Posts by alexadmin alexadmin:
How Recent U.S. Tariffs Impact Your Cross-Border Contracts: Key Clauses to Review
Posted on: 03 Feb 2025
On Saturday, February 1, 2025, President Trump imposed significant tariffs on Canada, Mexico, and China, which go into effect on February 4, 2025, at 12:01 AM. In response there has been concern from a number of clients, partners and colleagues about the practical effects of the tariffs on the economy between the U.S.’s largest trading partners and the related business relationships with companies doing business with these countries. Pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1610, et seq.) (NEA), Section 604 of the Trade act of 1974, as amended (19 U.S.C. 2483), et al., the executive orders impose a 25 percent tariff on imports from Mexico and Canada, as well as a 10 percent tariff on Chinese goods. Canadian energy imports will be tariffed at 10 percent. With the larger geopolitical and policy issues notwithstanding, we are advising clients with cross-border contracts to be reviewing their contracts immediately in light of these changes to essential to safeguard their interests and ensuring continued profitability. These tariffs are likely to increase costs, disrupt supply chains, and create uncertainties that may not be accounted for in existing contracts. Some of the areas that business owners should be reviewing right now fall into the following categories: Pricing Structures. One of the primary concerns is how tariffs impact pricing structures. If your contract is based on fixed pricing, rising costs (inflation and currency fluctuations) due to tariffs can erode profit margins. It’s important to determine whether the agreements allow for cost adjustments in response to external factors such as new duties or taxes. Some contracts include escalation clauses that permit price modifications under certain conditions. If a contract does not, renegotiating terms with suppliers or customers may be necessary to account for increased expenses. Delivery and Shipping. Additionally, businesses should examine their delivery and shipping provisions. Higher tariffs may lead to increased transportation costs or customs delays. Contracts should specify how these costs are allocated between the buyer and seller. If the agreement follows standard Incoterms such as FOB or CIF, understanding which party is responsible for import duties is crucial. If tariffs significantly affect the ability to fulfill obligations, you may need to renegotiate delivery schedules or explore alternative sourcing options. Risk Allocation. Risk allocation is another key area to review. Contracts often include force majeure clauses that excuse performance under extraordinary circumstances. However, many force majeure provisions do not explicitly cover tariff changes or government trade policies. If the agreement lacks clear language addressing economic disruptions caused by new trade regulations, businesses may need to amend it to ensure adequate protection against unforeseen financial burdens. Tax and Duty Allocations. Tax and duty allocation clauses should also be revisited. Some contracts specify which party is responsible for additional costs related to customs duties and taxes. If the agreement does not address tariffs explicitly, there may be ambiguity regarding who absorbs the additional expense. This can lead to disputes, financial strain, or even contract breaches. Ensuring that the agreements clearly define responsibility for new tariffs can prevent potential conflicts and maintain business stability. Termination Clauses. Businesses should evaluate their termination and renegotiation clauses. Some contracts allow for renegotiation if economic conditions change significantly, while others provide a clear mechanism for terminating agreements that become unviable due to regulatory shifts. Hardship clauses, which provide for contract modifications when unforeseen circumstances arise, can be a valuable tool for mitigating the financial impact of tariffs. If the contract lacks such provisions, adding them through amendments can provide greater flexibility in uncertain trade environments. Governing Law. The governing law and dispute resolution mechanisms in the contract can also influence how tariff-related conflicts are handled. If a disagreement arises over who bears the burden of new duties, the contract should specify whether disputes will be resolved through arbitration, mediation, or litigation. Ensuring that agreements include clear dispute resolution procedures can save time and money if conflicts emerge due to changing trade policies. Supply Chain and Compliance Issues. Finally, reviewing supply chain and compliance obligations is crucial. Some businesses may need to explore alternative suppliers or adjust sourcing strategies to minimize tariff impacts. Contracts should include provisions that allow for such flexibility, particularly in long-term agreements where trade policies may shift over time. Businesses should also ensure that compliance with customs regulations is clearly defined to avoid unexpected penalties or disruptions. Under the current executive orders, changes to the United States Code and CFRs are expected. At the time of this writing the focus of the tariffs appear to be directed to goods and products produced in the targeted countries, but all three countries, Canada, Mexico, and China have indicated that they will be responding with reciprocal tariffs and other measures, and until those polices have been released, it is not yet clear whether these tariffs will extend to cross-border services as well. This is something that our firm will be monitoring as this apparent trade war continues and/or escalates. By proactively reviewing and amending contracts in response to rising tariffs, businesses can mitigate risks and maintain operational stability. Working with legal professionals to refine agreements can help ensure that companies are well-positioned to navigate these regulatory changes effectively. Taking action now will enable clients to adapt to evolving trade policies while protecting their bottom line and maintaining strong relationships with business partners through this uncertain period.
