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Blogs and blogging or not immune from the law

The internet is such an open and dynamic forum that it can be all too easy to think that a blogger, or for that matter someone posting on facebook, twitter or other social media site, can state an opinion with impunity and that, due to the speed and fluid nature of the web, a comment made will easily be lost in the internet ether.

Whilst the internet is and has proved difficult to police in many respects legally, with issues over jurisdictions on hosting and ownership of websites where inappropriate comments are made, in basic legal terms, the same laws apply online as offline. It is also the case that businesses of all types and sizes, in many parts of the world, are now much more aware of the need to monitor what is being said about them online, and many are prepared to take action for any form of defamation.

As with any litigation matter, legal costs can escalate fast, and  in some jusrisdictions, notably the US, when compared to commonwealth law systems based on the English legal system, damages can be punitive and extremely costly.

So, as just one salutory reminder to be careful about your online activity, whether blogging or otherwise, and to check your facts, be aware of the case in the US between Obsidian Finance and blogger Crystal Cox. In this case Ms Cox ended up with a judgment against her for $2.5 million damages last year. An expensive mistake based on a single defamatory post alleging wrongdoing.

Share Sale & Purchase Agreements will generally include the following:

Selling the Shares

A provision relating to the procedure as to when the shares in the business have been transferred. This may include a mechanism for the previous directors in the company to resign, new directors to be appointed and other Companies House formalities which may need to be undertaken.

Warranties

These are statements given on completion by the seller to the buyer which will relate to the business and give the buyer some protection over issues of concern they may have about the target business.

The purpose of a warranty is two-fold:

• To give the potential buyer some protection in the case that the seller has not been as forthright as to some of the details of the business; and

• To extract some key information from the seller which he may not have otherwise volunteered and would affect the purchase price and whether the potential buyer would want to purchase the company altogether.

Disclosure Letter

This document is a chance for the seller to provide information to the buyer where the actual position is not as stated in the warranties. This allows the Seller to reveal certain information to the buyer which may protect them once completion has taken place.

Seller’s Protection

This clause will attempt to limit the liability which will be placed onto the seller. The seller’s solicitors will attempt to do this by limiting the scope of their client’s potential liability, the amount of time in which they are to be liable for warranties, the total amount they are to be liable for and minimum thresholds for liability.

Indemnities

During the due diligence procedure certain issues may be found by the buyer, if this is the case, he may seek certain indemnities from the seller that these issues will not arise in the future.

Restrictive Covenants

This clause is placed into the Agreement in order to prevent the seller from interfering with the business after completion has taken place. Restrictive covenants should be drafted very carefully to ensure that they are enforceable by the buyer. If they are drafted too vaguely or too strictly, they are likely to be unenforced by the court.

These tips courtesy of Darlingtons, solicitors in London. Thanks.

Separation Agreement

A separation agreement (also known as a maintenance agreement) is a formal agreement between a married couple who decide they wish to stop living together. This agreement enables the couple to manage their finances, division of property and care of children.

The agreement is open to challenge by either party on the grounds of undue influence, duress, fraud and mistake. It is therefore essential that if you intend to enter into a formal separation agreement that legal advice is sought by each party prior to make sure that both parties set out in writing the terms to which they are agreeing to the separation.

Contents of a separation agreement

A separation agreement usually states that the parties are going to live separately and this will provide evidence of a dissolving marriage. A separation agreement can be relied on as proof of an irretrievable breakdown of a marriage which is what courts need to see before they allow divorce proceedings to commence. The agreement may contain provisions relating to:

• periodical monthly payments for maintenance
• payments relating to the property such as the payment of the mortgage, repairs and outgoings
• arrangements relating to the children such as where the children should reside and how much contact the other parent may be entitled to
• agreement not to disturb, pester or harm the other partner

A separation agreement would need to be signed and dated in order to take effect and be able to be used when petitioning for divorce. However in these financially tough times it is often the case that couples cannot actually afford to allow one of them to move out and thus live in two separate households. They are therefore forced to carry on living together even though the agreement has stated that they will live apart. In these cases, a separation agreement can still be signed and the date of separation to be recorded in the agreement is the date where the parties become “two separate households under one roof” and when they stop sharing the same bed, cooking and eating together.

Advantages of a separation agreement

A separation agreement is preferable to a contested court order for the reasons of convenience and speed. Parties may enter into a separation agreement in order to avoid court proceedings because it is likely that a court order will not be made until a considerable amount of time has lapsed. these agreements are also becoming moire common in circumstances where many couples simply can’t afford to get divorced and decide to leave financial and property law issues to a later date, when economic conditions hopefully improve. It would also be a cheaper alternative for parties to enter into a separation agreement and furthermore this alternative would avoid the bitterness that could arise from confrontation in court proceedings. Another advantage of separation agreements is the flexibility it entails of allowing to include anything in the terms to be agreed between the parties.  A husband, for instance, may agree to continue paying the outgoings and repair costs for the home in which his wife and child remain living in. Such a matter would not hold any weight by the divorce courts as they cannot enforce it under the Matrimonial Causes Act 1973 despite the parties applying for a consent order.

Finally by the parties agreeing the details of their separation amicably this reduces the need to spend a lot of money on legal and other professional costs.

Disadvantages of a separation agreement

A separation agreement cannot serve to be a guaranteed final solution to an end to a partnership and cannot overrule a court’s jurisdiction. A party to the separation agreement may seek further provision or relief from the court at the time of the divorce which the courts would consider and may grant despite a valid separation agreement being in force. Separation agreements are also not as easily enforceable as court orders.

