Contract Review: Proper Form to Prevent Future Breach
Before signing a contract, read through it carefully. Have an attorney review the contract. Make certain that you know what obligations are stated and/or implied. If you are uncertain as to your duties and you sign the contract, you may be liable for a future unintentional breach of the contract.
Contract negotiations, especially in the context of important financial contracts, can be taxing and difficult at best. An attorney can assist you with negotiations to ensure your needs and requirements are met. Additionally, your attorney can properly draft and/or review the contract, explain to you your rights and duties under the contract, and make suggestions as to provisions which may be necessary to protect your best interest.
The following is a good guideline for contract review. It is not an all-inclusive list, but may be used as a tool to assist with contract drafting and review:
- Make sure the language contained in the contract is clear and understandable. In most cases, limit the use of highly technical terms when possible. Unnecessary legal wording may make the contract confusing, thus use regular wording to make sure the parties understand what the contract says and means.
- Give a clear and concise description of the goods and/or services to be received.
- Give a clear description of the amount of money or other consideration for the contract.
- If any payments are payable outside the U.S., make sure the payments are in U.S. dollars.
- Make sure the contract contains a specific time and place for performance.
- The contract should contain a method of providing notice of default and opportunity to cure default.
- Rights, obligations, and duties of every party should be clearly listed. Each party’s responsibilities should be identified in understandable wording.
- Use clear and concise names when listing parties to the contract, including address, telephone number, fax number, and email addresses.
- Be sure you have a contact person for each party to the contract, including address, telephone number, fax number, and email addresses.
- Establish a date the contract is to begin and end.
- Make sure the contract contains all other important dates to the contract (milestones, deadlines, reports, etc.). Use full dates. Such dates should be clearly identified.
- The procedure for renewal of the contract should be clearly identified.
- If an employment contract, the procedure for termination of the contract should be clearly identified (termination for cause and/or termination at will).
- Indemnification, liquidated damages, attorney’s fees, waiver of contractor’s liability, waiver of statutes of limitation clauses should be incorporated if necessary or applicable.
- Establish the contract is governed by the laws of the State of Texas.
- Establish the venue for suit is in the county where the Company’s main office or parties signing are located or agree otherwise.
- If insurance is required, define the types and levels of coverage.
- Confidentiality provisions, if applicable, should be incorporated.
- Ensure Act of God or force majeure clauses are incorporated if necessary.
- Assignment by either party should be approved in advance in writing.
- Incorporate an Alternative Dispute Resolution clause, if required or desired.
- All appendices, exhibits, attachments, and schedules should be attached.
- Title and authority of person signing the contract should be properly stated and warranted.
- Spelling, formatting, grammar, punctuation and general appearance of the contract should be professional and accurate.
Preprinted form contracts should only be viewed as a starting point, not a final expression of the parties’ agreement. Protection for all parties is usually minimal to non-existent in such pre-printed forms. No pre-printed form can be expected to cover the particulars of all agreements between two or more specific parties. Having an attorney review and negotiate pre-printed forms may prove prudent and smart.
It is imperative that the terms of a contract are fairly negotiated, properly drafted, and reviewed to ensure the contract meets the intentions of the parties.
The Duties of an Executor of a Texas Will
The executor of a will is the person chosen by the deceased to administrate the provisions of the will of his/her estate. The executor must be eighteen years older and have no prior felony convictions. Executors are usually family members, accountants or lawyers. The duties of the executor start at the time of death and finish when the last state and federal taxes are paid and the estate is closed or otherwise fully disposed. Executor responsibilities include accounting of assets in the estate, payment of estate liens and debts and final distribution of assets to the beneficiaries.
An executor has legal fiduciary responsibilities and must act with utmost honesty, impartiality, and scrupulousness on behalf of the deceased and the estate’s beneficiaries. Rational decisions must be made; and the executor must overcome emotion caused by loss and adhere to the terms of the will.
Some questions the potential executor should ask before accepting the position?
- What type of property and debts does the deceased own or owe? What type of property is it? Real estate, personal, mineral, oil or gas rights or other types of property?
- Where is the property located? Is all the property in Texas or are some estate assets in other states?
