Before signing a contract, read through it carefully.  Have an attorney review the contract.  Make certain that you know what obligations are stated and/or implied.  If you are uncertain as to your duties and you sign the contract, you may be liable for a future unintentional breach of the contract.

Contract negotiations, especially in the context of important financial contracts, can be taxing and difficult at best.  An attorney can assist you with negotiations to ensure your needs and requirements are met.  Additionally, your attorney can properly draft and/or review the contract, explain to you your rights and duties under the contract, and make suggestions as to provisions which may be necessary to protect your best interest.

The following is a good guideline for contract review.  It is not an all-inclusive list, but may be used as a tool to assist with contract drafting and review:

1. Make sure the language contained in the contract is clear and understandable. In most cases, limit the use of highly technical terms when possible.  Unnecessary legal wording may make the contract confusing, thus use regular wording to make sure the parties understand what the contract says and means.
2. Give a clear and concise description of the goods and/or services to be received.
3. Give a clear description of the amount of money or other consideration for the contract.
4. If any payments are payable outside the U.S., make sure the payments are in U.S. dollars.
5. Make sure the contract contains a specific time and place for performance.
6. The contract should contain a method of providing notice of default and opportunity to cure default.
7. Rights, obligations, and duties of every party should be clearly listed.  Each party’s responsibilities should be identified in understandable wording.
8. Use clear and concise names when listing parties to the contract, including address, telephone number, fax number, and email addresses.
9. Be sure you have a contact person for each party to the contract, including address, telephone number, fax number, and email addresses.
10. Establish a date the contract is to begin and end.
11. Make sure the contract contains all other important dates to the contract (milestones, deadlines, reports, etc.).  Use full dates.  Such dates should be clearly identified.
12. The procedure for renewal of the contract should be clearly identified.
13. If an employment contract, the procedure for termination of the contract should be clearly identified (termination for cause and/or termination at will).
14. Indemnification, liquidated damages, attorney’s fees, waiver of contractor’s liability, waiver of statutes of limitation clauses should be incorporated if necessary or applicable.
15. Establish the contract is governed by the laws of the State of Texas.
16. Establish the venue for suit is in the county where the Company’s main office or parties signing are located or agree otherwise.
17. If insurance is required, define the types and levels of coverage.
18. Confidentiality provisions, if applicable, should be incorporated.
19. Ensure Act of God or force majeure clauses are incorporated if necessary.
20. Assignment by either party should be approved in advance in writing.
21. Incorporate an Alternative Dispute Resolution clause, if required or desired.
22. All appendices, exhibits, attachments, and schedules should be attached.
23. Title and authority of person signing the contract should be properly stated and warranted.
24. Spelling, formatting, grammar, punctuation and general appearance of the contract should be professional and accurate.

Preprinted form contracts should only be viewed as a starting point, not a final expression of the parties’ agreement.  Protection for all parties is usually minimal to non-existent in such pre-printed forms.  No pre-printed form can be expected to cover the particulars of all agreements between two or more specific parties.  Having an attorney review and negotiate pre-printed forms may prove prudent and smart.

It is imperative that the terms of a contract are fairly negotiated, properly drafted, and reviewed to ensure the contract meets the intentions of the parties.

A corporation is a legal entity that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its shareholders.  When it is formed it becomes a separate entity from the people who own the stock of the corporation.  For this reason, a corporation’s actions are made by the corporation and not by an individual person.  This legal distinction is what separates the liability of the Texas corporation from the individual and is a major consideration in deciding to form a corporation.

Anyone can form a corporation in Texas.  A corporation can form another corporation.  Once the corporation is formed, the entity formed is responsible for all actions done in the corporate name.  The new entity is required to file state and federal taxes and acquire any licenses to do business in the name of the corporation.  The corporation can purchase insurance, own real estate and cars and other assets or personal property as if were a natural person.  It is responsible for actions both good and bad done in its name.  If a corporation fails, shareholders normally only stand to lose their investment, and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation’s creditors.

Corporations can exercise human rights against real individuals and the state, and they may be responsible for human rights violations.  There are five core characteristics of a business corporation:

•Legal personality
•Limited liability
•Transferable shares
•Centralized management under a board structure
•Shared ownership by contributors of capital

Generally, the corporation files articles of incorporation with the government, laying out the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of directors.  Once the articles are approved, the corporation’s directors meet to create bylaws that govern the internal functions of the corporation, such as meeting the procedures and officer positions.

•Some of the advantages of a corporation are as follows:

•Shareholders have limited liability for the corporation’s debts or judgments against the corporation.

•Generally, shareholders can only be held accountable for their investment in stock of the company.

•A Texas corporation may deduct the cost of benefits it provides to officers and employees.

•A corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 – $75,000; 34% tax on income from $57,001 – $100,000; 39% tax on income from $100,001 – $335,000; and 34$ tax on income over $335,001

There are some disadvantages to a corporation.  The process of incorporating a business in Texas may require more time and money than other forms of organizations and the corporation may be monitored by federal, state and some local agencies and as a result require have more paperwork to properly comply with regulations.  Incorporating may also result in higher overall taxes in some circumstances.

For answers to your questions on forming a business corporation in Texas, contact Dallas business attorney Mark Nacol with the Nacol Law Firm, P.C.