Category Archives: Commercial Law

Obligation

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Obligation in California

Modification, Substitution, or Termination of Obligation

Welcome to the California legal encyclopedia's introductory part covering the modification, substitution, or termination of obligation laws of California, with explanations of the various implications of modification, substitution, or termination of obligation in California and the statutes enforced in California in connexion with modification, substitution, or termination of obligation. This introductory section covers case law related to modification, substitution, or termination of obligation in California, the legal approach on modification, substitution, or termination of obligation in the United States and related topics. The information below provides an California-specific general overview of the legal regime of modification, substitution, or termination of obligation in California.

Modification, Substitution, or Termination of Obligation in relation to Commercial Law

This section analizes the legal issue of modification, substitution, or termination of obligation in this context, and provides information on its relation with Contracts.

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Settlement

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Settlement in California

Good Faith Settlements

All litigators need to know the statutory rules governing good faith settlements.

By Gilda R. Turitz. She is a partner and litigation practice group leader at Sideman & Bancroft in San Francisco.

When one defendant in a multiparty case settles for a low amount, an issue often arises as to whether the settlement has been entered in “good faith.” The issue is important because a key California statute enables a party who settles in good faith to leave the litigation and exempts them from certain cross-claims asserted by the other defendants.

Statutory Procedure

Settlements are supposed to bring warring litigants peace and finality, but that goal may be jeopardized when non-settling defendants challenge a pre-verdict or pre-judgment settlement between the plaintiff and some – but not all – joint tortfeasor or co-obligor defendants. The challenge usually comes in the form of an objection that the settlement lacks the requisite good faith to qualify for the protective statutory cloak that would shield the settling party from the cross-claims asserted by other defendants for equitable comparative contribution or indemnity based on comparative negligence or comparative fault. Moreover, a good faith settlement will reduce the plaintiff’s claims against the non-settlors by the amount stipulated in the release, dismissal, or covenant not to sue or enforce judgment, or by the amount of consideration paid to the plaintiff, whichever is greater. (See Cal. Civ. Proc. Code §§ 877 and 877.6.)

Any party can apply to the superior court for a good faith determination under alternative procedures of section 877.6(a) by a formal motion or a simple notice served by certified mail. A party asserting the lack of good faith (which is a question of fact) bears the burden of proof. (§ 877.6(d).) The battle regarding a disputed good faith claim usually focuses on the factors explained in Tech-Bilt, Inc. v. Woodward-Clyde & Associates (38 Cal. 3d 488 (1985)) and its progeny. The issue is whether the settlement is so far “out of the ballpark” that it is inconsistent with the statute’s dual goals of encouraging settlements and equitably allocating costs among multiple tortfeasors.

Proportionate Liability

The predominant factor under Tech-Bilt is that the settlement amount cannot be “grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the settling defendant’s liability to be.” (38 Cal. 3d at 499.) Although a monetary sum is easily quantified, total settlement value must factor in any nonmonetary considerations. Admissible evidence is required to prove value and the settlor’s proportionate liability, and expert affidavits in support may be necessary on both issues.

Financial Reality

Courts recognize that a settlor may pay less in settlement than it would be found liable for at trial, especially if its financial resources are limited. The good faith determination requires adequate and admissible evidence of the settling defendant’s net worth and any insurance or claimed noncoverage. An objecting party may properly seek a continuance of the good faith hearing to marshal evidence, including taking discovery, to support its burden of proof on the financial issues. If discovery is sought, the settlor may seek a protective order to limit financial disclosures.

Although courts are quite flexible in applying the good faith analysis, a settlement will not qualify as valid under section 877.6 if the evidence demonstrates that the settling parties engaged in conduct aimed at injuring the non-settlors’ interests. A collusion finding may be supported by a disproportionately low settlement figure entered into solely to immunize the settlors from a cross-complaint. (See Mattco Forge, Inc. v. Arthur Young & Co., 38 Cal. App. 4th 1337 (1995).) However, if the settlement resulted from a mediation or judicially hosted settlement conference, there is a much better chance that it will meet the good faith standard.

Make It Conditional

If settling parties anticipate a challenge, they should consider conditioning the settlement upon the court’s approval. Otherwise, if the court finds lack of good faith, the settling defendants will still be bound to pay, and they will face continuing potential exposure to indemnify non-settlors.

Dismissing Cross-Complaints

A good faith settlement order does not by itself dismiss indemnity and contribution cross-complaints. The settling defendant must move for that relief, and the motion can be made concurrently with or immediately following the good faith hearing.

Appellate Relief

Any aggrieved party may file a petition for writ of mandate within 20 days after written notice of the good faith ruling. (Cal. Civ. Proc. Code § 877.6(e).) Because there is no right to appeal from a good faith settlement order, to contest the trial court’s ruling, a party should promptly file a writ. Waiting to pursue appellate relief until after a judgment is entered will usually be too late.

