November 8, 2014 • By Dennis Beaver

“When you go from consumer to running your own small business, you are now in the big leagues of legal and financial responsibility,” observes Bryan Hull, Professor of Law at Loyola Law School, Los Angeles.

Hull shared with You and the Law his 12 golden rules for small business — “Which will help keep you out of trouble, and starts with knowing who you are dealing with.”

  1. What’s in the actual contract itself is not as important as the people you are dealing with. Are they honorable? Are they willing to work with you in a reasonable fashion if problems should arise? Google them! Be leery of an entity or person with many bad reviews. Also, if there are no reviews, I would wonder if this was some sort of fly-by-night operation.
  2.  Read the contract before you sign. For things you do not understand, seek advice from your lawyer. Assume that what you sign is binding and will be enforced. Do not have the Costco Mentality — You cannot return a product and cancel the contract just because you don’t like it. You have to point to something in the contact that was breached as a basis for rejecting the product or service.
  3. Always keep a copy of what you sign, initial each page and be sure the pages are numbered consecutively. Make sure there are no blank spaces that can be filled in after you sign. If things do not make sense, do not feel compelled to sign. Instead, take a time out and bring the contract, preferably to an attorney or someone whose judgment and experience you trust, to help in understanding. Be sure you have a copy of the original agreement. Keep it for years.
  4. Both consumers and business owners should be reluctant to authorize charges to their bank accounts or credit cards in undetermined amounts. It is like giving someone a blank check. Make sure exactly how much will be charged before giving any account information. As for future charges, specify that your permission must be obtained.
  5. Always check credit card and bank account statements promptly after receipt to be sure there are no strange charges or deductions. If you find odd or unauthorized activity, immediately instruct your bank or credit card to stop additional charges and dispute those which should not be there.
  6. If the agreement states that disputes will be resolved in a designated place — such as New York and you are in California — understand this provision could be valid. If there is a reasonable relationship between that place and the parties, you have to assume this might very well be enforceable.
  7.  Does the contract have language requiring arbitration? Carefully look for a paragraph which states that disputes will be handled by arbitration. If such a paragraph is in the contract, that means you are signing away your right to a jury trial in a court in the event of a dispute. Many believe that arbitration favors big companies as opposed to consumers and small businesses. Consult with a lawyer before agreeing to arbitration.
  8. Never sign a contract under pressure! Ask for a copy of the contract to be reviewed by your attorney before signing. It is a red flag if you are refused.
  9. Legitimate companies will encourage you to have their contract approved by your lawyer.
  10. How skilled are you in English? If weak and you still go ahead and sign the contract, do not look for much sympathy in court. If you do not understand the language in which the contract was negotiated or written, have someone you trust translate it or insist that the contract be in a language which you understand.
  11. When a dispute arises, do not ignore or sit on it! The more time that elapses, the more difficult it is going to be to prevent large losses. This is especially true where it is an issue of charges being made on credit cards or deductions from deposit accounts. Your entire account could get looted, or time frames for objecting could pass. Consult with your lawyer just as soon as you realize things aren’t right.
  12. Attorneys need to be paid for their time and advice. When you’ve got a legal problem, you only hurt yourself by being a cheapskate. We all expect to pay for medical services, and it is no different when you are in trouble and need sound, legal advice. It is simply not reasonable to expect a lawyer to give advice for nothing.

You and the Law has one more golden rule for all clients: Tell your lawyer everything.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.