Steven Bergman
October 2017
Business and individuals enter into contracts on a regular basis. When entering into a contract, it is important to make sure you know and understand every term in the contract, not just the major provisions, such as the parties, the price, the terms and conditions of performance, and the time and place for performance.
In addition to the major provisions, virtually every written contract contains what most people refer to as “boilerplate,” which are the standardized terms that are included in most agreements. These might include assignment clauses, severability clauses, notice clauses, choice-of-law clauses, and arbitration clauses, among many others. The so-called “boilerplate” is found in commercial leases, license agreements, purchase orders, loans, real estate purchase contracts, employment contracts, and guaranties. And it is true of consumer agreements, such as credit card agreements, residential leases, cell phone contracts, and more. The reality is that most people gloss over the “boilerplate” without even attempting to understand what it is they are agreeing to in the contract. Whether a commercial or consumer contract, not knowing and understanding every term and provision, including “boilerplate” provisions, can have far-reaching consequences. As the Utah Supreme Court recently stated, “it is not the judiciary’s role to draft better agreements for parties than those they draft for themselves.” PC Riverview, LLC v. Cao, 2017 UT 52, ¶ 23, n.2.
Additionally, for those contracts that do not contain sufficient terms of conditions, the law will often impose those terms and conditions based on the course of performance of the parties and/or the terms and conditions that are standard for that industry or transaction. Other terms and conditions, if not stated in the contract or agreement, are based on the Utah Uniform Commercial Code in many instances.
Over the next few months, we will be posting about some of the important provisions of a contract or agreement that many business and individuals overlook – often to their detriment. The time to get a contract right is before it is signed – not after an actual or threatened dispute exists. Examples of these provisions, and the effect they can have on a contract dispute, include the right to receive or requirement to give notice in the event of a default, the manner of that notice, what remedies are available to the parties in the event of a dispute or failure to perform, whether a lawsuit can be filed, where a lawsuit can be filed, and what law applies in a lawsuit or arbitration.
The attorneys at Richards Brandt Miller Nelson have decades of experience preparing, negotiating, litigating, and defending contracts. If you or your business are preparing or negotiating a contract, or you or your business are now facing an actual or threatened contract dispute, please contact us with your contract questions to ensure that you or your company have the most protection and strongest contract rights possible under the circumstances.
Read Contracting 101 – Choice of Law and Borrowing Statutes
UCC Article 9: What You Need to Know, Part 1
Clint M. Hanni
March 2018
Introduction
If you’re a business owner, you’ve been using the Uniform Commercial Code (UCC) even if you’ve never heard of it. The UCC is a model body of law adopted by all 50 states and US territories in a generally uniform manner that governs commercial business transactions, although there are slight differences between the states. The UCC is divided up into eleven separate sections or “Articles” that each govern a different set of transactions.
What kind of transactions are governed by the UCC? Here’s a short list: selling goods, leasing equipment, issuing promissory notes, sending purchase orders, writing checks, opening bank accounts, shipping goods, and finance transactions where a loan is secured by collateral. This blog series will deal with finance transactions, which are covered by UCC Article 9.
As a business owner, why should you care about UCC Article 9? The answer is simple: whenever you enter into a financing arrangement, equipment lease or any transaction where an obligation is secured by collateral, UCC Article 9 is there in the background to protect you as long as the documents and agreements comply with its provisions. If you are entering into a transaction where you will provide financing, you’ll need to have a basic understanding of how UCC Article 9 helps protect your interest in the collateral. As you might expect, UCC Article 9 is a complicated statute, and you’ll need the help of a professional to navigate it. If you’re a lender, you’ll want to make sure the documents you are using have been vetted by an attorney so they comply with the UCC in your state. If you’re a borrower, you’ll want to hire a lawyer to confirm the documents aren’t overreaching and include the protections offered by the UCC.
Because UCC Article 9 touches so many different kinds of transactions, a general understanding of how it works and what to look for will benefit you regardless of whether you’re a lender, borrower, buyer or seller.
