GEB 3113

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GEB 3113 C14. Elements of a Contract
(Continued) 15. Forces Causing Squeeze Out C
16. Regulations and Assistance Dr. B. Wayne
Rockmore, APS
WEEK
8

2
Looking Ahead

• REMEMBER KAE 3 Begins Thursday
• Dont Forget Your UCF ID and NID
• Where WebCT (not the Testing Lab)
• When Opens Thursday (2/28) at 400 pm
• Closes Saturday (3/1) at 830 pm

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C 14. Elements of a Contract (Continued)

• What is a Contract An agreement between two or
  more parties in which each mutually promises to
  do something for the other.
• Written or Verbal
• Problems with Verbal (Oral) Contracts
• Failure to Comprehend the same intent
• by all parties
• Issue of proof as to the promises
• Key is Effective Communications

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Communication and Contracts

• Sender Barrier Receiver
• (Offer) (Unclear)
  (Acceptance)
• Feedback
• (Interpretation of the
• Offer Acceptance)

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Barriers to Communication

• Filtering (status effects culture, values,
  biases, prejudice, etc)
• Selective Perception
• Emotions
• Language
• Non-verbal cues

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Richness of medium needs to match characteristics
of the message for maximum effectiveness
Highest Physical presence

(face-to-face) Media
Interactive media Richness
(phone, EM)
Personalized
static
media (text
messaging e-mails, memos, letters,
tailored
computer reports) Lowest
Impersonal static
media (flyers, bulleting)
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Elements of a Contract

• What is a GOOD Contract?
• ?Clearly communicated and leave nothing to the
  imagination or misinterpretation
• Offer is it bona fide (or open to
  negotiations)?
• Acceptance the other part must accept the
  offer (needs to be specific and clear to avoid
  misinterpretation).
• ? Two fundamental purposes of the court system
• ? It Determine the actual facts of a dispute
• ? It Apply the appropriate rules (law) to those
  facts
• ? It takes both parties mutually agreeing to
  terms for a contract to exist. No acceptance
  No Contract.

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Elements of a Contract(Continued)

• Consideration the second party (accepting
  the offer) must provide the first party (making
  the offer) something of value (money, services,
  materials)
• ? Specific Performance remedy for not meeting
  terms (promises) stated in the contract
• ? Liquidated Damages state damages to be
  awarded in the contract, if the terms are reached
• Capacity must be of legal age, mentally
  competent, and have the authority (to represent
  or act in the behalf of the entity) to enter
  (bind an entity) into a contract
• Legal Purpose subject of the contract is
  illegal, the contract in unenforceable

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Contract Issues

• Control enforcing the terms of the contract.
• Debtors are in control because creditors
  must initiate action to recover.
• Price Tag (Bright House Networks
  commercial) clauses in the contract that incur
  costs (may be hidden or difficult to identify)
• Bail Out Clause voids the contract under
  certain stipulated conditions (Act of War, Mother
  Nature, Riots, Inflation (tying price changes to
  a cost-of- living index)
• Contingency Clause states that a contract
  is voided if a specific condition is not met by
  one of the parties (sale of a home in a real
  estate transaction)
• These clauses are loopholes but obvious ones
  Beware of the not-so-obvious ones!

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Leases

• Standard So called or Boilerplate Contract
• ? Read the Contract every paragraph, clause
  and stipulation
• ? DO NOT let emotions (or desire) affect
  contract negotiations
• There are no Standard leases.
• Length of lease and options
• Set cost ceiling for critical items
• Beware of escalation clauses by the landlord
• Personal guarantee
• HVAC charges (sq. ft.)
• Common Area Maintenance (CAM)
• charges (sq. ft.)
• Advertising charges
• Contract review
• Tenant finis

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Employment Contracts

• Employment-at-Will Issue
• Buy-sell agreements protection for principal
  parties in a new venture from undue financial
  loss should a personal (including death,
  disability or divorce) or business relationship
  disintegrate
• Noncompete agreements employment agreement
  (confidentiality agreement) signed at the
  beginning of employment stipulating they will not
  leave or enter into competition with another
  employer using confidential information at any
  time or place
• Nondisclosure agreements protect
  proprietary rights prohibits the use of a
  ventures confidential information or trade
  secrets for ones one benefit or providing the
  information to another company.

