Transactional Services — all business contracts, including asset sales and purchases, stock sales and purchases, loan documents, promissory notes, security agreements, employment agreements, vendor agreements, financing statements, corporate formation and governance documents, shareholder agreements, memoranda of understanding, letters of intent, term sheets, and so on.
As a New York business attorney, I offer transactional legal services, which involve contracts and other documents that are not typically filed in court, or, more accurately, are not court filings. When there is a dispute over a transaction document, for instance, a contract, and the contract needs to be interpreted, that is when the contract is filed in court. But, until then, it’s a stand-alone document that is not filed in court, and it governs the conduct of the parties. Another way a transaction document is or can be filed in court is when the transaction needs court approval, like in a bankruptcy sale, for instance.
Even if you are not a New York business attorney, you probably know that there are all sorts of contracts — if you’ve ever ordered something online, there are terms and conditions. Guess what those are? Yup. A contract. Your mobile phone? Yep, there are contract terms for that too. Your apartment or home, whether you rent or own, came from a contract. Your credit card, your bank accounts, your utility services, even the credit cards slips that you sign, they’re all contracts. Accordingly it is fair to say that contracts are everywhere, and those contracts are the result of a transactional law practice.
Apart from touching our lives as consumers, those of us involved in business transactions rely more heavily — and perhaps more consciously — on contracts. If you are involved in the purchase or sale of a business, whether as a broker, or a buyer, or a seller, there is, or should be, a contract. Now, when selling, purchasing, or brokering the sale or purchase of a business, this can be done in at least two ways. First, there could be simply a sale of assets, which is commonly called, you guessed it, an asset sale. When there is an asset sale, and if you are working with a New York business attorney (or other attorney) who knows what he or she is doing, then the transaction documents will be limited to those assets. For instance, if a trucking company has ten (10) trucks, and 100 clients, then the assets that could be sold are all or a portion of those trucks and clients. An asset sale like that could be attractive to another trucking company that has all of their back office services set up, like phone people, advertising, marketing, branding, sales, drivers, and so on, so they would only need, in this instance, the trucks and the clients. One of the benefits of structuring a sale like this is that the purchaser would not normally be responsible for the selling party’s liabilities and, in some instances, the assets could be sold to settle or pay down some or all of the debts or liabilities of the selling company. Depending on how the deal is structured, the value of the assets, and the amount of liabilities, the buyer could assume the liabilities for a reduced purchase price.
One thing to note about contracts, and there is gold in here, is that in my experience being a New York business attorney, I get asked all the time what parties can or cannot do in the contract. Here’s the deal: they can basically do and agree to anything, except where it is illegal or against public policy. For instance, an agreement to commit a crime would not be enforceable. As another example, in New York, it is considered against public policy to have a provision in contract that exempts a landlord from damages arising from the landlord’s negligence; therefore that provision would be void. Just think about it: imagine what would happen if a landlord could be deliberately negligent and not be liable for the damages caused by negligence; think of every way a landlord could fail to deliver for its tenants (dirty common areas, unsafe conditions, leaks, no water, no hot water, and so on), and not be responsible for it. More on point, it would be for instance the landlord failing to fix a broken staircase and then someone getting hurt because of it.
Getting back to business sales, purchases, and business broker services. As a New York business attorney, I have seen lots of asset sales and purchases, and I have represented both sellers and purchasers (in different transactions of course). Another way a purchaser can purchase, and a seller can sell, a business is by purchasing or selling stock, in the case of a corporation, or, in the case of a limited liability company, membership interests. Even though stock and membership interests are essentially the same thing, i.e., evidence that you own an equity interest in a company or business, for some reason they are or can be referred to with different terms. But here’s the point: you can buy or sell a business by buying or selling its equity interests — just another word for stock, shares, or membership interests. Once you do that, however, everything that the company has transfers with the sale, which means that, unless otherwise specified in the contract, the seller retains nothing, and the buyer takes everything, including the liabilities. However, as I mentioned earlier, parties can typically do anything they want in the contract (subject to it being unenforceable), and this includes having the seller retain liabilities. SIDE NOTE: illegality and against public policy are not the only ways that a contract may not be enforced, there are other concepts like duress and unconscionability, which are also defenses to enforcing a contract (in layman’s terms: ways to get out of a contract). SIDE NOTE: to prevent courts from voiding or canceling a whole contract based on a single clause being unenforceable, parties should include language to the effect that if a court determines that a clause is unenforceable, it doesn’t affect the validity of the remaining provisions, and if you want to get super awesome, include language to the effect that even if the provision is void, the parties and court will try to bring it in line with what is acceptable so that they can enforce the intent of the parties to the fullest extent permitted.
In closing, I was thinking about listing every contract that is available for you, but I can get you whatever contract you need, and help you with it, and if I can’t help you with it, I will help you find someone who can. This will open up a can of worms, but I want to make the point here in closing because I think it is important. I hear this from a lot of attorneys: “I don’t normally see that.” Or “It’s not normally done that way.” To me, that’s myopic, frustrating, and misses the point, which is to ultimately serve the clients and the parties and get them what they want. It is our job to guide you through that part, regardless of convention. Before the lightbulb, the light bulb did not exist, nor did electricity, computers, airplanes, vaccines — not of these things existed before they existed, and if people had done everything the way they had always done it, we still wouldn’t have those things. The law is no different, and I look forward to getting you what you need or want in the way you want it. This isn’t to say that I am not going to say you can’t do something, but I will try my hardest for you as your New York business attorney.