- Did the deceased own a business that will have to be assumed by the executor to continue operations until the probate is settled and where is the business located? The executor will need to know about all aspects of the business operations and obligations.
- Do you have an accountant, attorney or other professional advisor who can assist you in handling the probate transition in a timely and expedient fashion?
- What are the deceased debts? Is the estate solvent or insolvent? Are there any outstanding lawsuits or potential problems? Any other property disputes?
- Any potential family disputes?
- Where is the will located? If the maker of the will is living, should any changes be made to the will before the person dies? If the executor decides to accept the position, does the will need to be changed on acceptance to appoint the executor of choice.
- What are the basics of administering the executor’s position and duties while administrating of the estate of the deceased?
- Collection and management of the assets
- Paying all taxes, debts, and expenses of the estate
- Distribution of remaining assets to the beneficiaries of the estate in strict accordance with the will terms.
The executor’s position can be very complicated and time consuming and you should have knowledge of all financial and legal aspects of probating an estate. An experienced employee, accountant or attorney can help you with this important task. If not sure, ask for help! You have a serious and legally accountable responsibility to the estate and its beneficiaries.
Beware of Trusts in High Asset Marriages!
Consider the legal consequences of Trusts regarding the characterization of marital property, especially Trusts created by separate property prior or after marriage. A Trust can be a creative and useful tool depending on the perspective and actual need of the parties. To a spouse owning substantial separate property, an irrevocable Trust may be a safe haven that will guard the separate property and potentially the income from the separate property against property divisions in a Divorce Court. On the other hand, in some cases, a spouse that has no separate property may be defrauded by the other spouse.
The Texas Courts have indicated that separate Trusts created prior to marriage, that are irrevocable spendthrift Trusts are a valid means to shelter separate property of the marriage and the income from the trusts are not subject to division during the divorce proceedings. The beneficiary of the separate Trust (the spouse with the separate trust or beneficiary of a separate trust) do not have a present possessory right to any asset within the corpus of the Trusts. If the spouse is granted a present possessory right to any portion of the trust in the trusts, then the income from the Trusts may be divided in a Divorce Court as community property.
This is an area of concern to the other spouse. If you are married to an unsavory spouse, where separate property assets owned prior to the marriage are put into an irrevocable spendthrift trust, take measure to insure no money or other property acquired during the marriage is siphoned into those separate Trusts. One spouse may siphon community property throughout the marriage into separate Trusts in order to deplete the community estate. This constitutes fraud on the community estate and the innocent spouse may seek adequate compensation.
It is important to hire an experienced attorney that understand the intricacies of Trusts and the part Trusts can play in sheltering community funds from a spouse during the marriage. Many wealthy men or women may abuse the Trust formation to defraud their spouses from fair community property allocation. Wealthy spouses may use irrevocable or discretionary Trusts created prior to the marriage for asset protection instead of using prenuptial agreements or post marriage property agreements. The case law is still not completely settled in Texas regarding irrevocable Trust as they pertain to divorce and it is important to hire an attorney that can help guide you through these complexities and insure you are not being defrauded or taken advantage of in a divorce proceeding.
Trust Busting in a High Asset Divorce
One the most complicate and transparent ways an individual may defraud a spouse during a marriage is with the use of a trust. A trust is an entity that separates equitable and legal title of all property or money placed within it. Prior to, during, or after marriage, a spouse may create a trust and name the children of the marriage or others, as the beneficiaries. The spouse then may start siphoning community property and separate property into the trust removing the property from the community. This is a tactic commonly practiced when a spouse has failed to sign a pre-nuptial agreement.
Circumstances like this happen in High Asset Divorces because a trust may be used to protect properties from the other spouse. Attack the trust as a party of the case and request an accounting. It takes an experienced lawyer to understand which trusts can be attacked and which trusts are impenetrable.
Trust busting consists of complex and arduous litigation depending on the circumstances. The circumstances of a trust are important in divorce cases. Here are a few questions you should ponder when assessing any trusts during a divorce:
- Determine when the trust was created;
- Determine if the trust is revocable or irrevocable;
- Determine who the beneficiary of the trust is;
- Determine who the trustee of the trust is;
- Determine who the settlor of the trust is;
- Determine the type of property or money that is placed within the trust; and
- Determine when the property or money was placed in the trust.