What Jeffrey’s Been Reading: Tyranny, Inc.
Posted on: 30 Dec 2024
At the beginning of this year, I started reading Tyranny, Inc. by Sohrab Ahmari, where he offers a compelling critique of modern corporatism, particularly the way corporate power has become deeply entrenched in our daily lives.
MJ Management and Plaintiff’s File Motions for Reconsideration of Court’s Decision in Homestead Litigation
Posted on: 23 Sep 2024
On Friday, September 20, 2024, both MJ Management and the Plaintiffs filed Motions for Reconsideration of Judge David Freeman’s Findings of Fact and Conclusions of Law entered on September 11, 2024, in the much-contested Homestead Litigation (Hillius, et al. v. 18 Paradise, LP, et al.). The Plaintiff’s Motion for Reconsideration addresses a wide range of topics where attorney Matthew Davis argues the court’s order was “inadequate and inappropriate,” and further goes on to say that the court’s decision was based on facts “not on (sic.) evidence presented at trial.” “[M]any, if not most of those findings, lack any evidentiary basis from trial or are simply wrong,” argues attorney Davis in his brief to the court (see below). The 11-page Motion for Reconsideration argues that the court had reversed itself from its oral ruling at the July 3, 2024, hearing; because the court had “used [plaintiff’s version of the proposed orders] to announce its decision in the case…” and “chose to use the plaintiff’s proposed findings as the basis for its oral decision…” and now believes the plaintiffs are “entitled to an explanation.” The court ultimately adopted the form of proposed findings of fact and conclusions of law, jointly submitted by MJ Management, 18 Paradise, and the Intervenors for its ultimate decision. In concluding its motion for reconsideration, attorney Davis challenges the court’s decision to terminate his and attorney K. David Andersson’s representation of the class members with the entry of the orders. In contrast, the Motion for Reconsideration filed by MJ Management (see below) focuses on a narrow issue related to the court’s decision that found the Sixth and Seventh Amendments to the Master Declaration to be void. The motion focuses on the evidence presented at trial and the weight the court placed on deposition testimony as opposed trial testimony of multiple witnesses that testified that MJ Management had authority under the terms of its agreements with 18 Paradise to record those amendments. In addition to MJ Management’s Motion for Reconsideration, the attorneys also filed a Motion for an Award of Attorney’s Fees and Costs on behalf of Mick O’Bryan and Josh Williams. These two individuals had originally been voluntarily dismissed from the case by the plaintiffs, when the Plaintiffs had filed their Third Amended Complaint, but were brought back into the case in January 2023 when the Plaintiff’s filed their Fifth Amended Complaint. The motion argues that plaintiffs brought O’Bryan and Williams back into the case “because they wanted to use the threat of personal liability to drive them to dismiss MJ Management’s declaratory counterclaim.” O’Bryan and Williams were ultimately dismissed personally from the case with their successful motion for summary judgment, where the court dismissed the plaintiffs’ Consumer Protection Act against all of the defendants, including O’Bryan and Williams. The Motion argues that O’Bryan and Williams were the prevailing parties as to this solitary claim brought against them by the plaintiffs and are requesting that the court award them their attorney’s fees and costs, which are stated in the Motion to be $245,762.11. A hearing is scheduled on the motion requesting fees on October 4, 2024. It will be up to the court to decide if it will take up MJ Management’s or Plaintiffs’ Motions for Reconsideration. the court’s decision regarding the limited role that Plaintiffs’ counsel will now play leaves open various questions. Whatever the case may be, the court’s decision marks the end of a significant chapter in litigation that has roiled the Homestead community, located in Lynden, Washington, for the last four years. Readers can find additional information, updates, and insights at the Homestead case website. For media questions, interviews, or any other needs, please contact [email protected].
