Business Law Services: Your Complete Guide to Corporate Legal Solutions

Understanding Business Law: Federal and State Regulations

Business law encompasses a vast regulatory framework that operates at multiple governmental levels. The federal government exercises jurisdiction over critical areas including securities and investments, workplace safety standards under OSHA, employment discrimination laws, and environmental protection regulations under the EPA. These federal laws create a baseline of compliance requirements that apply to businesses nationwide.

State and local governments layer additional regulations on top of federal requirements. States control business licensing and registration, establish the rules governing business formation and dissolution, regulate professional licenses, and impose state-specific taxation requirements. Local municipalities may add their own ordinances regarding zoning, operating permits, and business taxes.

This multi-tiered regulatory structure means that businesses must maintain compliance at all levels simultaneously. A manufacturing company, for example, must satisfy federal workplace safety standards, state environmental permits, and local zoning regulations—each with distinct requirements and enforcement mechanisms.

Why Legal Counsel Matters for Your Business

Fitter Law’s business attorneys bring industry-specific experience across diverse professional fields and business sectors. We handle the full business lifecycle: formation, daily operations, growth transactions, succession planning, and exit strategies. Our attorneys excel at identifying legal risks before they become problems, negotiating favorable terms in business dealings, and drafting enforceable agreements that protect your interests.

We provide strategic guidance on taxation structures, employment law compliance, securities regulations, investment transactions, debt management, and franchising arrangements. Rather than simply reacting to legal issues, we work proactively to position your business for sustainable growth while minimizing legal exposure.

Contracts and Business Agreements: The Foundation of Commercial Relationships

Every business relationship depends on clear, enforceable agreements. Contracts define rights, obligations, performance standards, payment terms, and remedies when things go wrong. Well-drafted contracts prevent disputes, while poorly written agreements create ambiguity that leads to costly litigation.

Types of Business Contracts We Draft and Review

• Service Agreements: Define the scope of services, deliverables, timelines, and compensation for professional relationships
• Sales Contracts: Govern the purchase and sale of goods, including warranties, delivery terms, and risk of loss
• Non-Disclosure Agreements (NDAs): Protect confidential information and trade secrets from unauthorized disclosure
• Employment Contracts: Establish terms of employment, compensation, benefits, and post-employment restrictions
• Vendor and Supplier Agreements: Create long-term relationships with consistent pricing, quality standards, and delivery schedules
• Commercial Lease Agreements: Secure business premises with clear terms on rent, improvements, maintenance, and termination rights
• Joint Venture Agreements: Structure collaborative business ventures with defined contributions, profit-sharing, and exit provisions
• Licensing Agreements: Grant rights to use intellectual property in exchange for royalties or other consideration

Contract Review and Negotiation

Before signing any agreement, you should understand every provision and its implications. Our attorneys review contracts to identify unfavorable terms, ambiguous language, missing protections, and hidden liabilities. We then negotiate modifications to protect your interests, ensuring that the final agreement reflects a fair deal that you can confidently execute.

Breach of Contract and Enforcement

When another party fails to honor their contractual obligations, you need to understand your legal remedies. Contract law provides various remedies including specific performance (forcing compliance), monetary damages (compensation for losses), rescission (canceling the contract), or reformation (correcting errors). We analyze the breach, quantify your damages, and pursue the most effective remedy for your situation.

Getting Out of Unfavorable Contracts

Sometimes businesses need to exit contracts that have become problematic. Legitimate grounds for contract termination include mutual mistake, fraud or misrepresentation, duress or undue influence, impossibility of performance, material breach by the other party, or termination provisions built into the contract itself. Our attorneys evaluate your situation to determine if valid grounds exist for termination or if negotiating an early exit is the better strategy.

Corporate Formation and Incorporation: Building a Legal Business Structure

A corporation represents one of the most established business structures in American commerce. Incorporation creates a separate legal entity distinct from its owners, with its own rights to enter contracts, own property, sue and be sued, and conduct business operations.