The rules governing settlement are designed to be efficient and user-friendly. And any lawyer in a multiparty case is well advised to not only be aware of them, but also to understand both their potency and their limitations.

California Settlement

This section covers California-specific basic information on settlement and related topics. Many of California's laws on settlement are similar to those of other U.S. states, with some differences (in some cases, minor differences). California settlement laws on settlement are created and revised by the actions of lawmakers and the courts. Use the cross-references and topics below to learn more about California statutes and laws on settlement, which is a basic matter in California law.

Settlement Contracts

Welcome to the California legal encyclopedia's introductory part covering the settlement contracts laws of California, with explanations of the various implications of settlement contracts in California and the statutes enforced in California in connexion with settlement contracts. This introductory section covers case law related to settlement contracts in California, the legal approach on settlement contracts in the United States and related topics. The information below provides an California-specific general overview of the legal regime of settlement contracts in California.

Settlement Contracts in relation to Commercial Law

This section analizes the legal issue of settlement contracts in this context, and provides information on its relation with Contracts.

Settlement of Small Estates

Welcome to the California legal encyclopedia's introductory part covering the settlement of small estates laws of California, with explanations of the various implications of settlement of small estates in California and the statutes enforced in California in connexion with settlement of small estates. This introductory section covers case law related to settlement of small estates in California, the legal approach on settlement of small estates in the United States and related topics. The information below provides an California-specific general overview of the legal regime of settlement of small estates in California.

Settlement of Small Estates in relation to Probate, Estates and Trusts

This section analizes the legal issue of settlement of small estates in this context, and provides information on its relation with Administration of Estates.

Settlements; Agreements on Compensation

Welcome to the California legal encyclopedia's introductory part covering the settlements; agreements on compensation laws of California, with explanations of the various implications of settlements; agreements on compensation in California and the statutes enforced in California in connexion with settlements; agreements on compensation. This introductory section covers case law related to settlements; agreements on compensation in California, the legal approach on settlements; agreements on compensation in the United States and related topics. The information below provides an California-specific general overview of the legal regime of settlements; agreements on compensation in California.

Settlements; Agreements on Compensation in relation to Workers' Compensation

This section analizes the legal issue of settlements; agreements on compensation in this context.

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Secured Transactions

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Secured Transactions

California Secured Transactions

This section covers California-specific basic information on secured transactions and related topics. Many of California's laws on secured transactions are similar to those of other U.S. states, with some differences (in some cases, minor differences). California secured transactions laws on secured transactions are created and revised by the actions of lawmakers and the courts. Use the cross-references and topics below to learn more about California statutes and laws on secured transactions, which is a basic matter in California law.

Uniform Commercial Code, Article 9: Secured Transactions

Welcome to the California legal encyclopedia's introductory part covering the Uniform Commercial Code, Article 9: secured transactions laws of California, with explanations of the various implications of Uniform Commercial Code, Article 9: secured transactions in California and the statutes enforced in California in connexion with Uniform Commercial Code, Article 9: secured transactions. This introductory section covers case law related to Uniform Commercial Code, Article 9: secured transactions in California, the legal approach on Uniform Commercial Code, Article 9: secured transactions in the United States and related topics. The information below provides an California-specific general overview of the legal regime of Uniform Commercial Code, Article 9: secured transactions in California.

Uniform Commercial Code, Article 9: Secured Transactions in relation to Commercial Law

This section analizes the legal issue of Uniform Commercial Code, Article 9: secured transactions in this context, and provides information on its relation with Uniform Commercial Code.

Secured Transactions in California: General Overview

This entry offers readers with practical insight to the subject of secured transactions in California, a general introduction to the legal issues relating to secured transactions under California law and practice.

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Commercial Law

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Commercial Law

Commercial Law

Basics of commercial law in the State of California. There is also additional information and resources on related topics in California.

Uniform Commercial Code, Article 1: General Provisions

Welcome to the California legal encyclopedia's introductory part covering the Uniform Commercial Code, Article 1: general provisions laws of California, with explanations of the various implications of Uniform Commercial Code, Article 1: general provisions in California and the statutes enforced in California in connexion with Uniform Commercial Code, Article 1: general provisions. This introductory section covers case law related to Uniform Commercial Code, Article 1: general provisions in California, the legal approach on Uniform Commercial Code, Article 1: general provisions in the United States and related topics. The information below provides an California-specific general overview of the legal regime of Uniform Commercial Code, Article 1: general provisions in California.