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C 15. Forces Causing Squeeze Out

• Protecting the enterprise and ones position in
  it.
• An Issue of Change Three Barriers of Change
• Greed primary reason for squeeze-outs
• Changes the relationships of associates,
  family, friends.
• At Arms Length keeping company assets
• separate from personal assets
• Power is usually covert, unacceptable to
• appear power hungry (but admired).
• Inactive Shareholder (only provided money
• why should we share the fruits of our labor
• without the money there would be no fruit)
• Death, Disability, Divorce, Age, Divergent
  Business Interest
• Superior Talent (Real not perceived talent
  should be rewarded, if not a squeeze-play may be
  inevitable)
• Duplicity (using company resources for
  personal gain)

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THREE BARRIERS OF CHANGE

• BRAIN BARRIER 1
• Fail to see the need for change
• BRAIN BARRIER 2
• Fail to move act
• Even though we see the need to change
• BRAIN BARRIER 3
• Fail to finish the change process

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Getting Ahead of theChange Curve

• Anticipatory Change (Visionary)
• Identify signs (trends) indicating the eventual
  need for change value of MEA.
• Most difficult to initiate and least expense
  (long-term)
• Greatest Potential Benefits/Lowest Cost
• Reactive Change
• Signs of Change are apparent but Old Maps still
  appear valid (Success makes it difficult to get
  others to see the need for Change)
• Crisis Change
• It is undeniable, immediate and Survival depends
  upon it!
• Easiest to initiate BUT most expensive

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Methods of Squeeze Out
Terminate minority stockholders (Protection
against being discharged - have an agreement to
repurchase the stock at an agreed upon price)
Withholding dividends (Request preferred stock)
Removal from the Board (Stipulate that each
stockholder is to be a Director of the
Corporation) Mergers (Majority stockholder
merges with a business they wholly own,
dissolving the business) Redeeming shares
(Under the auspices of organizational
restructuring, merger, recapitalization common
stock is converted to preferred stock)
Watering the stock (issue more stock
reducing the of minority ownership) Selling
corporate assets (sell key assets to a business
owned by the majority owner) Dissolutions (and
restart the business)
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Methods of Squeeze Out(Continued)
Change the State of Incorporation (move the
incorporation to a State more tolerant to
squeeze outs actions) Appropriation of
opportunities (take personal advantage of
business opportunities otherwise available to
the business. Key is Integrity!) Siphoning off
money (salaries/expenses for personal benefit,
reduces minority ownership value) Corporate
meeting maneuvers (logistics) Buy-sell
agreements (not revaluing stock) S corporation
situations (tax burden) Partnership situations
(can be dissolved at any time by settling
accounts and buying out financially weaker
partners)
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Avoiding Being Forced Out
Refuse minority positions (require 50 or more
of the ownership) Control bylaw provisions ?
Location of Board meetings ? Any deviations to
meetings or agendas and by laws require
unanimous consent ? Veto power (mergers, sale of
corporation/ assets, reorganization,
salaries/expenses, security issues)
Participate in management (investment requiring
membership on the management team, employment
contract stipulating conditions of settlement)
Specify buy-sell agreements Stipulate that their
elimination of ownership is through a buy-sell
agreement
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C 16. Levels of Government Regulations
International exports, conducting business
in foreign lands Federal uniform for
everyone In most cases, the primary
concern is the IRS State key issue is sales
tax Local regulation of business licenses
and zoning (Issue in networking to avoid
situations where the phrase You cant fight
City Hall applies
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Looking Ahead

• REMEMBER KAE 3 Begins Thursday
• Dont Forget Your UCF ID and NID
• Where WebCT (not the Testing Lab)
• When Opens Thursday (2/28) at 400 pm
• Closes Saturday (3/1) at 830 pm

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EXAM 2
? EXAM 2 Begins NEXT WEEK Dont Forget Your
UCF ID and NID Where CBAII Testing Lab, Room
104 When Beginning Tuesday (3/4) at 10 am
Ending Saturday (3/8) at 830 pm