Business Contract LawyerGlendale & Los Angeles
We draft, review and negotiate the commercial contracts California companies sign every week, from NDAs and service agreements to supply and licensing deals.
What contracts must be in writing under California law?
Under the statute of frauds in Civil Code section 1624, agreements that must be in writing include contracts that cannot be performed within one year, agreements for the sale of real property or an interest in it, leases longer than one year, guaranties of another's debt, and certain commission agreements. The Commercial Code separately requires writings for sales of goods of $500 or more.
At a glance
- Noncompete rule
- Bus. & Prof. Code § 16600 voids employee noncompetes outside a statutory exception
- Sale of goods
- Four years to sue under Commercial Code § 2725; contract may shorten to one
- Attorney fees
- Civil Code § 1717 lets the prevailing party recover under a one-sided fee clause
- We represent
- Buyers, sellers, suppliers, distributors and licensors in Glendale and Los Angeles
A business contract lawyer allocates risk before signature through scope, indemnity, limitation of liability, governing law and dispute resolution terms, and checks each clause against California rules such as the noncompete ban in Business and Professions Code section 16600. DiJulio Law Group drafts and negotiates commercial agreements for companies in Glendale and Los Angeles.
What a business contract lawyer reviews before you sign
Commercial contracts fail predictably. Scope is described in terms that made sense to the people negotiating and to no one else afterward. Termination requires cause without defining it. Indemnity is mutual in form but asymmetric in effect. The limitation of liability caps the wrong party's exposure. Dispute resolution points to a forum neither party would choose. None of these are exotic drafting problems, and all of them are cheaper to fix before signature.
Transactions add a second dimension. An asset purchase and a stock purchase transfer very different liabilities, and the choice drives the representations, the indemnity structure, the escrow or holdback, and the consents required from landlords, lenders, and counterparties. Assignment provisions in existing contracts and leases routinely dictate deal structure, and they need to be reviewed before the letter of intent, not after.
The firm drafts and negotiates these agreements as part of the business practice, coordinating with due diligence on the buy side and preparing the disclosure schedules on the sell side. Where a deal fails or a contract is breached, the same team handles enforcement.
Employment agreements and offer letters for foreign workers must be consistent with the visa category that supports them; see temporary work visas and employment-based green cards. Families relocating with an employee may also need family-based immigration advice.
Supply and distribution agreements should say who answers for a defective product and who pays after a security incident. For the claims those clauses later decide, see product liability and privacy litigation.
Which business contracts most often need a lawyer's review?
Contract types
The contracts that most often need review are the ones a company signs repeatedly on the other side's form: nondisclosure agreements, master services agreements, supply agreements, distribution agreements and licenses. Each allocates a different risk, so the clauses that matter change by type, and a template that works for one rarely fits another.
Nondisclosure agreement (NDA)
Defines what counts as confidential, who may see it, how long the duty lasts and what happens to materials at the end. Check that it does not quietly add a non-solicit or noncompete.
Master services agreement (MSA)
Sets the framework terms for every later statement of work: payment, acceptance, warranties, indemnity, liability caps and termination. The SOW should not be able to override the risk terms by accident.
Supply agreement
Covers specifications, forecasts, minimum purchases, inspection and rejection, and remedies for nonconforming goods. Under Commercial Code section 2725 a sale-of-goods claim must be filed within four years, and the contract can shorten that to one year.
Distribution agreement
Grants territory and product rights, sets minimums and pricing, and controls how the relationship ends. Exclusivity and post-term restraints between businesses are judged under a rule of reason, as discussed below.
License agreement
Defines the licensed rights, field of use, royalties, audit rights, improvements and who enforces the intellectual property. Unclear ownership of improvements often surfaces later as intellectual property litigation.
Which contract clauses decide who pays when a deal goes wrong?
Clause checklist
Five clauses usually decide who pays: indemnity, limitation of liability, governing law and venue, dispute resolution, and any restrictive covenant. They are negotiated last and read least, yet they control the outcome of most commercial disputes. Review them against the actual risk of the deal rather than accepting the counterparty's form.
Business contract clause checklist
- Indemnity: who defends and pays third-party claims, what triggers the duty, and whether it is capped or carved out of the liability limit.
- Limitation of liability: the cap amount, excluded damages, and carve-outs. Civil Code section 1668 treats contracts that exempt a party from its own fraud, willful injury or violation of law as against the policy of the law.
- Governing law and venue: which state's law applies and where suit is filed, checked against where the counterparty and its assets are.