These are just a few inquiries you should make prior to meeting with your lawyer. It will save you time and money. Depending on the answers to the seven inquires stated above, an experienced lawyer may be able to bust the trust opening the property and monies for the final hearing in a divorce case. There are many defenses and unsettled law in connection with trust busting and an experienced attorney must be sought.
Julian Nacol, Attorney
Nacol Law Firm P.C.
Sealing the Deal: Contracts – A Smart Investment
The Importance of Employment Contracts
An employment contract is a legal agreement between an employer and employee in which the terms and conditions of employment are spelled out. Though there is a body of statute law which governs specific aspects of the employer/employee relationship, such laws only form part of the basis upon which the employment relationship is based. Other areas of the employment relationship are based on the written terms and conditions given by employers to their employees, which function to work in conjunction with existing statute law to specify and define an employee’s rights and obligations.
An employer must within two months of the start of employment provide the employee with written terms and conditions of employment. There are different formats in which these terms and conditions may be presented, which include the following:
1. A formal legal contract which is signed by both parties. The terms are often negotiable and can be tailored to include terms very specific to the individual position and the employee concerned.
2. A “letter agreement” which may be detailed, or which simply sets out the minimum information required under the Terms of Employment Act of 1994. This letter is normally signed by the employee as an acceptance of the position offered. This letter might not contain sufficient detail to inform the employee fully of their terms and conditions and may not be adequate to protect the employer.
3. A handbook may be presented which will comprise of the terms and conditions of employment. The employee is normally asked to sign an acknowledgment of receipt and acceptance of the terms and conditions of employment contained in the handbook. The negative consequence of the handbook is that it applies for all employees and specific terms are not negotiable as they would be in a formal contract in the form of a traditional legal document.
The Term of Employment Act of 1994 requires some employers within two months of an employee beginning employment to set out in writing the terms and conditions of the job and to specifically include, but are not limited to, the following:
- Name of employer
- Name of employee
- Place of employment
- Job title
- Location of work (and if location may also be elsewhere or outside the state than further details must be given by the employer)
- Start date
- End date (if a temporary contract)
- Work hours and details of overtime pay
- Pay and frequency of payment
- Benefits, such as bonus scheme, health insurance, 401(k), retirement, use of company car, payment of tuition fees, etc.
- Holiday entitlements
- Details of any sick pay scheme
- Details of pension scheme
- Minimum notice to end the employment relationship must be given by both employer and employee.
Employees can ask for written terms and conditions at any time and the employer must provide same within two months. If a person has been in employment since before the Terms of Employment Act of 1994 and has never been issued written terms and conditions or a contract of any type, the employee is still entitled to receive a written copy of these terms. If, however, an employee has been in employment without a contract, an employer cannot force an employee to sign a contract of employment and employment will continue under the “custom and practice” created between the employer and employee.
The employment contract is equally as important to the employer as the employee. Employers can use contracts to their advantage, especially in times when jobs are scarce. Employment contracts often set out such things as probationary periods, sick pay scheme, additional leave which might be taken, pension scheme and any further benefits to be provided by the employer.
The great advantage to the employer is there, in some cases, are many items which can be included to protect the employer such as a restrictive covenant restricting a former employee from taking employment within a specified geographical area, a clause which would prohibit a former employee from doing business with the employer’s clients for a specified period of time or a confidentiality clause wherein the employee must keep all trade secrets of the employer confidential. Employers can set out the minimum notice an employee must give to terminate employment.
Employment contracts should be well drafted and should include proper protection for both the employee and employer. A well drafted contract may save a company thousands of dollars in legal fees.
NACOL LAW FIRM P.C.
8144 Walnut Hill Lane
Suite 1190
Dallas, Texas 75231
972-690-3333
Office Hours
Monday – Thursday, 8am – 5pm
Friday, 8:30am – 5pm
OUR BLOGS
SEARCH
JOIN OUR NETWORK
Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization
