What Is My Liability as A Startup Co-Founder?

What Is My Liability as A Startup Co-Founder?

Contracts, Corporations, Start-Up
The forming and launching of a startup is an exciting, possibly life altering event.  However, if you and your fellow co-founders are not careful to take certain precautions, being a co-founder has potential to be life altering in a negative way.   In this post, we'll talk about an oft-posed question I get as a Phoenix startup company attorney: What is my liability as a co-founder of a startup? Ways Your Startup Could Be Liable When I talk to startup clients about their liability concerns, I find it helps to break the universe of potential liability into two main camps: tort and contractual.  Note: I will save a potentially large---but no less serious---third category of corporate tax, payroll tax, and pension liabilities for another day/blog post. In its most basic…
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Is Customized Software a ‘Work Made for Hire’?

Is Customized Software a ‘Work Made for Hire’?

Contracts, Copyright, Employment Agreements, Independent Contractor
Your company just hired someone to help develop your new mobile app. Your agreement with this programmer or engineer specifically states that anything she creates for your business is a "work made for hire". Your business is good, right? No way that the new hire can ever lay claim to the deliverables, correct? In my Phoenix startup and technology law practice, I get this question a lot as it pertains to software and app development.   Unfortunately, the term "work made for hire" (or, more colloquially, "work for hire") is a term as misunderstood by companies as it is misused. The "Work Made for Hire" Doctrine Explained Generally speaking, a work that is copyrightable is the sole property of the person who created it (and assuming the author has not transferred…
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Is an Electronic Signature  Legally Enforceable?

Is an Electronic Signature Legally Enforceable?

Contracts, E-Commerce
It's no surprise that digital contracts and other records are becoming the norm in not only consumer-facing transactions, but especially in ones between businesses. In this post, we look at the question to what degree is an electronic or digital signature on such documents actually enforceable? Per usual, let me run through the caveats: I am only licensed to practice law in Arizona.  This article only addresses Arizona law.  If you're an e-commerce or other business utilizing digital agreements and signatures in another state or states other than Arizona, I strongly encourage you to consult the laws of those states or a lawyer licensed in those jurisdictions.  The Arizona Electronic Transactions Act In my Phoenix startup technology law practice, I have definitely noticed more and more clients who have chosen…
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Why You Should Do a Lien Search before Buying a Business

Why You Should Do a Lien Search before Buying a Business

Business Sale, Contracts, Liens, UCC
Potential buyers of businesses should take every possible step to search for and investigate potential liens affecting the acquired company's assets.  Our Phoenix business law firm's recent representation of the buyer in the purchase of a local contractor company illustrates the importance of making sure that the target business’ assets are not encumbered by liens.  Even if the transaction is structured as an asset sale, a seller’s liens might unknowingly become your problem.  What is a Lien? First thing's first: a lien is a legal right or interest that a creditor has in another person or company's property.  If you or your partners are purchasing a business and that company's assets are encumbered by a lien, a third party may have an interest in the business or the assets you…
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5 Essential Agreements Every E-Commerce Site Should Have

5 Essential Agreements Every E-Commerce Site Should Have

Contracts, E-Commerce, Privacy, Start-Up
Founders of e-commerce businesses can often be so wrapped up in getting to market and scaling as quickly as possible that they overlook legal protection for their business. Operating any business, let alone one providing goods or services over the Internet, without important legal safeguards in place is like trying to cross the 101 Freeway every day wearing a blindfold. Could you get away with it? For awhile, perhaps. However, sooner or later, the odds will catch up--with potentially catastrophic results. In this post, we'll cover the five essential legal agreements which every e-commerce site should have. Understand that this list is merely intended to describe the most basic documents that your e-commerce site should have in place. It is not meant to be exhaustive. There are other, no less…
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