Uniform Commercial Code, Article 1: General Provisions in relation to Commercial Law

This section analizes the legal issue of Uniform Commercial Code, Article 1: general provisions in this context, and provides information on its relation with Uniform Commercial Code.

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Electronic Transaction

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Electronic Transaction in California

The Uniform Electronic Transactions Act and the E-Commerce Law: e-signature

California enacted UETA and it took effect January 1, 2000. For more information on electronic transactions in the United States, see here.

Applicability

Civil Code Sec. 1633.3

Application of title provides:” (a) Except as otherwise provided in subdivisions (b) and (c), this title applies to electronic records and electronic signatures relating to a transaction.(b) This title does not apply to transactions subject to…” There is a long list of types of transactions that are NOT valid if electronic. These deal mainly with notices regarding real property, vehicles health and many other transactions that if left to e-mail could end up in fraud to the consumer.

Civil Code Sec. 1633.4

Next, this provision provides that the new law “applies to any electronic record or electronic signature created, generated, sent, communicated, received, or stored on or after January 1, 2000.” E-signatures alone (without paper backup) may not be valid if “signed” before this date.

Record or signature requirement; agreement to transact electronically: Section 1633.5. provides two requirements and a non-requirement. Part (a) states that the new law, “does not require a record or signature to be created, generated, sent, communicated, received, stored, or otherwise processed or used by electronic means or in electronic form.” This means that if the record is in paper form it is as valid an e-signature as if in electronic form.

Part (b) provides the CRUX of validity: if the parties to an e-transaction “each of which has agreed to conduct the transaction by electronic means,” then the Act applies to make it valid. “Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct.” for example if a person is online and goes to an online business, click “I Accept” they are, from these circumstances, making an electronic agreement (contract).

Note that this part also provides that if there is an “an agreement to conduct a transaction by electronic means may not be contained in a standard form contract that is not an electronic record.” Though this language is a bit cryptic, it is believed to be intended to mean that if there is a standard from paper agreement, it may not validly contain an agreement to conduct business by e-means.

Therefore, if an e-transaction is to be valid and enforceable the agreement to do business by e-means must be shown by:

  • the surrounding circumstances of the transaction,
  • by a separate agreement whether on paper or in e-format (not in a standard contract however),
  • a form contract the sole purpose of which is to approve or agree that the agreement is to be conducted by electronic means.

Then what if the person does not want to make all transaction by e-means? Section 1633.5 (c) provides, “A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. If a seller sells goods or services by both electronic and nonelectronic means and a buyer purchases the goods or services by conducting the transaction by electronic means, the buyer may refuse to conduct further transactions regarding the goods or services by electronic means.”

Others

Note that this part also states, “This subdivision may not be varied by agreement.” Of course, if the only format of business is e-business then the person would have to stop signing and would be unable to do further business with that company. You may not thus not tell the user that they need to agree to conduct all transactions by e-means.

If an agreement is “signed” by an e-signature it is valid IF certain requirements are met. First is that IF there needs to be an electronic record of the signature, this can be on disk, server or eventually printed on paper. The e-record is needed to prove that at the moment the accepting party clicked on “I Accept” he/she actually sent data to the offeror and the offeror, under the circumstances of the transaction, took the click as a signature. From then on the parties are bound by the acceptance of the agreement just as if it were on paper.

Requirement to provide, send, or deliver information in writing

Section 1633.8. electronic satisfaction: (a) If parties have agreed to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver information in writing to another person, that requirement is satisfied if the information is provided, sent, or delivered, as the case may be, in an electronic record capable of retention by the recipient at the time of receipt. An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record.

“Section 1633.7. Legal effect or enforceability of electronic record, signature, or contract: (a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.(c) If a law requires a record to be in writing, an electronic record satisfies the law.(d) If a law requires a signature, an electronic signature satisfies the law.”

Alarm Companies: Electronic Transactions (AB 1097) in California

The Alarm Companies: Electronic Transactions (AB 1097) is an act to amend Section 7599.54 of, and to add Section 7599.56 to, the Business and Professions Code, and to amend, repeal, and add Section 1633.3 of the Civil Code, relating to alarm companies. Decided: California Assembly Act (2015-2016 Regular Session – AB 1097)

Consumer

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Consumer

In order to protect consumers, California has regulations on businesses and certain criminal laws (dealing with cyber crimes like phishing) in place. California consumer laws and regulations, generally, are intended to protect citizens and entities in commercial transactions (such as deceptive business practices, liability, scams and dangerous products), and safegurd them from financial and computer-related harm. This subject area also includes laws protecting consumers in the marketplace. Federal and California laws address these matters.

This introductory entry covers the consumer laws of California, with descriptions of the legal regime protecting consumer rights. Choose a link below to learn more about state-specific laws on consumer issues in California.

