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Cleveland Business & Commercial Law Blog

When does the Uniform Commercial Code apply to a contract?

If you do business in the state of Ohio, you likely deal with contracts. Depending on the nature of the transaction, the applicable law can be either the original, common-law based structure or the more recent Uniform Commercial Code (UCC) as it has been adopted by this state. But how do you know which body of law governs your agreement?

A business and commercial law firm experienced with the UCC can assist you in making sure that your contract properly includes and addresses UCC-specific considerations, as well as help you to interpret those considerations if the need arises.

What is an integration clause?

Negotiating a contract between two businesses can become a drawn-out process, and it is not uncommon for the parties to the agreement to have held multiple meetings in which proposed terms were discussed or written down, oral understandings were exchanged, or even a memorandum of understanding put together before multiple drafts of the agreement itself are passed back and forth. Sometimes even the last, signed version of the contract may still be subject to different interpretations, which has led to the question of what effect those prior negotiations and understandings may have if a dispute arises.

The legal term for the use of such external sources to help explain (or to contradict) what the two sides agreed to is “parol evidence”.  How or whether such evidence can be introduced depends on factors including whether the agreement is governed by the Uniform Commercial Code (UCC) as it has been adopted under Ohio law, and whether the final agreement contains what is known as an “integration clause.”

Choice of law provisions in contracts: why they matter

If your company does business with international partners, and especially if these transactions involve buying and selling goods, you may discover that to many foreign business people the American penchant for detailed contracts that seek to anticipate and address as many problem areas as possible is puzzling if not irksome. In the interest of trying to maintain a spirit of harmony during the negotiation process you may be tempted to scale back on some of the details, but one that you should always insist upon is a clearly understood choice of law provision.

International business transactions often carry the promise of great profitability, but if difficulties or disputes arise they can quickly become more complicated when the other side is using a legal system that is different from the one that you are accustomed to. Understanding exactly in advance which country's law will govern in the event of a misunderstanding, or whether an alternative dispute resolution mechanism will be used instead of litigation, will help to either avoid trouble or to expedite finding a solution.

What is the contractual effect of unilateral and mutual mistakes?

Parties to an agreement, particularly a business agreement, do not operate in an environment of perfect knowledge. Sometimes after entering into a contract either or both of the parties to it may realize that a mistake has occurred in the way the contract was written or in the business assumptions that formed the basis for entering into it. When mistakes are made, what is the legal effect on the contract and the parties' rights and obligations under it?

Contract mistakes can generally be broken down into two main types: mutual and unilateral.

Lawsuit alleges breach of contract by Ohio hospital

The Cleveland Clinic, which holds the lease for a 100-year-old hospital in Lakewood, Ohio, announced that it wanted to close the facility in 2016, 10 years before the end of its lease in 2026. The city and several council members have signed on as plaintiffs in a lawsuit against the clinic and several other defendants, alleging breach of contract and breach of fiduciary duty, among other charges.

The lawsuit contends that the clinic has already begun to cut services at its Lakewood Hospital and send patients to other facilities it operates, a practice the plaintiffs' attorney refers to as "gross mismanagement." The suit demands $400 million damages and for the hospital to remain open until the end of its current lease in 2026.

When cooperation turns to litigation, we can help

One of the advantages that commercial transactions have at the outset is the convergence of interests between the business partners: everybody is interested in making money. But sometimes after the ink is dry on the contract what began as a case of great expectations can break down into something that you did not anticipate or want, and you can find yourself seeking a way to salvage the situation or even to get out of it.

Simply put, there are businesses in Ohio, in other states and especially in foreign countries that see business relationships as zero-sum transactions. What do you do when the company you engaged to make your products in another country starts making and selling knock-offs of its own? What is your remedy when the distributor to whom you assigned exclusive territorial rights in one state or country starts selling outside its territory? How should you respond when it becomes apparent that your contract partner is stealing your intellectual property? 

An overview of non-compete agreements in Ohio

The saying, "Knowledge is power" is one that many businesses in this state understand even if they never utter those words. In the present-day information era, often what is most important to a company's profitability or even its survival consists of data, processes, customer lists, trade secrets and other intangibles that cannot be physically removed from the employer's premises but which can be taken away in the experience and knowledge of departing employees. The loss of key information to a competitor can spell disaster for a business if a former employee divulges it without any concern for the consequences to his former employer or to himself.

For many years, businesses that need to protect sensitive information and to prevent the loss of customers to competing companies have relied on non-compete agreements to protect them. The purpose of these agreements, which an employee enters into with his employer as a condition of initial or continued employment, is to prohibit that employee from revealing proprietary or confidential information of his former company to his new employer.

Contract disputes in Ohio

If two individuals or organizations enter into a written agreement, it is considered to be a contract. If the one of the parties does not meet their obligations as defined by the agreements, they are considered to be in breach of contract. When this occurs, the dispute can either be resolved through mediation, arbitration or through the court system, and the court system is the most common way of handling disputes.

There are a few ways that a party may be in breach of contract. These can include failing to perform, failing to perform in a timely manner or failing to perform in the way prescribed by the contract. Breaches may be described as material or immaterial depending on how important that portion of a contract was.

Travel clubs accused of violating consumer protection laws

Several interrelated companies have been accused of violating Ohio's consumer protection laws. According to a lawsuit that was filed by the state's Attorney General, the group of companies used deceptive business practices when they sold travel club memberships to their customers. Furthermore, it was suggested that when customers tried to cancel their memberships, the companies did not honor their cancellation policies.

The lawsuit states that the companies mailed postcards to consumers offering A2Z travel club memberships. The postcards claimed that the recipients might receive prizes like airline tickets and vacation packages. However, the postcards did not reveal that listening to a two-hour sales presentation was required to qualify for the prizes.

Avoiding small business legal mistakes in Ohio

Many small business owners make errors that could potentially lead to the failure of their businesses and significant personal liability for business debts. It is important for small business owners to be aware of the common errors they might make in order to take steps to avoid them.

When a business has employees, the business should make sure they have human resource materials that outline the employees' responsibilities, work practices and expectations. Some businesses fail after employees bring lawsuits, and having human resource materials can help prevent such actions if an employee is terminated. Businesses should also consider blocking employee access to certain websites to prevent them from the personal use of any computers at work. If they have sensitive customer information on their work computers, they should have safeguards in place to protect the information from hackers.

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