- Arbitration or mediation: the institution, seat, number of arbitrators, and whether mediation is a required first step. See business mediation.
- Attorney fees: under Civil Code section 1717, a clause awarding fees to one side is applied to the party who prevails on the contract, and a waiver of that right is void.
- Non-solicits and noncompetes: employee noncompetes are void under Business and Professions Code section 16600; business-to-business restraints are tested under a rule of reason.
- Assignment and change of control: whether a sale of the company or its assets needs the counterparty's consent.
Are noncompete clauses enforceable in California business contracts?
Bus. & Prof. Code §§ 16600, 16600.1, 16600.5
In employment contracts, almost never. Business and Professions Code section 16600 voids contracts that restrain anyone from a lawful profession, trade or business, except as the chapter allows, and as amended effective January 1, 2024 it directs a broad reading that voids employee noncompetes however narrowly drawn. Sale-of-business covenants remain the main exception.
Two 2024 statutes added teeth. Section 16600.5 makes a void contract unenforceable regardless of where and when it was signed, bars employers from entering or trying to enforce one, and gives employees, former employees and prospective employees a private action for injunctive relief, actual damages, and reasonable attorney's fees and costs. Section 16600.1 made it unlawful to include a noncompete clause in an employment contract and required employers to send written, individualized notice by February 14, 2024 to current employees, and former employees employed after January 1, 2022, that the clause was void. A violation is an act of unfair competition.
Contracts between businesses are treated differently. In Ixchel Pharma v. Biogen (2020) the California Supreme Court held that a rule of reason governs restraints in contracts between businesses, and that interference with an at-will contract requires an independently wrongful act. Section 16601 separately allows an owner who sells the goodwill or all of an ownership interest to agree not to compete in the area where the business was carried on.
| Type of restraint | California rule | Source |
|---|---|---|
| Employee noncompete | Void unless a statutory exception applies; read broadly per Edwards v. Arthur Andersen LLP | Bus. & Prof. Code § 16600(b) |
| Void clause signed outside California | Still unenforceable; employer may not attempt to enforce it | Bus. & Prof. Code § 16600.5(a)–(b) |
| Noncompete given on sale of a business | Permitted within the area where the business was carried on | Bus. & Prof. Code § 16601 |
| Restraint between two businesses | Tested under a rule of reason | Ixchel Pharma v. Biogen (Cal. 2020) |
Managing PartnerR. David DiJulioRead profile- Office
- 330 North Brand Boulevard, Suite 1280, Glendale, California 91203
- Direct line
- (818) 502-1700 · rdd@dijuliolaw.com
- Courts
- Los Angeles County Superior Court, including the Glendale and Stanley Mosk courthouses.
- Focus
- Formation, contracts, governance, transactions, and litigation for closely held California companies.
Business contracts we draft and negotiate
For California companies buying, selling, supplying, distributing, licensing and settling.
Commercial Agreements
Master services, supply, distribution, licensing, manufacturing, and consulting agreements, with attention to scope, term, and remedies.
Asset & Stock Purchases
Purchase agreements, representations and warranties, indemnity caps and baskets, escrow and holdback terms, and closing conditions.
Indemnity & Liability Limits
Indemnity scope and procedure, limitation of liability, consequential damages waivers, and insurance requirements that back the allocation.
Loan & Security Documents
Promissory notes, guaranties, security agreements, UCC filings, and intercreditor and subordination arrangements.
Settlement Agreements
Releases, payment terms and security, confidentiality, non-disparagement, and stipulated judgments enforceable under Code of Civil Procedure section 664.6.
Consents & Assignments
Landlord, lender, and counterparty consents, change of control provisions, and the assignment mechanics a transaction depends on.
Business contract problems we see in Glendale and Los Angeles
Composite examples of the matters this practice handles. They illustrate common fact patterns and are not descriptions of specific client cases or predictions of any result.
The Lease That Blocked the Sale
A business sale is agreed and then stalls because the premises lease prohibits assignment without landlord consent, and the landlord uses the leverage to demand a rent increase. Reviewing the lease before the LOI would have priced that in.
The Indemnity With No Cap
A supplier signs a customer's form agreement containing an uncapped indemnity and a broad additional insured requirement. A single product claim then exceeds the entire value of the relationship.
The Settlement Without Security
A dispute settles for installment payments with no stipulated judgment and no security. The payer defaults after two installments and the creditor must sue again on the settlement.
First steps before you sign a commercial contract
Identify the real risk
Most negotiation energy goes to price. The larger exposure usually sits in indemnity, liability limits, and termination. Name the risk before marking up the draft.