Browse California Consumer Topics

Below you will find some information and cross references to California-specific laws on issues like lemon laws, California homestead laws, identity theft in California, fraud and consumer scams and others.

California Identity Theft Laws

An overview of California's various laws and regulations handling the crime of identity theft in California, in which an individual's personal identifying information is used to secure credit or purchase goods.

California Deceptive and Unfair Business Practices

General overview of California laws prohibiting businesses from engaging in unfair and deceptive trade tactics and practices, such as false advertising in California, bait and switch, or tampering with a car's odometer, with cross-references to additional information and resources on related topics in California.

California Environmental Regulations

California laws regulating businesses include environmental regulations, such as waste and pollution controls.

Consumer Credit

Welcome to the California legal encyclopedia's introductory part covering the consumer credit laws of California, with explanations of the various implications of consumer credit in California and the statutes enforced in California in connexion with consumer credit. This introductory section covers case law related to consumer credit in California, the legal approach on consumer credit in the United States and related topics. The information below provides an California-specific general overview of the legal regime of consumer credit in California.

Consumer Credit in relation to Commercial Law

This section analizes the legal issue of consumer credit in this context, and provides information on its relation with Trade Regulation.

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Contract Law

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Contract Law in California

Nature and Requisites of Contracts

Welcome to the California legal encyclopedia's introductory part covering the nature and requisites of contracts laws of California, with explanations of the various implications of nature and requisites of contracts in California and the statutes enforced in California in connexion with nature and requisites of contracts. This introductory section covers case law related to nature and requisites of contracts in California, the legal approach on nature and requisites of contracts in the United States and related topics. The information below provides an California-specific general overview of the legal regime of nature and requisites of contracts in California.

Nature and Requisites of Contracts in relation to Commercial Law

This section analizes the legal issue of nature and requisites of contracts in this context, and provides information on its relation with Contracts.

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Breach

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Breach

California Breach

This section covers California-specific basic information on breach and related topics. Many of California's laws on breach are similar to those of other U.S. states, with some differences (in some cases, minor differences). California breach laws on breach are created and revised by the actions of lawmakers and the courts. Use the cross-references and topics below to learn more about California statutes and laws on breach, which is a basic matter in California law.

Performance or Breach

Welcome to the California legal encyclopedia's introductory part covering the performance or breach laws of California, with explanations of the various implications of performance or breach in California and the statutes enforced in California in connexion with performance or breach. This introductory section covers case law related to performance or breach in California, the legal approach on performance or breach in the United States and related topics. The information below provides an California-specific general overview of the legal regime of performance or breach in California.

Performance or Breach in relation to Commercial Law

This section analizes the legal issue of performance or breach in this context, and provides information on its relation with Contracts.

Breach of the Peace

Welcome to the California legal encyclopedia's introductory part covering the breach of the peace laws of California, with explanations of the various implications of breach of the peace in California and the statutes enforced in California in connexion with breach of the peace. This introductory section covers case law related to breach of the peace in California, the legal approach on breach of the peace in the United States and related topics. The information below provides an California-specific general overview of the legal regime of breach of the peace in California.

Breach of the Peace in relation to Criminal Law & Procedure

This section analizes the legal issue of breach of the peace in this context, and provides information on its relation with Particular Crimes and Offenses.

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Business Names

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Business Names in California

Unfair Competition, Trademarks, and Business Names

Welcome to the California legal encyclopedia's introductory part covering the unfair competition, trademarks, and business names laws of California, with explanations of the various implications of unfair competition, trademarks, and business names in California and the statutes enforced in California in connexion with unfair competition, trademarks, and business names. This introductory section covers case law related to unfair competition, trademarks, and business names in California, the legal approach on unfair competition, trademarks, and business names in the United States and related topics. The information below provides an California-specific general overview of the legal regime of unfair competition, trademarks, and business names in California.

Unfair Competition, Trademarks, and Business Names in relation to Commercial Law

This section analizes the legal issue of unfair competition, trademarks, and business names in this context, and provides information on its relation with Trade Regulation.

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Trade Secrets

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Trade Secrets in California

Trade Secrets

Welcome to the California legal encyclopedia's introductory part covering the trade secrets laws of California, with explanations of the various implications of trade secrets in California and the statutes enforced in California in connexion with trade secrets. This introductory section covers case law related to trade secrets in California, the legal approach on trade secrets in the United States and related topics. The information below provides an California-specific general overview of the legal regime of trade secrets in California.

Trade Secrets in relation to Commercial Law

This section analizes the legal issue of trade secrets in this context, and provides information on its relation with Trade Regulation.

Trade Secrets in California: General Overview

This entry offers readers with practical insight to the subject of trade secrets in California, a general introduction to the legal issues relating to trade secrets under California law and practice.

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