Business Law Archives | Velletta & Company

How to contact individuals online without being considered SPAM

October 16, 2018February 2, 2018 by Velletta & Company

Individuals promoting their business or company online are now subject to Canada’s Anti-Spam Legislation (“CASL”). CASL deals with how businesses can contact people and what must be included in the content of online messages. One important question relating to this legislation is “how can I contact people online in order to promote my business and attempt to gain clientele without breaching this legislation.” This blog post attempts to answer that question.

Firstly, CASL only applies to commercial messages. Messages you send are commercial where the purpose of the messages are to encourage participation in a website. The three requirements that CASL has when sending commercial messages are:

Having consent from the recipient in order to message them further;
Identifying yourself in the message and including contact information of the sender; and
Having an unsubscribe function so the recipient can choose when to opt out of your messages.

Please note that liability applies to anyone who sends, causes, or permits a commercial message to be sent, and whether or not the sender is in Canada. If the message is accessed from a computer in Canada then CASL applies and the sender can be liable.

Having consent from the recipient in order to message them further

The first time you contact a potential customer you must ask their consent in order to contact them again. Exceptions to this requirement are where you have a personal or family relationship with the recipient or you are responding to an inquiry about your site. If the message falls within one of these categories, you do not need the above three requirements in order to communicate with them. This applies whether or not the message is commercial in nature.

Other exceptions exist where the message is sent solely for the purposes of providing a quote to a potential customer or contacting someone with whom you have a prior business relationship with. In either of these scenarios, when responding it is recommended that you ask their consent in your response. An example would be “click here if you would like to receive further correspondence about upcoming and new developments from our site.” Otherwise, without consent, you cannot contact them with a commercial message.

If you are contacting an unknown person for the first time then consent is required and must be obtained before contacting the same unknown person a second time. Once you obtain consent you do not need to ask for consent again. An example of obtaining consent would be something like:

We are requesting your consent to provide you messages from our site. These messages will allow us, along with other members, to contact you about our services. By clicking below you are agreeing that you consent to receive these messages and therefore participating in our site.

If you would like to contact the manager of our site, or having any questions, please email us at…

After you have received consent any further correspondence in a message to the same address will require the two elements below:

Identifying yourself in the message and include contact information of the sender

When sending a message you must identify yourself. This can be done by including the logo of Jobsdone.ca at the bottom of your messages. Unless the message is sent to a recipient with whom the sender has a personal or family relationship with.

Having an unsubscribe function so the recipient can choose when to opt out of your messages

Every message sent for a commercial purpose must have an unsubscribe function at the bottom of the message. Unless the message is sent to a recipient with whom the sender has a personal or family relationship with.

In conclusion, you can certainly contact people on the web and elicit customers to join your website. The recipients cannot be added to a send list, email list, or messaged the second time until you have received their consent in contacting them. Velletta & Company can certainly help you in establishing an adequate way of doing this, or alternatively, moving forward in establishing your website. Contact one of our associates today to get started-we would be happy to help.

Additional sources: http://laws-lois.justice.gc.ca/eng/acts/E-1.6/page-1.html

About the Author, Jade Fraser

Before pursuing her education in law, she completed her undergraduate degree at the University of British Columbia obtaining a Bachelor of Science. After living in places such as Saudi Arabia and France, Jade gained a unique set of experiences which contributed to her decision to travel abroad in pursuit of her legal education. Jade is excited to be commencing her articles with Velletta & Company in August of 2017. Although her interests reside in family law, Velletta & Company offers a broad range of experience in many different areas of law which Jade will actively engage.

VIDEO | BENEFITS OF INCORPORATION

January 26, 2018January 26, 2018 by Michael Velletta

Incorporating your company in Canada has a variety of benefits to you as a business owner. Incorporation effectively means that your business becomes a separate legal entity created under the Business Corporations Act or Canada Business Corporation Act offering a flexible array of ownership, control, and profit participation share structures. A statutory scheme with corporately established rules and governance. Although professional advice is recommended to best design a specific corporation, set up costs are surprisingly low.

A few of the benefits of Incorporation include:

Very flexible business structure
A two-year provincial tax holiday for most new businesses
Creates a marketable entity
Very flexible ownership options, allowing possible participation of family or key employees
Allows for different equity contributions, not all owners have to make the same investment
Allows for non-controlling ownership interests (i.e. non-voting shares) for family, key employees, etc.
Many income splitting options
Lower tax rates for high-income individuals
Limited liability in most areas (tax liability, employee taxes, and wages are not limited)
Allows preferred ownership interests through preferred share structures giving special rights to prescribed investors
A Corporation is immortal, creating a flexible and advantageous estate planning tool

There are a few fees associated with incorporation, including a legal fee to set up and an annual fee of to run. However, these are more than manageable and well worth it for the wealth of benefits incorporation offers you.