Court Enters Final Orders in Homestead Litigation
Posted on: 13 Sep 2024
On Tuesday, September 11, 2024, Judge David Freeman entered his final decision in Homestead Litigation (Hillius, et al. v. 18 Paradise, LP, et al.) The much-awaited Findings of Fact and Conclusions of Law, which were presented by the parties on July 26, 2024, were issued by the court. A copy of the court’s final orders is attached below. At the conclusion of the July 26, 2024, hearing, court adopted the form of the orders jointly presented by MJ Management, 18 Paradise, and the Intervenors; but the 19-page final orders addressed various issues that had been raised at the presentment hearing and clarified Judge Freeman’s earlier rulings from the bench on July 3, 2024. Much of what was contained in the final orders was what was expected by the parties, but the court addressed with more clarity several issues that will have a direct impact on the Homestead community and some parts of the case moving forward. Some of the key takeaways from the court’s decision: Plaintiffs counsel indicated in a court hearing on September 12, 2024, that they intend to appeal the court’s ruling, which could drag this case out for an additional year or more. When asked after the hearing, Jeffrey Possinger, one of the attorneys for MJ Management, stated that MJ Management was “considering all of their options.” In August, certain members of the Homestead community spoke to the City of Lynden about the state of disrepair at Homestead and parts of the grounds having become a fire hazard; much of which is directly attributed to the protracted litigation. The Homestead Golf Course litigation, which has been ongoing since 2020, will likely continue in some capacity into the foreseeable future, but the court’s decision regarding the limited role that Plaintiffs’ counsel will now play leaves open various questions. Whatever the case may be, the court’s decision marks the end of a significant chapter in litigation that has roiled the Homestead community, located in Lynden, Washington, for the last four years. Readers can find additional information, updates, and insights at the Homestead case website. For media questions, interviews, or any other needs, please contact [email protected].
Court Enters Judgement for Attorney’s Fees Against Plaintiffs and Plaintiffs’ Counsel
Posted on: 12 Aug 2024
On Friday, August 9, 2024, Judge David Freeman entered judgment for MJ Management against the plaintiffs and their counsel on an unpaid order for attorney’s fees and costs that had been previously entered in June 2024 but remained unpaid. Following a hearing on the issue, the court entered a judgment in the amount of $24,634.50. The underlying basis for the award of fees related to MJ Management being the prevailing party in a Motion for a Temporary Restraining Order (TRO) and Preliminary Injunctive Relief. At the hearing the court denied plaintiff’s motion for reconsideration they had previously filed in response to the order to pay MJ Management’s attorney fees. Plaintiff’s counsel indicated that they intend to appeal. Earlier, Defendant, 18 Paradise sought entry of judgment for the court’s orders awarding 18 Paradise its attorney fees in the amount of $17,816.50 related to the same motions seeking injunctive relief against plaintiffs and their counsel. The parties continue to wait for the court to issue its final findings and order addressing the court’s final decisions on the case, following a two-week trial in May 2024. Readers can find additional information, updates, and insights at the Homestead case website. For media questions, interviews, or any other needs, please contact [email protected].