Advantages of Incorporating Your Business

Limited Personal Liability: The corporate structure shields shareholders from personal liability for business debts and legal judgments. If the corporation faces a lawsuit or bankruptcy, creditors generally cannot pursue shareholders’ personal assets, protecting your home, personal bank accounts, and other personal property.

Tax Flexibility: Corporations can elect different tax treatments. C corporations face double taxation (corporate profits are taxed, then dividends are taxed again at the shareholder level), but they can also retain earnings for growth without passing tax liability to shareholders. S corporations allow pass-through taxation, avoiding double taxation while maintaining limited liability protection.

Capital Raising Capabilities: Corporations can raise capital by issuing stock to investors, creating opportunities for substantial growth funding. Public corporations can access capital markets through stock exchanges, while private corporations can structure equity compensation to attract top talent.

Perpetual Existence: Corporations continue to exist regardless of changes in ownership. When shareholders die or sell their interests, the corporation continues operating without disruption.

Enhanced Credibility: The corporate designation (“Inc.” or “Corp.”) signals professionalism and permanence to customers, vendors, and lenders, potentially opening doors that remain closed to sole proprietorships.

Considerations and Potential Drawbacks

Increased Complexity: Corporations face significant administrative requirements including annual meetings, corporate minutes, board resolutions, and detailed record-keeping. Failure to observe corporate formalities can result in “piercing the corporate veil,” eliminating liability protection.

Higher Costs: Formation requires filing fees, often attorney fees, and ongoing costs for compliance, tax preparation, and administrative overhead. Annual franchise taxes and business license fees are typically higher for corporations than for simpler business structures.

Reduced Control: Corporate governance requires shareholder voting, board oversight, and adherence to bylaws. Founders who want complete autonomy may find corporate structure restrictive.

Regulatory Scrutiny: Corporations face more extensive regulation and reporting requirements, particularly if they issue securities or grow large enough to trigger additional compliance obligations.

Types of Corporations

C Corporations: The default corporate structure, suitable for businesses seeking venture capital or planning eventual public offering. C corps can have unlimited shareholders of any type, but face double taxation.

S Corporations: A tax election allowing pass-through taxation while maintaining corporate liability protection. Restricted to 100 or fewer shareholders who must be U.S. citizens or residents, with only one class of stock.

Professional Corporations (PC): Available for licensed professionals like doctors, lawyers, and accountants. Provides liability protection for business debts while maintaining individual professional liability.

Benefit Corporations (B Corps): A newer corporate form that legally commits the company to pursuing both profit and positive social impact, protecting directors who prioritize stakeholder interests over pure profit maximization.

The Incorporation Process

Incorporating involves selecting a business name and confirming availability, choosing your state of incorporation, filing articles of incorporation with the Secretary of State, drafting corporate bylaws, issuing stock to initial shareholders, obtaining an EIN from the IRS, and completing any required business licenses and permits. Our attorneys guide you through each step, ensuring compliance with all legal requirements while structuring the corporation to meet your specific business goals.

Limited Liability Companies: Flexible Protection for Modern Businesses

The Limited Liability Company (LLC) has become the most popular business structure for small to medium-sized businesses in the United States. Created by state statute, LLCs combine the liability protection of corporations with the tax efficiency and operational flexibility of partnerships.

Key Advantages of LLC Formation

Limited Liability Protection: LLC members enjoy protection from personal liability for business debts and obligations. Creditors and lawsuit claimants generally cannot reach members’ personal assets to satisfy business debts, provided the LLC maintains proper separation between business and personal affairs.

Pass-Through Taxation: By default, LLCs are taxed as pass-through entities, meaning business profits and losses flow directly to members’ personal tax returns. The LLC itself doesn’t pay federal income tax, avoiding the double taxation that C corporations face. Multi-member LLCs are taxed as partnerships, while single-member LLCs are taxed as sole proprietorships (unless they elect corporate taxation).

Operational Flexibility: Unlike corporations, LLCs aren’t required to hold annual meetings, maintain extensive corporate records, or follow rigid management structures. Members can manage the LLC directly, or they can appoint managers to handle daily operations while members function as passive investors.