Clint M. Hanni is Of Counsel to Richards Brandt Miller Nelson. He is a member of the Business Transactions & Corporate Governance, Banking and Finance Law, Business Bankruptcy and Creditor Rights, and Real Estate Transactions & Litigation practice groups.
CDDC Announce 2018 Award Winners
The 4th Annual Intermountain Construction Defect and Dispute Conference was held Friday, February 9th, 2018 at which the organizers recognized five professionals in the community for their contributions in the construction industry.
Lincoln Harris received the Attorney of the Year Award honoring him for his level of excellence and longtime service in the field of construction law. Besides this award, he was acknowledged for his work in local government and solving the legislative issues facing his clients. Lincoln’s further credits, which were pointed out at the ceremony, are representing the Appalachian Education and Defense Funds.
Deferred Action for Childhood Arrivals – Where are we now?
Kendall Moriarty
February 2018
Limbo. On June 15, 2012, President Obama unveiled a program called Deferred Action for Childhood Arrivals (or “DACA”) which would provide employment authorization and protection from deportation for individuals who entered the United States as children and who had never committed a deportable crime. The program began accepting applications on August 15, 2012. Since then, U.S. Citizenship and Immigration Services (or “USCIS,” the branch of the Department of Homeland Security that processes DACA applications and renewals) has accepted over 1.5 million applications requesting relief[1] (at $495[2] a pop, that’s more than $742,500,000 in revenue for the federal government[3]). Of those 1.5 million, more than 1.2 million have been approved.[4]
On September 5, 2017, President Trump issued a new Executive Order effectively beginning a “phasing out” DACA by giving only certain individuals the right to renew within one month’s time. Everyone else could maintain their status until its expiration, but would then lose their protection. However, on January 10, 2018, the District Court for the Northern District of California issued a preliminary injunction pausing President Trump’s order. While this pause does not revive the program entirely, it provides a window of relief for the thousands of individuals who had already been issued DACA and who needed to renew it but missed the deadline or did not qualify based on President Trump’s October 5, 2017 requirement.
In response to the court’s decision, on January 13, 2018, USCIS issued a policy update[5] stating that the agency would again accept DACA renewal applications. This included applications for those who had let their DACA status expire more than a year before President Trump’s September 5, 2017 announcement. However, those who have never been issued DACA cannot newly apply.
Still, the court order allowing eligible individuals to renew their DACA status provides important physical and emotional security for thousands of individuals. Employers who have hired and trained DACA recipients as part of their workforce now also enjoy an added measure of stability.
What does this mean for you?
If you currently have DACA, you may be eligible to renew your work authorization and DACA status. If you have any questions on whether you qualify or how or when you should renew, please call us.
If you are an employer who has hired DACA workers and want to know how these changes affect you and your business, please call us.
If you have never had DACA but want to know if you have other options for seeking and obtaining status in the United States, information is power; please call us.
Author: Kendall J. Moriarty, immigration and general litigation attorney at Richards Brandt Miller Nelson.
[1]https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/All%20Form%20Types/DACA/daca_performancedata_fy2016_qtr3.pdf.
[2] https://www.uscis.gov/i-821d.
[3] The Institute on Taxation and Economic Policy found that DACA-eligible individuals and DACA recipients “contribute an estimated $2 billion a year in state and local taxes.” https://itep.org/state-local-tax-contributions-of-young-undocumented-immigrants/.
[4] Id.
[5] https://www.uscis.gov/humanitarian/deferred-action-childhood-arrivals-response-january-2018-preliminary-injunction.
Tread Carefully – An Ethics Reminder
Zack (Zachary) Peterson
January 2018
In State v. Ellis, 2018 UT 02, Justice Himonas wrote a separate, concurring opinion that provides a reminder of an attorney’s ethical obligations as an officer of the Court and of candor to the tribunal. Before the district court, the prosecutor requested to use a preliminary hearing transcript at trial because a witness was unavailable to testify at trial. The prosecutor made representations to the district court that the witness was a “key witness” and the State could not proceed without the testimony. The district court allowed the use of the preliminary hearing transcript at trial. Mr. Ellis was convicted at trial.