Are you thinking about incorporating your business? Or just want to learn about the process? Give us a call today to speak to one of our professionals: 250.383.9104. We would welcome the opportunity to work with you to start the steps to incorporate your business

Builders Liens and How to Get Paid in Construction

November 2, 2017November 2, 2017 by Cadeyrn Christie

The construction industry is one of the places where disputes often arise over unpaid bills, the scope of work, and whether or not work is done correctly. The end result is that tradespeople are often left fighting to get paid for the work that they performed on a project. Add in the fact that many construction projects are done based on a verbal agreement and a handshake, and you have a recipe for contentious disputes. Even worse, if you are a subcontractor, the head contractor with whom you reached an agreement might go bankrupt, leaving you with a dry judgment that cannot be easily enforced.

The law has evolved to recognize that disputes often come up in construction, and that there are unique factors that may make it difficult to get paid. The culmination of the legal solution to this problem is the British Columbia Builders Lien Act (the “Act”). In order to protect contractors and subcontractors, the Act establishes special remedies. In order to qualify for these remedies, you must comply strictly with the Act. If you miss a deadline or make a mistake in filing your lien, your lien will likely be invalid and may be struck if the owner of the property, or anyone else interested in the lien claim, takes you to court. If you lose in court, you may also have to pay the successful party’s legal fees.

The Act allows a person who supplies work or material to an improvement on a property, and has an unpaid invoice, to file a builders lien against the title of the property. The lien then goes on the title, like a mortgage or other encumbrance. People who search the title of the property, such as people who are interested in purchasing the property, will see the lien and be alerted to your claim.

Once you have filed your lien, the owner of the property and any head contractor may be more willing to negotiate the payment of your invoice. If filing the lien is not enough and there is still a dispute, then You may ultimately have to take your case to court and enforce your claim of lien.

The lien gives you security for your claim, against the title of the property that you worked upon. Even if the head contractor goes bankrupt, and you have no contract directly with the owner of the property, you can still potentially recover at least part of your unpaid invoice from the owner. This may seem unfair to owners at first, but keep in mind that the tradespeople who worked on the property improved the property and presumably increased its value.

Unfortunately, while the Builders Lien Act provides valuable protection to tradespeople, it also is extremely complicated, and cannot be fully explained in a short article. The Act also involves a series of holdbacks kept all the way down the chain from the owner, to the head contractor, and to the sub-contractor. Unfortunately, these holdbacks are often not dealt with properly, especially on smaller projects where the parties may be used to doing things more informally. If the holdbacks are dealt with improperly, it can further complicate matters.

If you are facing a builders lien issue, it likely makes sense to consult with a lawyer. There are tight timelines involved, and if you fail to file your lien within the timelines, then you may completely lose the right to file a builders lien. In some situations the deadline can be 45 days from when you finish the job. This makes it a very tight timeline indeed when you factor in that many invoices are not due and payable until 30 days after they are issued. Because of these tight timelines, you should talk to a lawyer as soon as possible If you get the suspicion that your invoice is not going to be paid on time.

If you are facing a builders lien situation, Velletta & Company offers a free consultation to discuss your situation and how we can help you obtain payment for your invoice.

Cadeyrn Christie is a civil litigation lawyer and business lawyer with Velletta & Company. A former tradesperson, business owner, and high performance athlete, Cadeyrn focuses his practice on providing dynamic representation to individuals and businesses.

VIDEO | Incorporation in Canada

November 23, 2017September 28, 2017 by Michael Velletta

I am Michael Velletta, a founding partner of Canadian law firm Velletta & Company. Why should you choose British Columbia as your place to incorporate? For those desiring to do business in Canada the obvious jurisdiction of choice is British Columbia.

British Columbia is an investor friendly environment and has the most contemporary business laws in Canada. Perhaps, even the most contemporary anywhere on the globe. These laws reduce bureaucracy and increase flexibility. An interesting feature of incorporating in British Columbia is that at the same time you incorporate in BC you can also incorporate into Alberta, which is the neighboring province.