Flexible Profit Distribution: LLC operating agreements can allocate profits and losses in any manner the members agree upon, regardless of ownership percentage. A member with a 30% interest might receive 50% of profits if the operating agreement so provides.

Simplified Administration: LLCs face fewer formalities than corporations, reducing administrative burden and compliance costs while maintaining liability protection.

Important Exceptions to Limited Liability

While LLCs provide strong liability protection, certain actions can expose members to personal liability:

• Personal Guarantees: When members personally guarantee business debts (common with business loans or commercial leases), they become personally liable for those specific obligations
• Commingling Assets: Mixing personal and business funds, using business accounts for personal expenses, or failing to maintain separate finances can result in “piercing the LLC veil”
• Fraud or Illegal Activity: Members remain personally liable for their own fraudulent or criminal conduct, even when acting on behalf of the LLC
• Unpaid Taxes: Personal liability often attaches to certain unpaid taxes, particularly payroll taxes
• Professional Malpractice: Licensed professionals remain personally liable for their own professional negligence or malpractice
• Undercapitalization: Starting an LLC with inadequate funding for its intended operations may allow courts to disregard the liability shield

The Operating Agreement: Your LLC’s Constitution

The operating agreement is the foundational document governing your LLC’s operations. While some states don’t legally require an operating agreement, having one is essential for any multi-member LLC and highly advisable even for single-member LLCs.

A comprehensive operating agreement addresses:

• Management Structure: Whether the LLC is member-managed or manager-managed, and the specific authority of each
• Capital Contributions: Initial and future contributions by each member, and consequences for failing to make required contributions
• Profit and Loss Allocation: How profits and losses are distributed among members
• Voting Rights: What decisions require member votes, voting thresholds, and whether voting is proportional to ownership
• Transfer Restrictions: Limitations on selling or transferring membership interests, buy-sell provisions, and right of first refusal
• Dissolution Provisions: Events triggering dissolution, wind-up procedures, and asset distribution
• Dispute Resolution: Mechanisms for resolving conflicts between members, such as mediation or arbitration
• Fiduciary Duties: The duties members and managers owe to the LLC and each other

Our attorneys draft customized operating agreements that reflect your business’s unique needs, anticipate potential conflicts, and provide clear mechanisms for resolution.

LLC Formation Process

Forming an LLC involves choosing a unique business name compliant with state requirements, filing articles of organization with the state, drafting an operating agreement, obtaining an EIN, complying with state-specific publication requirements (in some states), and obtaining necessary business licenses and permits. We handle the formation process efficiently while ensuring your LLC is properly structured from day one.

Partnership Agreements: Structuring Collaborative Business Ventures

Partnerships form when two or more individuals or entities combine resources, expertise, and effort to pursue a common business objective. While partnerships can form informally—even through conduct without a written agreement—having a clear, comprehensive partnership agreement is essential for preventing disputes and protecting each partner’s interests.

General Partnerships: Shared Control and Shared Liability

In a general partnership, all partners participate in managing the business and share equal responsibility for its obligations. Key characteristics include:

Unlimited Personal Liability: Each general partner is personally liable for all partnership debts and obligations. If the partnership cannot pay its debts, creditors can pursue any general partner’s personal assets. This “joint and several liability” means one partner might pay the entire debt, even if other partners were primarily responsible for creating it.

Mutual Agency: Each partner acts as an agent of the partnership, meaning one partner can bind the entire partnership to contracts and obligations within the ordinary course of business. This requires high trust between partners.

Pass-Through Taxation: Partnerships don’t pay entity-level taxes. Instead, profits and losses pass through to partners’ individual tax returns based on their ownership percentage or as specified in the partnership agreement.

Shared Management: Unless the agreement states otherwise, all partners have equal rights in management decisions, regardless of their capital contribution or profit share.

General partnerships work well for professional practices, small businesses with trusted co-owners, and ventures where all participants want active involvement in operations.

Limited Partnerships (LP): Protecting Passive Investors

Limited partnerships accommodate investors who want to contribute capital without participating in daily management. An LP includes at least one general partner with unlimited liability and management authority, and one or more limited partners.