On appeal, the Utah Supreme Court reversed the district court’s decision to allow the use of a preliminary hearing transcript, finding it did not meet the hearsay exception in Rule 804. In the briefing, the State took the position that the admission of the preliminary hearing transcript was harmless error, and therefore, the conviction should be affirmed.
Justice Himonas wrote a separate, concurring opinion to point out the inconsistency in the two positions the State had taken in the course of the proceedings. At the district court, the witness was a key witness who was vital to the prosecution of the case. On appeal, the witness’ testimony was insignificant and its admission was harmless error. Justice Himonas noted that the State’s conduct in the case was beyond reproach, and he acknowledged that perceptions about evidence change before trial as compared to on appeal. Nevertheless, he stated: “But when a prosecutor has stated their belief that evidence is important, I’d tread carefully before finding any error in admitting it to be harmless.”
This concurring opinion serves as a reminder to be cautious in the positions that are taken with the Court. A position which appears reasonable one day may appear less so as the case proceeds down the long, winding road.
Zachary Peterson is a shareholder at the Salt Lake City law firm of Richards Brandt Miller Nelson. He can be reached at Zachary-Peterson@rbmn.com.
Contracting 101 – Choice of Law and Borrowing Statutes
Steven Bergman
November 2017
This is another in a series of posts about negotiating, executing, performing, and enforcing contracts, whether commercial or individual. This installment focuses on choice of law issues and how choice of law can affect your right to pursue a remedy on a contract default or the defenses available to you or your business in the event of a default.
Many contracts today contain provisions establishing where a lawsuit can be filed (or arbitration can be heard if there is a mandatory arbitration provision) and what law applies. For contracts that are silent on choice of law and forum selection, statutes or court rules govern the appropriate forum, and the controlling law is determined based on a complex body of law known as conflicts of law. Which law applies can have a significant effect on the outcome of the case. One area where these provisions or the choice of law analysis can be critical concerns the statute of limitations. A statute of limitations is a law that establishes the maximum amount of time a party can wait before it pursues a potential claim. Depending on the type of claim, there are different statutes of limitation. To illustrate this point, a few examples follow.
In Utah, the statute of limitations for written contracts is typically six years. For oral, or unwritten, contracts, the statute of limitations is four years. By contrast, in other states, the statute of limitations varies from three to fifteen years on written contracts and from two years and up on oral contracts. These differences can come into play, even on a contract with a Utah forum and choice of law clause or even where a Court determines under choice of law principles that Utah law applies. This is because Utah, like most states, has a borrowing statute for the application of the statute of limitations where another state’s law may be implicated. Put another way, a Utah court will adopt the other state’s law as Utah law for purposes of the dispute in certain circumstances, such as when performance under the contract occurred in that other state. This can result in a shortening of the statute of limitations, which if you are a defendant is a potential defense, and if you are a plaintiff, a potential bar to recovery.
Utah’s borrowing statute is codified at Utah Code Ann. Section 78B-2-103 and states: “A cause of action which arises in another jurisdiction, and which is not actionable in the other jurisdiction by reason of the lapse of time, may not be pursued in this state, unless the cause of action is held by a citizen of this state who has held the cause of action from the time it accrued.” The first part of this statute means that if the statute of limitations on a claim has expired in another state, that claim generally cannot be pursued in Utah, even if the statute of limitations in Utah has not expired. For example, if a Utah company enters into a contract with a company from California, and the contract provides for payments to be made in California, California’s shorter statute of limitations periods may apply, even if the contract calls for litigation in a Utah court and application of Utah law. For Utah defendants in contract actions, this is a potentially dispositive defense, meaning it will terminate the action. The exception is if the plaintiff is a Utah citizen and has held the claim from the time of inception, then the borrowing statute does not apply.