In fact British Columbia companies can be extra-provincially registered in every jurisdiction in Canada and can be extra-territorially register in just about every jurisdiction around the globe. One advantage of being a British Columbia company is that you have access to the Canadian legal system which is considered extremely stable and is very well-respected. It also meshes well with all US jurisdictions, Australia, New Zealand, Great Britain and many other corporate business jurisdictions around the globe.

A BC incorporation also gives you great opportunities and exposure to Canadian capital markets with the Toronto Stock Exchange that Toronto Stock Exchange, Venture, which is the junior market, and the Canadian Stock Exchange. In addition, companies that are listed companies in Canada can at the same time use documents filed in Canada on inter-listed U.S. stock exchanges such as NASDAQ, the American Stock Exchange and the New York Stock Exchange.

Finally, the cost of doing business in Canada is much more attractive than most other jurisdictions. You might be surprised to learn that the tax regime in Canada is not very aggressive, and is in deed much more attractive than most U.S. jurisdictions.

Velletta & Company is adept at advising international clients on all corporate matters, and particularly creating your British Columbia Corporation. I hope that you will let Velletta & Company provide you with corporate advice and be a part of your team.

The British Columbia Franchises Act

September 28, 2017September 21, 2017 by Velletta & Company

For the first time in British Columbia franchises are now subject to legislation with the enactment of the new Franchises Act (the “Act”) which took effect as of February 1, 2017.

With the enactment of the Act, British Columbia is the sixth Canadian province with franchise legislation, joining Alberta, Manitoba, Ontario, New Brunswick and Prince Edward Island.

The B.C. Government recognizes that franchise purchasers are making a significant investment, however they can sometimes be at a disadvantage when solely relying on the information provided by the company offering the franchise, due to a lack of knowledge, experience, and access to expert advice. The Act helps to rectify this imbalance and support the expansion of franchises by standardizing regulatory requirements, while at the same time encouraging investment in B.C. Franchisors selling franchises in B.C. must now deliver a compliant disclosure document to prospective franchisees at least 14 days before the execution of a franchise agreement or the payment of any consideration in relation to the franchise. This disclosure includes (but in not limited to) a description of the business opportunity itself, a list of all fees and costs a franchisee must pay to acquire and operate the franchised business, details of any litigation involving the franchisor or its affiliates, a description of any territory granted, and a list of existing and former franchisees for prospects to contact for more information. Audited or reviewed financial statements must also be a part of the disclosure package, together with copies of all contracts the prospective franchisee is required to execute.

In addition, the Act imposes retroactive application for certain claims, including damage claims relating to breaches of the duty of fair dealing and the right to associate. This means, as of February 1, 2017, franchisees and franchisors are able to make claims for breaches of the duty of good faith and fair dealing in the performance and enforcement of franchise agreements entered into prior to February 1, 2017.

Below is a brief summary of the main provisions of the Act.

The Act:

Application – the Act applies to any franchise agreement entered into and to any renewal or extension of a franchise agreement that was entered into before, on or after the Act comes into force.

Fair Dealing – a duty of fair dealing, which includes acting in good faith and with reasonable commercial standards, is imposed on both the franchisor and the franchisee in the performance and enactment of a franchise agreement.

Right to Associate – a franchisee may associate with other franchisees and may form or join an organization of franchisees.

A franchisor and a franchisor’s associate must not, directly or indirectly, penalize, attempt to penalize or threaten to penalize a franchisee for associating with other franchisees, or for forming or joining an organization of franchisees.

Disclosure – a franchisor must provide a prospective franchisee with a disclosure document including financial and other relevant information about the franchise at least 14 days before the signing of the franchise agreement and the payment of any consideration.

Right of Rescission – conditions are set for the franchisee to rescind a franchise agreement upon a franchisor’s failure to provide satisfactory disclosure.

Damages – if the franchisee suffers a loss because of a misrepresentation in a disclosure document or in a statement of a material change, or as a result of a franchisor’s failure to comply with the provisions of the Act dealing with disclosure requirements in respect of material change, then the franchisee has a right of action against the franchisor, the franchisor’s broker, the franchisor’s associate and everyone who signed the disclosure document.

Attempt to Affect Jurisdiction Void – provides that a provision in the franchise agreement to restrict the application of the law of the province is void with respect to claims arising under a franchise document to which this Act will apply, including in respect of arbitration.