Limited Partner Protections: Limited partners enjoy liability protection similar to corporate shareholders. Their liability is limited to their investment in the partnership; creditors cannot reach their personal assets. However, this protection requires limited partners to remain passive—if they participate substantially in management, they may lose their limited liability status.

General Partner Exposure: At least one general partner must accept unlimited personal liability for partnership obligations. Often, the general partner is a corporation or LLC, adding a layer of liability protection.

Investment and Return: Limited partners contribute capital and receive a share of profits based on the partnership agreement. They can monitor business performance and vote on major decisions like selling the business or removing the general partner, but cannot direct daily operations.

Limited partnerships are commonly used in real estate development, private equity funds, and ventures seeking outside investment while keeping management concentrated.

Limited Liability Partnerships (LLP): Professional Practice Protection

Limited Liability Partnerships provide liability protection for all partners while maintaining partnership tax treatment and management flexibility. In an LLP:

Liability Shield: Partners are not personally liable for partnership obligations arising from another partner’s negligence, malpractice, or misconduct. However, each partner remains liable for their own professional malpractice and, in most states, for general partnership debts like leases and loans.

Professional Use: Many states restrict LLPs to licensed professionals such as attorneys, accountants, architects, and doctors. Some states allow any partnership to register as an LLP.

Ongoing Requirements: LLPs must typically register with the state, pay annual fees, maintain adequate malpractice insurance, and comply with continuing registration requirements.

LLPs have become the dominant structure for large professional service firms, providing malpractice liability protection while preserving partnership tax treatment and traditional partnership management.

Essential Partnership Agreement Provisions

A well-drafted partnership agreement prevents disputes by clearly establishing expectations. Critical provisions include:

• Capital Contributions: Initial and future contributions by each partner, what counts as a contribution (cash, property, services), and consequences for failing to contribute
• Profit and Loss Allocation: How profits and losses are divided, distribution timing, and priority of distributions
• Management and Decision-Making: Who handles daily operations, what decisions require partner approval, voting thresholds, and dispute resolution
• Partner Authority: What actions each partner can take independently versus requiring partnership approval
• Partner Compensation: Salaries, guaranteed payments, and draws against profits
• Transfer and Withdrawal: Restrictions on transferring partnership interests, buy-sell provisions, valuation methods, and voluntary withdrawal procedures
• Dissolution Events: Circumstances triggering partnership dissolution, wind-up procedures, and asset distribution
• Non-Compete and Confidentiality: Restrictions on competing businesses and protection of partnership confidential information
• Admission of New Partners: Process and requirements for adding partners
• Dispute Resolution: Mediation and arbitration procedures before litigation

Our attorneys work with you to draft partnership agreements that address your specific business needs while anticipating potential conflicts and building in resolution mechanisms.

Choosing the Right Partnership Structure

Selecting between general partnerships, limited partnerships, and limited liability partnerships depends on several factors: desired liability protection, management involvement, tax considerations, regulatory requirements, and cost. We help you analyze these factors and recommend the structure that best aligns with your business goals and risk tolerance.

Debt and Lending Agreements: Navigating Business Financing

Business growth and operations frequently require borrowed capital. Whether you’re securing a startup loan, financing equipment purchases, managing working capital, or structuring complex commercial credit facilities, understanding your financing options and their legal implications is crucial.

Types of Business Debt and Financing

Term Loans: Traditional loans providing a lump sum repaid over a set period with interest. Term loans fund major purchases, expansion, or refinancing existing debt. They typically require collateral and personal guarantees.

Lines of Credit: Revolving credit facilities providing access to funds up to a maximum amount. Businesses draw funds as needed and pay interest only on the outstanding balance. Lines of credit help manage cash flow fluctuations and seasonal inventory needs.

Equipment Financing: Loans specifically for purchasing business equipment, with the equipment itself serving as collateral. Often easier to obtain than unsecured loans because the lender can repossess the equipment if you default.

Commercial Real Estate Loans: Financing for purchasing or refinancing business property. These loans typically have longer terms (10-20 years) and lower interest rates than other business loans.

SBA Loans: Government-backed loans through the Small Business Administration offering favorable terms and lower down payments. The SBA guarantees a portion of the loan, reducing lender risk.

Invoice Financing and Factoring: Converting accounts receivable into immediate cash. Factoring involves selling invoices at a discount, while invoice financing uses invoices as collateral for a loan.

Merchant Cash Advances: Receiving a lump sum in exchange for a percentage of future credit card sales. While providing quick access to capital, these advances often carry extremely high effective interest rates.

Key Loan Agreement Components

Commercial loan agreements contain numerous provisions that significantly impact your business. Understanding these terms is essential before signing:

Promissory Notes: The fundamental loan document establishing the debt amount, interest rate, repayment schedule, and default consequences. Promissory notes create an enforceable obligation to repay the borrowed amount.

Security Agreements: Grant the lender a security interest in specific collateral. If you default, the lender can seize and sell the collateral to recover the debt. Security agreements identify the collateral, specify the lender’s rights, and detail default remedies.

Personal Guarantees: A separate agreement where business owners personally guarantee the debt. If the business cannot repay the loan, the lender can pursue the guarantor’s personal assets. Personal guarantees eliminate the liability protection that LLCs and corporations normally provide.

Subordination Agreements: Establish priority among multiple lenders. Subordinated debt holders agree to be paid only after senior lenders are satisfied in bankruptcy or liquidation. Senior lenders often require subordination agreements before providing financing.

Inter-Creditor Agreements: When multiple lenders have claims against the same collateral, inter-creditor agreements define each lender’s rights, priority, and remedies. These prevent conflicts between lenders and establish procedures for workout situations.

Covenants: Promises and restrictions the borrower must follow while the loan is outstanding. Affirmative covenants require actions (maintaining insurance, providing financial statements, paying taxes). Negative covenants prohibit actions (incurring additional debt, selling major assets, making distributions beyond specified limits). Violating covenants triggers default even if you’re current on payments.

Specialized Financing Documents

Complex commercial transactions may involve additional specialized agreements:

• Patent and Trademark Collateral Agreements: Grant security interests in intellectual property. Lenders financing businesses whose primary value lies in IP often require these agreements
• Assignment and Assumption Agreements: Transfer loan obligations from one party to another, common in business sales or restructuring
• Hazardous Substance Indemnity Agreements: Protect lenders from environmental liability arising from contamination on mortgaged property
• Mortgage Agreements: Establish liens on real property as security for loans, with detailed provisions addressing property maintenance, insurance, and default remedies
• Accounts Receivable Financing: Use outstanding invoices as collateral, with specific provisions for collection, verification, and dilution reserves
• Letters of Credit: Bank guarantees ensuring payment to suppliers or contractors, commonly used in international trade and construction projects

Negotiating Favorable Loan Terms

Loan agreements are negotiable, particularly for substantial loans or borrowers with strong credit. Our attorneys help negotiate terms including lower interest rates, longer repayment periods, less restrictive covenants, partial release provisions for collateral, subordination of personal guarantees, and more favorable default remedies.

Before signing any loan agreement, you should understand the total cost of borrowing (including fees, interest, and time value), the full extent of your obligations and restrictions, what events trigger default, what collateral is at risk, and your options if your financial situation changes. We analyze loan agreements to identify unfavorable provisions and negotiate terms that protect your interests while satisfying lender requirements.

Franchise Law: Opportunities and Protections for Franchisees and Franchisors

Franchising represents a unique business model where established brands expand through independent business owners who operate under the franchisor’s name, systems, and standards. The franchise relationship is highly regulated to protect franchisees from deceptive practices while allowing franchisors to maintain brand consistency.

Understanding the Franchise Relationship

What Franchisees Receive: When you purchase a franchise, you acquire the right to use the franchisor’s trademark, trade name, and operating system. You benefit from established brand recognition, proven business methods, marketing support, training programs, and ongoing operational assistance. The franchise package typically includes site selection guidance, initial training, operating manuals, proprietary products or services, and marketing materials.

What Franchisees Pay: Franchise costs include an initial franchise fee (often $20,000 to $50,000 or more), ongoing royalty payments (typically 4-8% of gross revenue), marketing or advertising fund contributions (usually 2-4% of revenue), and costs for required equipment, inventory, and build-out to meet franchise standards.

The Risk-Benefit Analysis: Franchising reduces some entrepreneurial risks through proven business models and brand recognition, but introduces other risks including dependence on the franchisor’s reputation, limited operational flexibility, mandatory fee payments regardless of profitability, and potential for franchisor misrepresentation.

Federal and State Franchise Regulations

FTC Franchise Rule: The Federal Trade Commission requires franchisors to provide prospective franchisees with a Franchise Disclosure Document (FDD) at least 14 days before signing any agreement or paying any money. The FDD must contain 23 specific items including franchisor litigation history, bankruptcy history, initial and ongoing costs, franchisor obligations, trademark information, territory rights, renewal and termination provisions, and audited financial statements.

State Franchise Registration: Fourteen states require franchisors to register before offering franchises within their borders. These registration states impose additional disclosure requirements and review FDDs for compliance before permitting franchise sales.

State Relationship Laws: Many states have enacted franchise relationship laws protecting franchisees from unfair termination, non-renewal, or transfer restrictions. These laws often require “good cause” for termination, adequate notice periods, and fair dealing in the franchise relationship.

The Franchise Disclosure Document (FDD): Your Essential Resource

The FDD provides critical information for evaluating franchise opportunities. Key sections include:

• Item 1-4: Franchisor identity, business experience, litigation history, and bankruptcy history. Review these sections for red flags about franchisor stability and trustworthiness
• Item 5-7: Initial franchise fee, other fees, and estimated initial investment. Understand the total capital required to open and sustain the franchise during the initial period
• Item 8-9: Restrictions on sources of products and services, and franchisor obligations to provide support
• Item 11: Franchisor’s obligations including training, site selection, and ongoing support
• Item 12: Territory rights and whether the franchisor can establish competing locations nearby
• Item 17: Renewal, termination, transfer, and dispute resolution provisions—some of the most important terms in the franchise agreement
• Item 19: Financial performance representations. If provided, this shows how existing franchisees are performing financially. Franchisors are not required to include Item 19, and its absence means no financial performance claims have been substantiated
• Item 20: List of current and former franchisees, enabling you to conduct due diligence by speaking with actual franchise owners
• Item 21: Audited financial statements of the franchisor, revealing financial health and stability

Evaluating Franchise Opportunities

Before committing to a franchise, conduct thorough due diligence:

Speak with Current Franchisees: Contact existing franchise owners to ask about their experience, profitability, franchisor support, problems they’ve encountered, and whether they’d purchase the franchise again.

Analyze Financial Projections: Create realistic financial projections based on Item 19 disclosures (if available) and current franchisee input. Ensure you can sustain operations during the ramp-up period when revenues may be insufficient to cover expenses.

Review the Franchise Agreement: Have an attorney review the franchise agreement for unfavorable terms including termination provisions, non-compete clauses, territory restrictions, mandatory renovations or updates, and fee escalation clauses.

Assess Franchisor Support: Evaluate the quality and extent of training, ongoing support, marketing assistance, and operational guidance the franchisor provides.

Consider Exit Strategy: Understand your options for transferring or selling the franchise, renewal terms and costs, and termination provisions.

Franchisee Protections and Legal Rights

Federal and state laws protect franchisees against certain franchisor practices:

Protection Against Fraud and Misrepresentation: Franchisors cannot make false or misleading statements about franchise opportunities. If a franchisor violates disclosure requirements or makes fraudulent representations, franchisees may sue for rescission and damages.

Good Faith and Fair Dealing: Many courts and state statutes impose implied covenant obligations requiring franchisors to act fairly toward franchisees, not terminate without good cause, and deal honestly in the relationship.

Anti-Encroachment Protections: Some states restrict franchisors from establishing competing locations too close to existing franchises or from selling products through alternative channels that undermine franchisee sales.