Variation of separation agreements

Parties are allowed to make variations to a separation agreement which is in force without having to undergo a court application subject to both individuals agreeing to the variation and this is of course if there is not an insolvency situation with one of the parties, which changes the position. In the event of a disagreement arising relating to a proposed variation, a court application would need to be made and the court at its discretion will choose to reject the variation or incorporate it into the separation agreement.

Shareholders agreements – what you need to know

A Shareholders agreement is a highly effective, possibly critical means of governing the relationship between shareholders and in some cases between the shareholders and the company and of avoiding commercial disputes.

Much of what may be included in a shareholders’ agreement may also be included in the company’s articles of association (“the Articles”). However the contents of shareholders’ agreements are private, unlike the Articles which must be filed at Companies House and are, therefore, public documents.

Shareholder Agreements basics

Things to consider/benefits for shareholders’ agreement  :-

• a contract between shareholders and/or between shareholders and the company.
• enterprise Management Incentives -this is a tax efficient way to give shares to your employees. Giving employees shares can improve efficiency and reduce absence, as the employees feel they are a part of the company.
• ability to purchase shares linked to profitability of the company, or over a set period of time. You may be considering giving someone shares in your company now, or you may decide that while you want them to have an option to purchase shares now to tie them into the company, you do not want them to be able to purchase shares for a period of time, or until the company reaches a set turnover level. This way the option holder will have an interest in how the company is doing as it will affect the value of the shares when he does get them, but will not be able to benefit from the shares until a future date. After all, a shareholder is a member of a company and will have a say in how it is run.
• ability for other members of the company to buy back shares from shareholders wishing to leave the company or when certain other events occur. For example a lower valuation if an employee/shareholder is leaving after gross misconduct a time limit to force the shareholder to sell the shares within a set period from the event; and  the percentages that other shareholders can buy in order to keep, or change, the balance of power. The ability of particular shareholders to veto actions of the company.
• You can use a shareholders agreement to cover all aspects of voting at shareholders meetings. While directors have day-to-day control of the company there are many matters that will need the shareholders consent.
• Requirement for new shareholders to become parties to the shareholders agreement before they are registered as members of the company. While all shareholders are automatically bound by the Articles, a new shareholder will only be bound by a existing shareholders agreement if they have signed a deed of adherence. It is common to prevent the directors registering a new shareholder unless they have signed a deed of adherence.
• avoid future misunderstandings and problems in running the business.
• Require departing employees to sell their stock so that the shares remainh wi th those who have the greater incentive.
• Require the company or other shareholders to buy shareholders shares on a shareholder becoming disabled or dying.
• A venture capitalist who does not acquire control with purchase of company shares will often require a shareholders’ agreement as a condition of funding.
• Management wishing to sells a controlling interest in the company’s shares will normally insist on a shareholders’ agreement to ensure its continued ability to run the company.

The content of this basic guide is for information only. You should never act on the contents of this alone and should always seek professional legal advice regarding any legal issue or business contract before taking any action.

Instructing solicitors is an expensive business and is not a panacea to all legal problems or a a guarantee of a successful outcome.

Whilst we would not advocate a “diy” approach to any legal matter, there are some areas, particularly with the fantastic free legal resources on the internet now, where a lay person can get a pretty good handle on legal issues and matters to be aware of. Good examples of this are issues such as what to look out for in a commercial lease, or things to bear in mind before entering into a partnership agreement, shareholders agreement or other kind of business contract.

In our view, notwithstanding the inherent problem of the no-cost rule for small claims cases under £5,000.00 (whereby win, lose or draw, the general rule is that neither party is awarded costs), the one area of law fraught with danger in going it alone is litigation. there are complex general rules of procedure contained in the Civil procedure Rules (CPR) running to hundreds of pages with variations relating to specified types of cases. Making a mistake with procedure, let alone not getting the law right, can be fatal and/or expensive to a case and even though there is an established “overriding objective” in the rules designed to make both parties equal, some Judges are more prepared to apply this objective than others.

We then move onto the law. This of course varies from case to case but to succeed with a litigation case, not only does the evidence need to be in favour of the winning party, but the law also needs to be, and this can vary from application of case law precedents (common law) through to technical statute law. Experience and research skills count in this regard and Judges can be very intolerant of any party attaending court without being fully prepared. Expect an opponent to be ready.

Finally, and perhaps most crucial of all, is the issue of litigation tactics. What does winning mean ? What happens if an opponent makes a tactical offer which you reject and the court has knowledge of this ? You could find yourself winning on the law, but paying your opponent’s costs, which may outweigh your damages. What type of documents might your opponent have which will help your case ? You may need to go to court to get an order that the opponent discloses such documents. And what about enforcing any judgment you may obtain ? It is one thing reaching a settlement or getting a judgment, but another thing getting your money from the opponent. The court will not help you just because you have won, and you could end up wasting even more money if you choose the wrong enforcement method.

In short, there are more hurdles with any litigation matter than in almost any other area of the law. Don’t forget also to choose the right lawyer !

Commonwealth Law

One of the features of the historical commonwealth of nations, and it’s origins from the British empire is that there is much commonality in the legal systems of the relevant countries, which currently number some 54 member states.

As we develop this site, we will be adding analysis of the relevant legal systems of some commonwealth countries, which in total cover a population of nearly 2 billion. Continue reading →