In conclusion, the Act is intended to benefit franchisors by continuing to establish uniform regulatory regimes across Canada and standardize franchise practices already followed by more sophisticated franchisors. Likewise, the Act will provide appropriate and needed legal protection to B.C. franchisees who are typically small business operators.

View the full text of the British Columbia Franch1ises Act.

Natalia M. Velletta is an Articled Student at Velletta & Company. Before pursuing her passion for law, Natalia attended the University of Victoria where she obtained her undergraduate degree in Education. Natalia also worked for the Government of British Columbia under the Superintendent of Motor Vehicles.

Raising Capital: Strategies for Success

July 12, 2017June 8, 2017 by Michael Velletta

If your business has reached the stage where you need to raise investment capital to grow and develop, being well prepared and adopting key strategies for success will greatly increase your chances.

Consult Your Team: If you are at the stage of raising capital to fund the development of your business, you will likely have in place a team of professionals. It makes sense to consult with them and tap into their creativity and experience. This is a good launching point.

How Much: The more junior and less developed your business is, the more expensive in terms of rates or dilution it will be to obtain investment capital. Carefully consider how much of this expensive investment capital you need in the first stages. As your business develops and grows you will be able to raise capital at lower rates and with less dilution.

Be Prepared: Potential investors are usually savvy business people. They will quickly form an opinion to invest, or not to invest based on first impressions. How do you make a good first impression?

Have at least a basic business plan, explaining where you want to take your business, how much capital you need, how that capital will be deployed and other basic information. It needs to look professional.
Make sure you have pro forma financial statements demonstrating how the potential investor will benefit from their investment.
Put together a physical binder, or digital data room of key documents concerning your business. Make it easy for the potential investor to perform due diligence on your business.
Have a term sheet setting out all the terms and conditions of participation in your capital raise.
One of the first places a potential investor will look is at your website. Make sure you have one, and that it is tasteful and represents your brand. A good website is a simple way to look established, successful and that you are going places. Even something very simple is better than nothing at all.
Know your stuff. You should be well prepared to answer questions about your product or business. You will need to know the financial numbers and be able to explain how the investor will see a good financial return on their participation in your business. Be fully prepared to explain the form of the investment, how it works and the exact terms.

Intellectual Property: If your business or product is unique or innovative make sure you protect your intellectual property. At the very least you will want potential investors to sign a nondisclosure agreement.

Adopting these key strategies will help you make that critical positive first impression and be a launching pad for success.

Michael J. Velletta is a senior lawyer with decades of experience, sitting on the boards of a number of publicly traded companies in Canada, Europe, and Australia.

Promissory Notes

June 17, 2016June 17, 2016 by Cadeyrn Christie

Promissory Notes: Ancient Origins, Modern Importance

Promissory notes are believed to have originated in ancient China, and then made their way into European history, before ultimately becoming an important part of modern business. In ancient times money was made of precious metal, and any large transfer of funds over a distance was a heavy proposition, so promissory notes evolved as a lighter alternative. Now it is common to use promissory notes in many different business transactions, and for loans between private individuals. The Canadian Bills of Exchange Act (R.S.C., 1985, c. B-4) creates a statutory definition in section 176(1) for promissory notes in Canada:

“an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer.”

Benefits of Promissory Notes

The main benefit of a promissory note is that it clearly documents an obligation to pay money, and creates a strong cause of action in the event that the issuer defaults upon the note. The signed promissory note is effective from the time it is made, and is an independent obligation of the issuer. If the note is drafted properly, the holder of the note can sue upon it without having to prove much beyond the fact that the defendant issued the note, and then defaulted upon it.

Strategically, having a signed promissory note can be invaluable to a creditor seeking to collect upon a debt. Collections work is pragmatic, and no creditor wants to spend more money enforcing a debt than the debt is actually worth. Litigation is expensive, and it takes a significant amount of time to obtain a judgement. In order to provide a more efficient method of obtaining judgment, the British Columbia Supreme Court Civil Rules contain a process called a summary trial. A summary trial is available in cases where a judge is able to decide the issue without having to hear live testimony and weigh the credibility of the parties. A signed promissory note can help a creditor to qualify for the summary trial process, and as a result obtain a more rapid and cost effective judgment against the debtor.

Pitfalls of Promissory Notes

1: A Sum Certain in Money

In order to be a promissory note, the document must make it clear that the issuer of the note is unconditionally promising to pay a specific amount of money. This makes a promissory note distinguishable from a revolving line of credit. The note must make it clear how much is owed by the issuer of the note. If the amount is not clear, then you have no promissory note, and consequently a big problem.