Read Contracting 101 – Introduction
Growing Use of Blockchain in the Insurance Industry
Gary L. Johnson
October 2017
Gary Johnson’s new article, Blockchain Technology and the Insurance Industry, published in the most recent issue of In-House Defense Quarterly, provides an in depth overview of the growing use of blockchain technology in the insurance industry, including discussions of security, privacy and smart contracts. Read more
16J1065-GLJ – BLOCKCHAIN TECHNOLOGY_
Contracting 101 – Introduction
Steven Bergman
October 2017
Business and individuals enter into contracts on a regular basis. When entering into a contract, it is important to make sure you know and understand every term in the contract, not just the major provisions, such as the parties, the price, the terms and conditions of performance, and the time and place for performance.
In addition to the major provisions, virtually every written contract contains what most people refer to as “boilerplate,” which are the standardized terms that are included in most agreements. These might include assignment clauses, severability clauses, notice clauses, choice-of-law clauses, and arbitration clauses, among many others. The so-called “boilerplate” is found in commercial leases, license agreements, purchase orders, loans, real estate purchase contracts, employment contracts, and guaranties. And it is true of consumer agreements, such as credit card agreements, residential leases, cell phone contracts, and more. The reality is that most people gloss over the “boilerplate” without even attempting to understand what it is they are agreeing to in the contract. Whether a commercial or consumer contract, not knowing and understanding every term and provision, including “boilerplate” provisions, can have far-reaching consequences. As the Utah Supreme Court recently stated, “it is not the judiciary’s role to draft better agreements for parties than those they draft for themselves.” PC Riverview, LLC v. Cao, 2017 UT 52, ¶ 23, n.2.
Additionally, for those contracts that do not contain sufficient terms of conditions, the law will often impose those terms and conditions based on the course of performance of the parties and/or the terms and conditions that are standard for that industry or transaction. Other terms and conditions, if not stated in the contract or agreement, are based on the Utah Uniform Commercial Code in many instances.
Over the next few months, we will be posting about some of the important provisions of a contract or agreement that many business and individuals overlook – often to their detriment. The time to get a contract right is before it is signed – not after an actual or threatened dispute exists. Examples of these provisions, and the effect they can have on a contract dispute, include the right to receive or requirement to give notice in the event of a default, the manner of that notice, what remedies are available to the parties in the event of a dispute or failure to perform, whether a lawsuit can be filed, where a lawsuit can be filed, and what law applies in a lawsuit or arbitration.
The attorneys at Richards Brandt Miller Nelson have decades of experience preparing, negotiating, litigating, and defending contracts. If you or your business are preparing or negotiating a contract, or you or your business are now facing an actual or threatened contract dispute, please contact us with your contract questions to ensure that you or your company have the most protection and strongest contract rights possible under the circumstances.
Read Contracting 101 – Choice of Law and Borrowing Statutes
Website Hack? What are the legal issues?
Someone is trying to hack your site. In fact, if your site is built on WordPress, which more than 75 million websites are, there are bots constantly trying to gain access to your site – perhaps even as you read this post. This isn’t because WordPress has security flaws. It is because most sites are built on WordPress, so that is the Content Management System on which most hackers focus. Thus, after you have taken reasonable steps to secure your site, you should have a plan in place in case a hack is successful despite your security measures. Here is a short list of steps to take in the event your site is hacked. A word of warning: this will sound pretty simple, but it could get messy.
There is no such thing as a hack-proof website. As security technology improves, hackers are constantly thinking of new ways to circumvent it. Many computer security experts suggest the most effective thing you can do to keep your site secure, as simple as it seems, is to use complex usernames and passwords. Login pages are typically the easiest way for a hacker to get into your site, and they usually use bots that simply guess usernames and passwords. It is also important to back up your data every night and keep an eye on unusual activity on the site.
