Pennsylvania Business Law FAQs

Is it necessary to have professional assistance to make business contracts? If so, how much more protection does this give you?

In today's litigious society, professional assistance to make business contracts is an absolute must. It is rarely wise to cut your own hair or fix your own plumbing or car unless you are a professional. Agreements are typically reduced to writing to create a record and provide certainty between the parties as to their rights and obligations. Both the statute of frauds and the Pennsylvania Uniform Commercial Code require that certain agreements be in writing to be enforceable. The drafter of a contract must fully understand the parties' objectives in entering into the agreement, and produce an unambiguous document incorporating every element of that agreement. The Plain Language Consumer Contract Act requires that any consumer contract executed after June 23, 1994, be written, organized and designed to be easily read and understood. Because interpretation of a contract is the crucial factor in determining whether the contract is enforceable, no one can afford not to seek the best possible assistance in drafting that document.

When a person sells his business what should they look out for?

The most important aspect of the sale of a business from the seller's prospective is treatment of the tax implications incumbent from that sale. Factors such as capital gain treatment vs. ordinary income and depreciation recapture must be considered. The most attractive sale is one in which a complete cash buyout is accomplished. In the event the seller agrees to finance any part of the purchase price, it is important to confirm the buyer's solvency and noninvolvement in bankruptcy proceedings and nonexistence of claims, lawsuits or judgments against the business. To safeguard the seller, the transaction should have duly recorded mortgages and notes with confession of judgment provisions, and the filing of UCC-1 statements with the Commonwealth of Pennsylvania. The least attractive option for a seller is retaining stock in the business and taking the role of a minority stock holder. Finally, a consideration whether special indemnities are appropriate for the seller, for example, a bulk sales indemnity or an environmental indemnity. An attorney should be consulted if further assistance is required.

If you need to speak with a lawyer about starting a business, selling a business, tax law or another important legal matter, we are pleased to offer our assistance. Call our Greensburg, Pennsylvania, law office at 866-343-8555 or contact us on line for assistance.