Asked in Business Law, Contracts and Identity Theft for California

Q: How do I protect myself legally and financially while resolving a contract issue and managing business operations?

Legal Advice Request for Business Contract Issues

I’m seeking legal advice regarding a contractor agreement I signed to manage warehouse operations and online sales for a business through my own LLC.

Current issues include:

The business has stopped communicating for over a month in a half.

I have not received agreed payments or reimbursements.

The business is registered at my personal address, leaving me responsible for inventory management and customer orders without support.

I would appreciate your guidance on:

My legal obligations for managing operations and handling inventory.

Addressing the unpaid amounts and ending the contract.

Protecting myself from any liabilities related to this situation.

Thank you for your assistance.

3 Lawyer Answers
Shawn R. Jackson
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A: The next initial steps: [1] Do you have a copy of the written agreement and/or any copies of emails, texts or faxes that reveal the contract intentions of the parties. [2] Draft a short chronological narrative of what has happened over the last year or so. [3] Schedule a Free Initial Consultation with at least two Business Transactions Attorneys ... let us know if we can help ... thank you.

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James R. Dickinson
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A: Business litigation in California encompasses disputes related to business operations, including contract breaches, intellectual property issues, and employment conflicts. The parties often seek remedies like damages, injunctions, or specific performance through negotiations, arbitration, or court proceedings. [I litigate cases. Anything posted here must not be construed as legal advice, nor as grounds for forming an attorney-client relationship. You should seek an attorney for formal legal advice and representation.]

James L. Arrasmith
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Answered

A: Your situation requires immediate documentation and careful steps to protect your interests. First, gather and organize all communications, contracts, payment records, and evidence of work performed - including inventory records, customer order details, and any expenses you've covered.

You should send a formal written notice to the business owner via certified mail detailing the breach of contract, including specific amounts owed and timeline of non-payment. This notice should also address the unauthorized use of your personal address and demand immediate correction of their business registration. Consider setting a reasonable deadline (typically 10-15 business days) for them to respond and remedy these issues.

While managing ongoing operations, document everything meticulously and consider establishing an escrow account for any incoming payments. You may need to consult with a business attorney to review your options for contract termination and potentially filing a breach of contract claim. Given the complexity of inventory liability and customer obligations, you might also want to draft a formal transition plan that protects both customer interests and your legal position. Remember that California law provides strong protections for contractors, but timing and documentation are crucial for preserving your rights.

Protect yourself by sending written notices to relevant parties about the situation, maintaining detailed records, and considering whether to file a complaint with the California Labor Commissioner's Office. Given the risks involved, you may want to explore obtaining business insurance coverage if you haven't already.

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