Archive for May 14, 2014

Of all the things I see in my practice, a client’s personal guarantee of a corporate obligation is among the few things that keep me from sleeping at night, really. I loathe personal guarantees, and for good reason.

1. Corporations are (quasi) people. In every American state, corporations are legal entities or “beings” in the same way that you and I are beings. As such, corporations are afforded certain privileges and responsibilities. The most common form of responsibility is the obligation to file and pay income, sales and other taxes. Privileges

Chances are good that you have at least one contract in which you have agreed to arbitrate—rather than litigate—disputes between you and the other party. It may even be the case that the arbitration clause is in the agreement because you wanted it there. After all, the consensus in the business world is that arbitration is better, faster and cheaper. But, is it really?

Hint: No, no and no, but keep reading.

Myth: Arbitration is better because it’s just like litigation, and there is no public record.

The only accurate part of this

Revenue commitments rarely end up benefiting the buyer—that’s not the intent. However, buyers too often accept revenue commitments in their contracts because the presented rates seem good, and the buyer plans to only give a portion of its traffic to the carrier.

You know what happens next. For any number of reasons, buyer fails to hit the minimums and now the contract is up for renewal. Carrier graciously offers to waive the shortfall if buyer agrees to renew the contract, with another revenue commitment—carrier has buyer over a barrel.

Some carriers require