2: Interest

If the note contains interest, it must be clear how interest is calculated. This ties in to the requirement that the note be for a sum certain in money. The interest must be capable of being objectively calculated, and this requires that the rate of interest be stated, along with the formula for how interest is calculated – e.g. simple interest, or interest compounded monthly.

3: Notice of Default or Demand for Payment

Notes need to make it clear when a default has occurred. Many notes with regular payments contain a provision that the holder of the note must give notice of default to the issuer of the note, and the issuer must fail to remedy the default within a certain period of time, before the issuer can accelerate the debt and collect. If you are the one signing the promissory note, you may want a provision that gives you time to remedy a default without the holder of the note taking collection actions. On the other hand, if you are the holder of the note, you need to make sure that you give notice of a default correctly, and wait the requisite amount of time before taking collection actions.

For promissory notes that are payable on demand, you will also likely want to include in the note the amount of time that the issuer has to pay the note, after demand has been given. Under the common law, the issuer had a reasonable amount of time to satisfy the demand, and this had to be assessed taking into consideration the amount of the note. You would be wise to include a specific amount of time in order to avoid this issue, and make it totally clear how much time the issuer has to satisfy the demand.

For both defaults on installment notes, or demands for repayment on demand notes, the note should specify whether the notice must be given in writing, and whether it needs to be given at a particular place. In order to give effective notice, the holder of the note will need to comply with these requirements, or else the notice may be ineffective and therefore not trigger the issuer’s obligations.

4: Limitation Periods

Promissory notes can be either due on demand, or else contain specific dates on which payments must be made. For both types of notes, if the issuer defaults, you must bring a civil action to enforce the note within the applicable limitation period. The Limitation Act [SBC 2012] c.13 creates a general two year limitation period to commence a civil action. This limitation period runs from the date that the claim is discovered. For a note with regular payments, a claim would usually be discovered when the issuer of the note defaults upon a payment and fails to remedy the default within any time specified in the note.

For demand notes however, the situation is potentially much different. A note payable on demand can be demanded by the holder of the note at any time. Under the common law, demand notes were considered to be due and payable when the note was issued, and the limitation period ran from that date. Fortunately, the Limitation Act contains section 14, which provides that for claims upon a demand obligation, the claim is discovered on the first day that there is a failure to perform the obligation after a demand for performance has been made. This protects the holder of a demand note from their claim becoming statute barred before they have even issued a demand for performance. This only protects the holders of demand notes in British Columbia, and other jurisdictions might have less forgiving limitation periods.

Whether your note is payable in installments, or due on demand, it is vital to commence your enforcement proceedings quickly after there is a default. Failing to do so might result in your claim expiring, and then you are left unable to collect upon the amount in court.

5: Acceleration on Default

When a note contains payment in installments, and a payment is missed, this traditionally only allows the holder of the note to sue for the missed payment. The holder of the note could not sue for the full amount of the note unless there is a provision allowing the holder to accelerate the debt. Acceleration is important, because if the issuer of the note starts missing payments, you want to be able to claim the whole amount owing immediately, and not have to commence a separate lawsuit for each missed payment as the payments are missed. Promissory notes are subject to the legal rule of contra proferentem, meaning that courts will strictly interpret any ambiguity in the note against the party who drafted it, resolving any doubt about the meaning of a term in favor of the other party. It is important that the provision is drafted clearly, and gives the holder of the note the unambiguous right to claim the entire outstanding amount as immediately due and owing if the issuer of the note defaults upon a single payment.

From a practical point of view, you might choose not to accelerate the note, but the threat of doing so is a powerful bargaining chip to keep the issuer of the note on track with their payments.

Why Hire a Lawyer for a Promissory Note?

Our office routinely sees promissory notes that were drafted by the parties themselves without the benefit of legal assistance. These notes can range from relatively well drafted notes that are still enforceable despite their flaws, to totally useless pieces of paper that provide nothing more than a false sense of security. Even worse, we see clients who loaned money or made an agreement verbally and did not get a signed promissory note at all, which makes it potentially much harder to collect the amount owed.

For a lawyer, drafting an enforceable promissory note is relatively simple, and can be done for the client affordably. The lawyer will also meet with you to review your specific circumstances, and can advise you about any particular pitfalls in your situation, or about additional steps that you can take to protect yourself. In many cases, if you are loaning money and the debtor has assets, you might also want to obtain security over those assets so that you have collateral in the event that the debtor defaults. When the small cost of having a lawyer draft the note is compared with the huge hassle you can face in the event of a default, it is clear that if you are lending any significant amount of money, you’d be wise to have a lawyer prepare a promissory note.

