This month’s Business Bytes highlights buy-out insurance, liquidated damages, and using emojis.
Buy-Out Insurance. A common way to fund the buy-out of a business owner’s interest is life insurance, including split-dollar and keyman policies. A recent Supreme Court decision held the insurance payout to the company to acquire the interest of a deceased owner was taxable income to the decedent’s estate. As a result, if your business uses life insurance to fund a buy-out on death you should review its future use and alternatives. READ MORE.
Liquidated Damages. In commercial transactions it may be difficult to determine damages resulting from a breach, so parties can agree to a measure of damages or liquidate damages in their contract. The liquidated damages cannot be a penalty for a breach, must be reasonable, and should be fairly negotiated between the parties. If liquidated damages are appropriate for your transaction, take steps to ensure they are enforceable. READ MORE.
Watch Your Emoji Use. The communication short-cut of an emoji instead of words may be cute but it is also confusing. When courts have to interpret your emoji communications a mere “thumbs up” emoji may bind you to a contract. As many parents have said, “please use your words.” READ MORE.