Tips for Borrowers Negotiating a Loan: Part 6 After the Closing
Clint M. Hanni
April 2017
It’s a great relief for the borrower when the documents are signed and the money is wired. What happens after the loan has closed is critical to a successful loan.
2. Prompt financial reporting. Many loan documents require ongoing reporting of financials, usually on a quarterly and annual basis. Borrowers that miss financial reporting deadlines (usually 45 days after each quarter and 60 days after the end of the year) put themselves at risk of getting a default notice from the bank. If the borrower won’t be able to get financials to the lender on time, they should give the lender notice before the due date.
3. Keep the lender in the loop. There will be times when a borrower fails to reach a financial covenant set by the bank in the loan documents. Sales may be down, and unforeseen expenses may lower net earnings. In times of financial distress, it’s in the borrower’s interest to contact the bank early and give them notice. Most borrowers tend to wait until the last minute to report bad news to their lender, but this will only erode trust between them. The borrower should strive to be as open and transparent with the lender as possible. By doing so, the lender will be more flexible and accommodating if the borrower misses a financial covenant or a payment. Lenders will often go the extra mile to assist cooperative borrowers. Without such trust, the Lender may quickly seek to enforce its rights against the borrower when the borrower can least afford it.
4. Keep your lawyer engaged. After the loan is closed, borrowers tend to drop their lawyer off the radar screen until an angry letter arrives from the lender. The better approach is to call your lawyer at the first indication of trouble. A good finance lawyer will be able to help a borrower frame a solution and formulate a proactive plan for dealing with its lender when difficulties arise. Visit https://www.richardsbrandt.com/practice-areas/utah/bank-finance-attorney
Tips for Borrowers Negotiating a Loan: Part 5 Closing Documents
Clint M. Hanni
April 2017
Loan transactions are document intensive. When the agreements have all been drafted and agreed, it’s time for the lender and borrower to sign the documents and fund the loan. Closings can be easy or hard. Here are some tips to make them as smooth as possible.
1. Authorizing resolutions. After the main transaction documents are complete, there may remain other documents to be drafted, agreed and signed. For example, the lender wants assurance that the borrower’s board of directors has authorized the loan. To that end, the lender may provide its own form of board resolution for the borrower. It can take time to organize a meeting or pass around resolutions for signatures. Borrowers should plan to remain involved and put in extra time even after the documents are finalized.
2. Closing certificates. Most loans in excess of a few million dollars will require officers of the borrower to certify that all representations and warranties are true and that all conditions to the loan have been met. Other certificates may be required with respect to resolutions, articles of incorporation and bylaws of the borrower. In addition, the lender may ask for a solvency certificate to confirm the borrower is solvent. Insurance certificates may be required. Here’s the point—a fair amount of work remains to be done after the main loan documents are complete. Finance counsel can walk you through it all.
3. Third party documents. Closings are often delayed because the lender requires third parties, such as landlords, to sign documents (e.g., consents to collateral assignments of agreements or landlord estoppels). An experienced lawyer will help the borrower identify these documents in advance so that they can be distributed to third parties well before the closing. Lenders may be willing to accept such documents on a post-closing basis.
4. Closing mechanics. In the old days, all parties used to gather in a conference room to sign and release deal documents. That rarely happens nowadays. Most closings are done via email with little face-to-face interaction. But loan closings are still complicated. Final versions of the documents need to be gathered and distributed to each side for signatures. Some documents, such as stock certificates to be taken by the lender as collateral, must be delivered to the lender’s attorney. The lender may require the borrower’s attorney to render a closing opinion that the loan documents are enforceable. Any escrow procedures must be complied with. Often, last minute issues rise up and threaten to derail the deal. It’s important that you have counsel that is experienced in running a closing to work around these issues. Visit https://www.richardsbrandt.com/practice-areas/banking-and-finance-law/
Read Tips for Borrowers Negotiating a Loan: Part 6 After the Closing