Always Get It in Writing

May 13, 2016 by Cadeyrn Christie

If they ever existed, the days of doing business based on a handshake and a verbal agreement seem to be long gone. We regularly have clients come to our firm with disputes in which there is no written agreement. The failure to draft a written agreement often results in a complicated fact situation that has to be sorted out by our firm and another law firm. For example, we recently assisted a client who had become embroiled in a contentious partnership dispute over a small business. While we ultimately resolved the matter with a large degree of success, it would have been much simpler, and a dispute may have been avoided entirely, if the parties had formalized their arrangement in a written agreement.

The Gold Standard:

In terms of enforceability, the gold standard is usually a professionally drafted contract, signed by both parties, after having received independent legal advice. Depending upon the complexity of the agreement, such a contract might cost several thousand dollars to prepare; however, if the subject matter of the contract is valuable, this cost is money well spent to protect each party in the event of a dispute. If you’re starting a business partnership that you expect to last for many profitable years, spending some money up front will help protect that business, and will help avoid your hard work being swallowed up in lawyers’ fees after a dispute develops.

For simpler agreements, it can be surprisingly cost effective to have a contract drafted by a lawyer, and having the contract professionally drafted will provide the peace of mind that it includes all of the proper legal formalities to make it enforceable. Sadly, we often see contracts that are drafted by the parties themselves, and these can range from perfectly enforceable contracts, to ones that lack basic legal certainties necessary to make the agreement enforceable.

Reconsider DIY Contracts:

We generally recommend that people do not attempt to draft their own contracts, or pull contracts from the internet in the hopes that they can tailor that general contract to their specific needs. We have seen client drafted contracts for Canadian clients contain errors such as references to the United States Uniform Commercial Code – something that you almost certainly do not want in a Canadian contract.

Clear Communication:

A further benefit of written agreement is that good communication and clear terms help stop disputes before they start. All too often parties skirt around the difficult or contentious issues in a business relationship, hoping to avoid conflict. In reality, by not dealing with these issues up front, the potential conflict is only pushed into the future, where both parties may have spent time and money in reliance upon agreement terms that they thought existed.

Damage Control:

As a final last resort, it can be beneficial to clearly communicate important terms of an agreement to the other party in writing, even if that written communication takes the form of text messages or emails. Text messages and emails are admissible as evidence, and we routinely utilize such documents in court to protect our clients’ rights.

The difficulty is that you cannot force terms upon someone merely by sending them a message. If the other party replies with their agreement to your stated terms, that would be beneficial. If the other party disputes the terms, then at least you have identified a disagreement early on, before time and money has been expended. If the other party just ignores your message containing the terms, and does not agree or disagree, then it may be possible to argue that they went forward with the agreement, knowing that you were relying upon the terms that you set out to them. The latter situation is a far from ideal, and if the other party does not acknowledge your terms, you should follow up to clarify your agreement, sooner rather than later.

In conclusion, beware of people who refuse to put things into writing. If someone balks at committing your verbal agreement to a written form, there is usually a reason, and it is better to find out sooner rather than later what that reason is.

If you are seeking a well drafted purchase and sale contract, partnership agreement, shareholders agreement, or other contract, or if you are involved in a business dispute, we offer a free half-hour consultation to discuss your situation and legal needs. Please feel free to contact us to schedule an appointment.

Enforceability of Non-Compete Clauses in an Employment Contract

June 9, 2015June 7, 2015 by W. Eric Pedersen

As an employment lawyer who represents small business as well as employees, I am often asked to advise on the contents of a written employment contract. Many of the key provisions in an employment contract are concerned with what happens after the termination of employment. This article deals with “restrictive covenants”, and more specifically, what are sometimes called “non-compete” clauses.

Why You Need a Shareholders’ Agrement

May 29, 2015June 5, 2015 by Cadeyrn Christie

British Columbia is home to a thriving small business economy. According to the B.C. Small Business Profile, in 2013, 43% of self-employed business owners carried on business through a corporation. It is quite common for the shareholders of a small incorporated business to be close friends, family, or to all work together in the business. These close relationships can be the basis for highly successful small corporations, when the parties are all getting along. Unfortunately many small businesses also collapse due to disputes among the owners. Usually these disputes are caused because one of the owners feels they are being short changed in the business, or that the arrangement between the owners has become unfair. Having a clear agreement that lays out the rights and responsibilities of each shareholder is one of the best steps that you can take to ensure that your small corporation does not ultimately fail or fall apart due to a disagreement between the shareholders. Even the exercise of drafting a Shareholders’ Agreement can help avoid disputes, because the shareholders are forced to turn their minds to the issues that might cause conflict, and decide how best to deal with these issues in a fair manner.