Our attorneys ensure franchisors treat you fairly by reviewing FDDs for red flags, negotiating more favorable franchise agreement terms where possible, advising on compliance with franchise requirements, and representing you if disputes arise with the franchisor.

Becoming a Franchisor: Expanding Through Franchising

If you’ve developed a successful business model and want to expand through franchising, substantial legal work is required:

Trademark Registration: Federal trademark registration protects your brand and is essential for franchising nationwide.

Franchise Disclosure Document Preparation: Creating a compliant FDD requires careful drafting to meet federal and state requirements while accurately representing your franchise opportunity.

Franchise Agreement Drafting: The franchise agreement governs the franchisee relationship, addressing territory, fees, term and renewal, operational standards, training and support, transfer and termination, and dispute resolution.

Operations Manual Development: Comprehensive operations manuals standardize franchise operations and maintain brand consistency.

State Registration Compliance: Register your franchise in states requiring registration before offering franchises.

Franchise Support Infrastructure: Develop systems for franchisee training, ongoing support, quality control, and marketing.

Our attorneys guide you through every aspect of developing and launching a franchise system, ensuring legal compliance while structuring the franchise to meet your expansion goals.

Commercial Transactions: The Legal Framework for Business Operations

Commercial law provides the legal structure for buying and selling goods, securing payment, and financing business transactions. Most commercial law in the United States derives from the Uniform Commercial Code (UCC), a comprehensive set of laws governing commercial dealings.

The Uniform Commercial Code (UCC)

The UCC was developed to standardize commercial law across states, creating predictability and consistency for businesses operating in multiple jurisdictions. Every state has adopted some version of the UCC, though individual states may modify specific provisions.

The UCC covers several critical areas:

Article 2 – Sales of Goods: Governs contracts for selling movable goods. Article 2 establishes rules for contract formation (including when oral agreements are enforceable), seller obligations regarding title and warranties, buyer obligations including inspection and payment, remedies for breach, and risk of loss during shipping.

Article 2A – Leases: Applies to equipment leases, vehicle leases, and other leases of personal property. Article 2A addresses lessor and lessee rights and obligations, warranties in lease transactions, default remedies, and finance leases.

Article 3 – Negotiable Instruments: Covers checks, promissory notes, and other written promises or orders to pay money. Article 3 establishes requirements for negotiability, rules for transferring instruments, liability for forgery and alteration, and holder in due course protections.

Article 4 – Bank Deposits and Collections: Governs the check collection process, establishing duties and liabilities of banks and customers in the deposit and collection system.

Article 5 – Letters of Credit: Regulates letters of credit used in commercial transactions, particularly international trade. Letters of credit provide payment security by having banks guarantee payment upon satisfying specified conditions.

Article 9 – Secured Transactions: Governs transactions where personal property or fixtures secure payment or performance of an obligation. Article 9 covers creation of security interests, perfection through filing or possession, priorities among competing creditors, and creditor remedies upon default.

Sales Transactions Under UCC Article 2

Article 2 significantly impacts how businesses buy and sell goods. Key provisions include:

Statute of Frauds: Contracts for goods worth $500 or more must be in writing to be enforceable, with specific exceptions. The writing must indicate a contract was made, identify the parties, and specify the quantity of goods.

Battle of the Forms: When businesses exchange purchase orders and acknowledgments with conflicting terms, Article 2 provides rules for determining which terms control. Generally, additional terms become part of the contract unless they materially alter it, the offer expressly limits acceptance to its terms, or the offeror objects to the additional terms.

Implied Warranties: Unless expressly disclaimed, sellers make implied warranties that goods are merchantable (fit for ordinary purposes) and, in some circumstances, fit for particular purposes the buyer made known.

Perfect Tender Rule: Buyers can reject goods if they fail in any respect to conform to the contract, though the seller may have a right to cure defects within the contract time.

Remedies: Buyers can seek specific performance, cover (purchase substitute goods and recover the difference in price), or damages. Sellers can resell goods and recover damages, sue for the purchase price if goods cannot be resold, or cancel the contract and reclaim goods in transit.