Check consents early
Landlord, lender, and contract counterparty consents are the most common cause of delayed closings. Identify them at term sheet stage.
Secure payment obligations
Installment payments in a settlement or purchase should be backed by a stipulated judgment, security interest, or guaranty. Unsecured promises are litigated twice.
Signs a business contract needs a lawyer's review
- You have been asked to sign a counterparty's standard form agreement.
- A transaction involves the sale or purchase of a business or its assets.
- An agreement contains indemnity, guaranty, or personal liability provisions.
- A deal requires consent from a landlord, lender, or key counterparty.
- You are settling a dispute and need the payment obligation secured.
- A contract auto-renews and you want to change or exit it.
California contract statutes and official filing records
- California Business and Professions Code § 16600: Contracts in Restraint of Trade (opens in a new tab)Voids contracts that restrain anyone from a lawful profession, trade, or business, and requires a broad reading that voids employee noncompetes.
- California Business and Professions Code § 16600.5: Void Noncompetes Signed Anywhere (opens in a new tab)Makes void restraints unenforceable regardless of where signed and gives employees a private action with attorney's fees.
- California Civil Code § 1624: Statute of Frauds (opens in a new tab)The categories of agreements California requires to be in writing and signed to be enforceable.
- California Secretary of State: UCC Filings (opens in a new tab)Filing and searching UCC financing statements that perfect security interests in California personal property collateral.
Business contract cases we’ve analyzed
Court decisions and legal developments DiJulio Law Group has written about. Each summary explains the law; none describes a firm client or result.
Business contract questions California companies ask
What California businesses ask about commercial agreements, purchases, and settlements.
What does a business contract lawyer do?
A business contract lawyer drafts, reviews and negotiates commercial agreements such as NDAs, master services agreements, supply, distribution and license agreements, focusing on the clauses that decide who bears risk when performance fails, including indemnity, limitation of liability, governing law, dispute resolution and any restrictive covenant. Most of the value comes before signature, when terms can still change.
Are noncompete clauses enforceable in California?
Noncompete clauses in California employment contracts are void unless a statutory exception applies, because Business and Professions Code section 16600 must be read broadly to void any employee noncompete, however narrowly tailored, and section 16600.5 makes such clauses unenforceable no matter where or when they were signed. Covenants given on the sale of a business are the main exception.
Can two businesses agree not to compete with each other in California?
Two businesses can sometimes agree to limit competition with each other, because the California Supreme Court held in Ixchel Pharma v. Biogen (2020) that restraints in contracts between businesses are judged under a rule of reason, which weighs the restraint's effect on competition against its business justification rather than voiding it automatically as with employee noncompetes. The analysis is fact-specific, so drafting matters.
What should an indemnity clause cover?
An indemnity clause should state exactly which third-party claims trigger the duty, whether the indemnifying party must also defend, how notice and control of the defense work, and how the obligation interacts with the limitation of liability, because an uncapped indemnity can expose a company to losses far larger than the value of the contract itself. Insurance requirements should back the promise.
Can a contract limit how much I can recover if the other side breaches?
A business contract can cap damages and exclude categories such as consequential damages, and these limits are commonly enforced between sophisticated parties, but California Civil Code section 1668 treats contracts that exempt a party from responsibility for its own fraud, willful injury or violation of law as against the policy of the law. Carve-outs for those situations are standard.
Does a one-sided attorney fee clause apply to both parties?
Yes, in an action on the contract a one-sided attorney fee clause is applied to whichever party prevails, because California Civil Code section 1717 entitles the party prevailing on the contract to reasonable fees whether or not it was the party named in the clause, and any contractual waiver of that right is void. The court decides who prevailed.
How long do I have to sue over a contract for the sale of goods?
A claim for breach of a contract for the sale of goods must generally be filed within four years after the breach under California Commercial Code section 2725, the claim accrues when the breach occurs even if you do not know about it, and the original agreement may shorten the period to as little as one year. Check your purchase terms for a shorter clause.
Should I sign the other side's standard form contract?
You can sign the other side's standard form, but it was written to protect them, so have the indemnity, liability cap, termination, governing law, dispute resolution and auto-renewal terms reviewed first, since those clauses decide what a dispute will cost and are often negotiable even when the counterparty describes the form as non-negotiable. Short, targeted markups are usually accepted.
Business contract help in Glendale and Los Angeles
Transactions involving Los Angeles County businesses and property involve local consents, recording, and courts.
Talk to a Business Attorney
Send the agreement before signing. Negotiating a clause costs a fraction of litigating it.