Setting up a Sole Proprietorship

June 3, 2015May 29, 2015 by Cadeyrn Christie

Sole proprietorships are usually the simplest, easiest, and most affordable business structure for a small business or new venture; however, there are still a number of things that need to happen to set up a well organized sole proprietorship. Dealing with these issues up front is a valuable investment because it can avoid serious headaches as your business grows. It is a lot easier to deal with the organization of your business at the start, before you become busy marketing and dealing with customers or clients. The following are some general concerns with sole proprietorships. Depending on the type of business there may be other important steps necessary to establish a sole proprietorship. Getting these simple first steps out of the way can give you more time to focus on your business later.

1: Name registration:

A business name can be a valuable asset. As a sole proprietor, you can carry on business under your own name without having to register or take any formal steps. An example of this would be “Joe Blogg’s Lawn Maintenance”. The name is sufficient to identify your business and distinguish it from other businesses, while making it clear to the public who they are dealing with. The British Columbia Partnership Act creates a legal requirement to register your name if you are doing business under a name other than your own and your business involves “trading, manufacturing, or mining”.

Even if you carry on a type of business that does not require name registration, it is still a good idea to register your business name if you are not using your own name. Registering your business name will not totally prevent other businesses from using the same name, but it will provide some measure of protection by publically establishing when you started your business using that name.

2: Insurance:

The simplicity of a sole proprietorship is that the individual carries on business as themselves with no intervening legal entity. This makes things affordable and creates a fairly efficient tax structure, but it also comes at a significant cost – the sole proprietor is personally liable for all their business debts and for any liability arising from the activities of the business. Depending on the type of business, insurance can be vital. Because the sole proprietor is personally liable, any accidents or injuries that occur due to the business’ negligence will probably result in a claim against the sole proprietor. Damages for a personal injury or destruction of property can be very high, and a claim against the business could put your major assets, like your home, at risk.

3: A Strong Accounting System:

There is a common misconception that having a business allows the business owner to write off all sorts of “business” expenses like meals or a personal vehicle that is mainly used for pleasure. While there are appealing tax deductions that can be achieved through owning your own business, the real rationale behind a tax deduction is to allow businesses to incur legitimate expenses while pursuing a profit. Writing off borderline personal expenses can be a violation of the Income Tax Act. As a sole proprietor it is important to keep detailed and accurate records of your business expenses so that you can claim all of your legitimate expenses at the end of the year, and avoid getting into trouble for inadvertently claiming expenses that were not legitimately connected to your business. Setting up a good accounting system from the beginning, and saving your receipts, can save you trouble later on, and make it easier for your accountant to file your taxes.

4: Business Contracts

Even as a sole proprietor you will still need strong and enforceable contracts with your customers or clients. These types of agreements will vary greatly depending on the type of business that you operate. Joe Blogg’s Lawn Maintenance might need a simple regular service contract that governs the ongoing relationship with a client, whereas a business consultant might need a one-time agreement that is very detailed.

Well drafted contracts are clear and lay out the rights and responsibilities of each party so that everyone knows what they can expect. Having clear contracts can actually make it easier to collect your receivables and reduce your delinquent accounts by avoiding misconceptions with your clients. Above all, well drafted contracts are legally binding and provide you with a remedy should a dispute develop and you find it necessary to go to court and collect upon your account.

If you are intending to have employees in your business, then it is very important to have employment contracts. Many small businesses do not have employment contracts and may also be unaware of the obligations placed on employers under the British Columbia Employment Standards Act. With employees it is especially important to clarify the terms of the relationship at the outset, and having a clear and fair employment contract can help foster a productive and respectful relationship with no unpleasant surprises for either party.

In conclusion, setting up a sole proprietorship is relatively simple, and depending upon your industry it can be the perfect structure for your small business or start-up company. As your business grows you can then think about incorporating when the time is right. In the meantime, making sure that your sole proprietorship is properly registered and well organized can save you time and money and give you more time to focus on running your business. We love helping small businesses, so if you need a name registration, business contracts, or if your small business is growing and you are considering incorporating, give us a call.