Secured Transactions Under UCC Article 9

When businesses borrow money or purchase goods on credit, lenders typically secure their interest in collateral. Article 9 governs these secured transactions:

Security Agreements: Create the security interest, requiring description of the collateral and granting the lender rights upon default.

Perfection: Protects the lender’s interest against competing claims by filing a financing statement (UCC-1) with the appropriate government office, typically the Secretary of State. Perfection gives public notice of the security interest and establishes priority over unperfected creditors.

Priority Rules: When multiple parties claim interests in the same collateral, Article 9 establishes priority. Generally, the first to file or perfect has priority, with exceptions for purchase-money security interests and certain other situations.

Default and Remedies: Upon default, secured creditors can repossess collateral and sell it to satisfy the debt, subject to requirements for commercially reasonable sales and notice to the debtor.

State Variations in the UCC

While the UCC provides general uniformity, state-specific variations can significantly impact your transactions. Some states have modified Article 9 provisions regarding fixtures and real property. States differ on whether certain provisions can be waived. Filing and perfection requirements vary by state. Exemptions and debtor protections differ across jurisdictions.

Because state modifications can materially affect your rights and obligations, it’s essential to work with an attorney familiar with the UCC as enacted in your state. Our attorneys understand how your state has implemented the UCC and structure transactions to protect your interests under applicable law.

Commercial Transaction Strategy

Successful businesses approach commercial transactions strategically:

Standardized Forms: Develop standard purchase orders, sales agreements, and terms and conditions that favor your position and comply with UCC requirements.

Credit Policies: Establish clear credit policies including credit checks, payment terms, security requirements, and collection procedures.

Warranty Management: Carefully draft warranty provisions to limit liability while meeting legal requirements and customer expectations.

Documentation: Maintain thorough documentation of all commercial transactions including agreements, amendments, communications, and performance.

Dispute Resolution: Include arbitration or mediation clauses in commercial contracts to resolve disputes efficiently.

Our attorneys help businesses develop commercial transaction policies and procedures that minimize risk while facilitating efficient business operations.

Why Choose Fitter Law for Your Business Legal Needs

Business law encompasses complex regulations, high-stakes transactions, and significant financial consequences. The business attorneys at Fitter Law bring deep experience across industries and transaction types, providing strategic guidance that protects your interests while advancing your business objectives.

Our Approach

Industry-Specific Knowledge: Our attorneys have worked with businesses across diverse sectors including technology, manufacturing, healthcare, professional services, real estate, and retail. This industry experience allows us to understand your unique challenges and provide relevant, practical advice.

Proactive Problem-Solving: Rather than simply reacting to legal issues, we work proactively to identify potential problems, structure transactions to minimize risk, and position your business for success.

Clear Communication: We explain complex legal concepts in clear, understandable language, ensuring you can make informed decisions about your business.

Cost-Effective Solutions: We understand that legal costs impact your bottom line. We provide efficient legal services and offer flexible fee arrangements that align with your budget.

Comprehensive Services: From entity formation through daily operations, major transactions, and exit strategies, we handle all aspects of business law, providing continuity and consistency in your legal representation.

Our Business Law Services Include:

• Business formation and entity selection (corporations, LLCs, partnerships)
• Contract drafting, review, and negotiation
• Commercial transactions and UCC compliance
• Mergers, acquisitions, and business sales
• Franchise law for franchisees and franchisors
• Debt financing and lending agreements
• Securities and investment transactions
• Employment agreements and workplace policies
• Business succession planning
• Shareholder and operating agreements
• Business litigation and dispute resolution
• Intellectual property protection and licensing
• Real estate transactions and commercial leases
• Regulatory compliance and licensing
• Tax planning and structure optimization

Schedule Your Business Law Consultation Today

Whether you’re starting a new business, navigating a complex transaction, facing a legal dispute, or planning your business’s future, Fitter Law’s experienced business attorneys are ready to help.

Don’t let legal uncertainty hold your business back. Contact Fitter Law today to discuss your business law needs and discover how our attorneys can help you achieve your business goals while protecting your interests.

Get Started: Join Fitter Law today. We’re committed to providing the experienced, strategic legal counsel your business deserves.