Payment of Debts
Any debts to creditors, taxes, and estate and funeral expenses must be paid from the estate. There may be a question regarding the validity of some creditor’s claims. If this occurs, a determination will need to be made. A personal representative of the estate is allowed to sell assets to satisfy any of the decedent’s obligations.
Step 4: Legal Title is Transferred
After the waiting period is given to creditors to file any claim, bills are paid, and all financial matters are settled, the court will be petitioned to grant the authority to transfer the remaining assets to the beneficiaries as directed in the last will and testament. If there is no last will and testament, the assets will be transferred according to the state’s intestate succession laws.
How to Avoid Probate
While you may give away all your property to avoid probate, there are some other ways to avoid the probate process. You could possibly use joint ownership with rights of survivorship or tenancy by the entirety for your accounts, which gives legal rights to your spouse when you die. Some accounts will let you use beneficiary designations, such as life insurance or retirement accounts. Finally, using a revocable living trust is an estate planning tool that has many benefits including avoiding probate, privacy, and the ability to make changes during your lifetime.
Contact an Estate Planning Attorney Today
If you are interested in creating an estate plan that will not need to go through probate or are interested in how the probate process will work with your last will and testament, contact the Law Office of Kris Mukherji at (858) 442-5747. We can help you build your estate plan to ensure that your estate is handled properly and according to your wishes.
Many small companies grow their business by selling shares of stock in the company. Oftentimes, as time goes on, the group of majority shareholders may attempt to remove the minority shareholders from the company. Perhaps there are different ideas about the direction of the company, personality differences have developed, or the majority shareholders simply want all of the stock to control. Whatever the reason, there are instances in which majority shareholders attempt to push out the minority shareholders. However, minority shareholders have rights regarding their shares in a company, and these rights can be enforced by law.
Under the law, the majority shareholders have a fiduciary duty toward the minority shareholders. They must deal with them honestly, in good faith, with candor, loyalty, and fairness. The majority shareholders must always act in compliance with the shareholders’ agreement. If a majority shareholder breaches his or her fiduciary duty, the minority shareholder may file a shareholder derivative action, which is a type of lawsuit. If a majority shareholder acts in a way that is not in the best interest of the company, pays him or herself a high salary, or sells stock that is a deal favorable only to the shareholder, a minority shareholder may have the right to sue.
Access to Financial Records
A minority shareholder should have the same rights as a majority shareholder to vote his or her shares, attend meetings, and have full access to the company’s financial records.
When a private company begins to value its company stock to sell or transfer ownership, a minority discount should be assigned. This means that the minority shares are not as valuable because they do not provide as much ownership in the company as other shares. The benefit to this is that a minority shareholder can purchase shares for less than majority shareholders.
Benefits of Shareholding
Minority shareholders should have the same rights to benefit from shareholding as majority shareholders. For example, if dividends are received by majority shareholders, minority shareholders should also receive dividends. If a minority shareholder believes that a majority shareholder is suppressing his or her rights in any way, the minority shareholder may have the basis for a strong lawsuit.
Communication With Other Shareholders
Minority shareholders have the right to communicate with other shareholders regarding their common business interests in the company. Any stockholder who is unsatisfied with some internal management of the company has the right to request the stock register that contains the name and addresses of the other stockholders to communicate with them regarding corporate management. Any shareholder lists, organizational documents, minutes, or other records should be made available so that shareholders can communicate with each other about the internal process of the company in which they own a part.
Contact an Experienced Business Attorney Today
If you are a minority shareholder and have concerns about your rights, you should take steps to ensure that those rights are protected. Protect your financial interests by visiting with an experienced business attorney at the Law Office of Kris Mukherji at (858) 442-5747 to learn how you can implement a successful strategy to ensure your shareholder rights are protected.