Partnership Agreements: Who Needs One?

March 5, 2015February 23, 2015 by Michael Velletta

Partnership and business law, Victoria BC , Velletta & Company

If you have a partnership, you need a Partnership Agreement. Successful entrepreneurs agree that good planning is a fundamental ingredient of any business venture. With partners you need a means by which to clarify the parameters of your relationship, and resolve disputes that will likely occur. Every partnership, from time to time, will involve disagreements, misunderstandings and, perhaps, outright warfare. A properly prepared Partnership Agreement will reduce or eliminate the risk of these difficulties threatening an otherwise efficient business relationship.

The best time to work out compromise and achieve a Partnership Agreement is when harmony and goodwill are in abundance, not after difficulties have arisen. Then, it may be too late.

A good Partnership Agreement clearly establishes the fundamental rules under which the partnership operates. Your Partnership Agreement should settle the following issues:

Fast Immigration for Business People: British Columbia PNP Business Programs

March 6, 2015February 21, 2015 by Velletta & Company

The Federal Government of Canada has Business immigration programs, but the processing times are three years or more, and an applicant cannot usually get a Work Permit to get the business started before approval.

Fortunately, the Province of British Columbia has stepped in to create three faster ways for Business people and their families to immigrate to the Province of British Columbia. These are all part of the Provincial Nominee Program (PNP).

There are three Business Immigration programs for the PNP, the Regional Business Component, the Business Skills Component and the Strategic Projects Component. In each immigration category, if the Principal Applicant is approved for Permanent Residence, then his or her accompanying spouse and all dependent children also get approved for Permanent Residence.

Debt Collection for Small Business

March 5, 2015February 20, 2015 by Michael Velletta

Many small business owners are reluctant to retain the services of a lawyer to collect outstanding accounts, because the cost of doing so often exceeds the amount they are owed. These little debts can sit around for months, causing cash flow and bookkeeping headaches. Many small outstanding debts can add up to one really big problem. How can you collect what your business is owed without going into debt yourself? There are several ways to manage the issue efficiently.

Planning For Your Business Succession

March 5, 2015February 20, 2015 by Velletta & Company

Business Law Advice in Victoria, BC - Velletta

Every successful business owner will one day be faced with the dilemma of having to choose a successor. Giving up the reins of his or her business that has been built through years of hard work will not be easy and a smooth succession can only be achieved if the business owner is ready to sell or pass the reins to his or her heir(s).

British Columbia Unlimited Liability Companies

March 5, 2015February 20, 2015 by Velletta & Company

One of the most recent amendments to the Business Corporations Act (British Columbia) (the “BCA”) is the ability for a company to be incorporated in B.C. as an unlimited liability company (ULC). There are only two other jurisdictions in Canada that permit ULCs, namely Alberta and Nova Scotia.

Be Smart About Your Intellectual Property

March 5, 2015February 20, 2015 by Michael Velletta

Intellectual Property is not real property (land), or moveable, tangible property (chattels), but “property of the mind.” Your ideas belong to you, and if they are profitable, you should convert them into a protectable form. Some examples of ideas in protectable form include patents, trade secrets, trademarks, trade names and copyright. Every business person should know how and when to protect their Intellectual Property.

Leases: The Chains That Bind

March 5, 2015February 4, 2015 by Michael Velletta

Losing your place of business or being locked into an unwanted or expensive lease can be a disaster. To avoid problems, take the time to negotiate a beneficial lease on the terms you need and want. You can bet that your landlord knows exactly what is in your lease. Do you?

Unlike residential leases, which are governed by legislation, commercial leases are suited to extensive negotiation. Commercial tenants have much greater leverage in lease negotiations then they typically realize. Before you begin your negotiations – and remember, almost everything is up for negotiation – know your objectives and options. Here is some information to get you started.

Starting a Small Business

March 5, 2015February 4, 2015 by Michael Velletta

Small business legal advice Velletta & Company, Victoria, BC

This outline is prepared by Michael J. Velletta, a lawyer practising in the areas of real estate, corporate and civil law. This outline is selective, and for discussion purposes only. This is not legal advice. Do not apply any of the information set out in this outline without first discussing it with your lawyer.

Velletta & Company represents hundreds of small and medium businesses, and has the experience, knowledge and resources to deliver cost effective legal services to enhanced and support business. We hope to be part of your business team.

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