Wilkes-Barre Business Law Blog

Pop-up stores taking over malls

Large malls in Pennsylvania and other areas of the country look forward to the Halloween season. It usually means more stores opening for a short time to fill a void left by larger companies until a permanent tenant is in place. It can take several months to complete the paperwork for a tenant to get into a mall, so pop-up stores like Spirit Halloween are a good way to bring customers to the mall. The popular Halloween store started in 1983 and is now known as one of the leading pop-up stores across the country.

The store sets up in strip malls and larger malls for a few weeks, selling everything from costumes to party supplies before closing after Halloween. The company is open online year-round. There will be an estimated 1,300 Spirit Halloween stores in 2017.

Due diligence and commercial real estate purchases

Ensuring that short cuts are not taken during the due diligence process can save commercial real estate buyers in Pennsylvania and around the country both time and money. The inquiries performed during due diligence may raise questions about the condition of a building or its suitability for a particular purpose, and buyers sometimes back away from the table or demand more attractive terms when property inspectors or attorneys make discoveries that shed new light on pending deals. Accountants are also called upon during due diligence to study financial documents, bank records and projections for inconsistencies and irregularities.

Commercial property transactions do not generally become binding until the due diligence process has been completed and the parties involved have reached agreement about how the issues raised should be addressed. Time is often of the essence in commercial real estate deals, and buyers and sellers who wish to keep matters moving may choose to allow the due diligence period to begin after signing a letter of intent. Parties can also wait until a purchase agreement has been drafted and extend deadlines when necessary, and buyers may insist that the due diligence period not begin until all of the documents needed to complete the process have been provided.

Commercial real estate vacancy rates continue to fall

Commercial real estate vacancy rates in Pennsylvania and around the country are expected to fall to below 12 percent by the end of 2017 as the nation's economy continues to grow and add jobs. Economic growth during the last quarter was a robust 3 percent, and the National Association of Realtors believes that even the beleaguered retail sector will benefit as a result. Retail vacancies are expected to drop by 0.4 percent by the end of 2017 while the amount of industrial space available is set to fall by 1.1 percent.

However, falling commercial real estate vacancy rates may not lead to lower prices in all parts of the country. Industry experts say that foreign investors have been less active recently, and they believe this will cause prices to plateau in a number of key markets. Expensive projects in exclusive areas could feel the impact most as Class A properties have been especially popular with overseas buyers in recent years.

Work with experienced attorney to address issues surrounding construction contract bidding, P.2

In our previous post, we mentioned that the rules governing contract bidding are different for public contracts and private contracts. Specifically, the bidding process on public contracts is governed by greater formality and more rules, among which is the some variation of the rule that a bid must be selected based on the lowest responsible bid.

A recent example of a case where this issue came up is the bidding for a contract to paint bridge approaches. The Delaware River Port Authority ended up rejecting a $17.9 million bid from a Baltimore firm, selecting instead an Ohio firm which made a higher bid. Subsequently, the Baltimore firm sued to prevent the contract from moving forward. 

Work with experienced legal counsel to address issues surrounding construction contract bidding

In construction law, the bidding process is a crucial phase of a construction project, since it is when parties establish the overall cost of the project. For contractors, getting the numbers right is important, not only to ensure the contractor is a competitive bidder, but also to ensure the contractor doesn’t set itself up for failure and financial loss.  

The bidding process for construction projects is different for public contracts and private contracts. Public contracts involve a government agency requesting the bid, while private contracts involve private companies. In private contracts, the bidding process is not as formal as with public contracts, since private contract bidding is not bound by many special rules and regulations outside the ordinary rules of contract law. 

Work with experienced legal counsel to protect your rights under construction contract

When owners, contractors and subcontractors enter into an agreement to engage in a project, they expect that they will be able to rely on each other party to honor their obligation under the contract. Good construction contracts do, of course, allow for changes in the project timeline and, if necessary, changes in the plan itself. A certain amount of flexibility is important in any construction project.

When one party fails to live up to its obligations under a construction contract, though, the other parties involved in the project can suffer serious economic losses. Take, for example, the case of an Arizona construction company who is currently suing for millions of dollars of damages in connection with a botched project at the Chestnut Street Tower in Philadelphia. 

Overuse of non-compete agreements can backfire on businesses, P.2

Last time, we began looking at the use of non-compete agreements for low-wage earning employees. As we noted, there can be legitimate reasons for negotiating non-compete agreements with such employees, but it is important to keep in mind that every non-compete agreement must aim at protecting valid business interests.

Two companies that have recently been in the news for their use of non-compete agreements for low-wage earning employees are Jimmy Johns Gourmet Sandwiches and Amazon. While Amazon cut out its use of such agreements when the practice became public in 2015, Jimmy John’s only recently agreed to discontinue its use of such agreements as part of an agreement with New York Eric Schneiderman, who called the use of non-compete agreements for low-wage employees “unconscionable.” 

Overuse of non-compete agreements can backfire on businesses, P.1

In our last post, we began looking at some of the general requirements of non-compete agreements. We have specifically mentioned the requirements of consideration, protection of a valid business interest, and reasonableness of duration, geographic area, and the scope of activities prohibited.

Another important consideration for businesses in drafting and negotiating non-compete agreements is the status of the employees on which they seek to impose non-compete agreements. Ordinarily, businesses reserve non-compete agreements for employees that present a higher risk of misappropriating valuable business information. Increasingly, though, businesses are choosing to impose non-compete agreements on lower-level employees. 

Non-compete agreements: looking at some basic rules

Businesses, particularly those in competitive industries, know that intellectual property protection is important to ensure valuable business information is not misappropriated. Patent and trademark registration, and trade secret enforcement, can be valuable ways to do this, but so can non-compete agreements, if they are used prudently.

Different states have different rules when it comes to the validity and enforceability of non-compete agreements. In general, because non-compete agreements are contracts, they must abide by the principles of contract law. Among other things, this includes the requirement of sufficient consideration, or something given in exchange for the agreement. Consideration can consist of the offering of employment, a promotion, or some other form of compensation. 

Proper entity selection an important decision when starting a business, P.2

Last time, we looked very briefly at some of the basic characteristics of sole proprietorships and partnerships, noting the importance of entity selection in business planning. Both of these types of business entities are relatively simple to set up compared to limited liability companies and corporations.

A limited liability company has some of the features of a partnership and some of the features of a corporation. Owners, called members, of limited liability companies have the same liability protection as owners of corporations. LLCs, however, are taxed like partnerships and provide the same flexibility of management as partnerships. LLC formation requires filing a Certificate of Organization with the state along with other documentation, and LLCs are required to register with the state on an annual basis.