Massachusetts General Laws Chapter 93A is the Consumer Protection Act and prohibits businesses from unfair and deceptive trade practices.  In order to make a 93A claim, you must first make a written demand to the business and give them 30 days to respond with a settlement offer.  The statute requires that a demand letter:

If the business does not respond, or the offer is not reasonable, you can then proceed with court action.  93A claims can be added as part of other claims, such as breach of contract, negligence, or insurance disputes. 

In our experience, the protections offered by this law are a very powerful tool for you as a consumer.  If you are successful, you may be able to receive damages up to three times your original claim plus attorneys fees.  Below, we have provided a couple of examples of how a 93A claim might work.

Lemon Law

            The Lemon Law covers any new vehicle purchased in Massachusetts from a new vehicle dealer.  The protection period is one year or 15,000 miles, whichever comes first.  There are some exceptions, including that the vehicles must be purchased for a non-business use.  Used vehicle purchasers are also offered protection, but the time period for protection under the law is limited to ninety days.

            The law can be a bit complicated, but basically your vehicle must have a “substantial impairment” which the dealer fails to repair in a “reasonable number” of attempts.  The state has not provided any definition of what qualifies as a substantial impairment, but this would include any issues that would affect the use, value or safety of the vehicles.  The statute defines a reasonable number of repair attempts as 3 or less for the same defect, or 15 days or less for a combination of defects.

            If you purchase a vehicle from a private party, you may still have some protections.  The Lemon Law allows for return of the vehicle if it fails to pass safety and emissions inspections within 7 days of purchase.  Also, you may be able to return the vehicle if it has defects affecting the safety of the vehicle and you can prove that the seller knew of the defects but did not inform you before the purchase.

Product Warranty Claims

            Massachusetts law offers two types of warranties:  express and implied.  Express warranties are those promises made by the seller, either orally or in writing.  For example, if the seller promises that the product you buy will be free from defects for 10 years, this creates an express warranty.

            An implied warranty is a promise that comes with every product, based on Massachusetts law.  The implied warranty of merchantability means that the product is free of defects and is safe to be sold in the marketplace.  It also states that the product will do what it is supposed to do, for a reasonable period of time after purchase.

            The implied warranty of fitness for a particular purpose comes into operation when the seller knows that you are purchasing the product for a specific reason and that you are relying on the seller’s knowledge and expertise in selecting the product.

            In some situations, both express and implied warranties can be limited, so it is important to consult someone with expertise that can help protect all of your rights in the best manner possible.

            The above examples are just two of the situations in which a 93A claim could properly be made.  Corporate America’s goal is to increase its profit margin, and as a result companies’ customer service suffers.  It is important to be a well-informed consumer, to know your rights and how to assert them!  Contact us to find out if the Consumer Protection Act is available to help you.

As the tax season is upon us, many of us start wondering if we have established our businesses in the best manner possible.  Of court, business owners always worry about issues such as liability, but at this time of year most people just want to know how their taxes will be affected.  Tax implications can be controlled with a little bit of planning.

Choosing the appropriate form and structure for a specific business venture involves several considerations; such as control, liability, simplicity, flexibility, continuity and taxation.  Proper formation and organization are important. 

A defectively formed organization may subject the owners to personal liability and may cause transactions to be called into question.  Formation is the actual choice of entity and filing the appropriate forms with the Secretary of State’s office.  Organization is the combination of actions by which those who will own and manage the business determine who will own, who will manage, and the way the business will operate.

In addition to taxes, one important consideration is the degree to which personal liability can be limited.  A sole proprietor is not insulated from liability arising from the operation of the business.  Similarly, a general partner in a partnership is not insulated from tort, professional or contractual liability.  However, LLC members and corporate shareholders are not subject to tort or contractual liability.  They may still be liable for any personally guaranteed obligations of the company, but the overall liability is greatly reduced.

A brief description of the features of each type of entity can be found below:

1. Sole Proprietorship – a business owned directly by one individual
   1. No state formation or annual filings are required.
   2. Owner retains direct control and management of the business.
   3. Personal liability for debts, errors and omissions is unlimited.
   4. Taxes are filed as a Schedule C on the owner’s tax returns, and the entire net profit is subject to self-employment tax.
2. General Partnership – an association of two or more persons formed to conduct business for profit.
   1. No state formation or annual filings are required.
   2. Partnership owns property of the business and partners have equal rights in control and management, unless they have an agreement that states otherwise.
   3. Personal liability for debts of business and professional errors of other partner.
   4. Partners report their share of the profits on the owner’s tax returns, and the entire share is subject to self-employment tax.
3. Corporation – a legal entity formed pursuant to state statute, it exists independent of its shareholders and has most of the same powers, rights and duties that an individual has.
   1. Formed by filing with the state articles of incorporation, and adopting by-laws.
   2. Corporation owns all property, shareholders participate in the profits of the company.  A board of directors governs the corporation’s affairs and selects corporate officers.
   3. No personal liability on the shareholders or board of directors, unless the corporate “veil” is pierced.
   4. C corporations are taxed as a separate entity from its shareholders.  Compensation, dividends and other distributions are taxed at the recipient’s individual tax rate.
   5. S corporations are not taxed as an entity, but all income is attributed to shareholders in proportion to stock ownership.
4. Limited Liability Company – a hybrid entity, part sole proprietorship and part corporation.
   1. Form by filing with the state articles of organization, and adopting an operating agreement.
   2. Managed by members or managers.
   3. No personal liability for members or managers, other than for professional services provided.
   4. One member LLCs are taxed as sole proprietorships and LLCs with two or more members may elect to be taxed as either a partnership or an S corporation.

As you can see, as a business owner you have several options available for setting up your business entity.  Remember, each business’ situation is different and before deciding on an entity you should speak with legal and tax advisors.  The Law Office of Kimberly L. Stevens has experience in establishing entities and can assist you in making your business run smoothly and efficiently.  Please call us to set up an appointment today.