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The Legal Challenges of Non-fungible Tokens (NFTs)

Posted by Mohsen Parsa | Dec 28, 2021 | 0 Comments

Non-fungible tokens, or NFTs, are the latest cryptocurrency-adjacent digital assets. The legal concerns around NFTS can be divided into two main categories. To begin with, owning an NFT can lead to legal challenges tied to the actual NFT. The second main area of concern connects to the actual transaction itself, wherein someone pays for an NFT. In this blog, we will look closer at potential issues in both areas.

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Simple Agreement for Future Equity v. Convertible Notes: Pros and Cons

Posted by Mohsen Parsa | Dec 15, 2021 | 0 Comments

A convertible note is a company debt: a loan carrying an interest rate, which converts to equity (stock ownership) upon the occurrence of a previously decided event such as the successful closing of a future investment round, or reaching a maturity date. A SAFE, in contrast, is neither debt nor equity and places no immediate financial burden on company founders. It is a fairly basic agreement between a company and an investor that gives the investor the right to purchase stock down the road at a lower rate than subsequent investors.

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What Purpose Does “Valuation Discount” Serve in a Simple Agreement for Future Equity?

Posted by Mohsen Parsa | Dec 01, 2021 | 0 Comments

Valuation discounts serve as a lure to make a speculative investment more attractive to potential investors during the startup’s earliest phase. Since investing in a startup is a high-risk proposition, the typical investor is looking for a high return.  The discount helps ensure the high return by giving early funders a preferential investment position, allowing their investment dollars to go further in subsequent financing rounds than the same amount of dollars from investors who previously held off on investing.

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What Purpose Does “Valuation Cap” Serve In A Simple Agreement For Future Equity?

Posted by Mohsen Parsa | Nov 15, 2021 | 0 Comments

Valuation cap is a ceiling imposed on the price at which a SAFE will convert to stock ownership in the future. It is the maximum valuation at which an investor can convert a SAFE into equity: a pre-negotiated amount that serves to “cap” the conversion price once shares are issued. If the company raises money above the cap, the investor can invest at a price equivalent to the share cap. When the shares are issued, the investor will receive the equivalent number of shares as if they had invested more money.

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The Case of the Fish Sandwich: Greenwashing and the CLRA

Posted by Mohsen Parsa | Oct 30, 2021 | 0 Comments

Twenty-first-century American consumers are more aware than ever that their choices in the marketplace have ramifications for the climate, ecological balance, and animal welfare. Expectations are high for products and services that put the least possible strain on an increasingly fragile world. California consumers who find claims for environmental sustainability falling short of the mark have legal recourse under the state’s Consumer Legal Remedies Act (CLRA)—so long as they meet the law’s requirement for specificity.

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CLRA Conditional Correction Offers

Posted by Mohsen Parsa | Oct 15, 2021 | 0 Comments

A business should never condition its CLRA correction offer in response to a valid notice of violation brought by a consumer on the basis that consumer waive all present and future claims against the business.

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Reasons Why Your Startup Should Not Begin as an LLC

Posted by Mohsen Parsa | Oct 01, 2021 | 0 Comments

When first beginning a company, many startup owners think that setting up the company as a Limited Liability Company (LLC) is the best option for the company’s structure. They believe that an LLC offers the owners protection from the company’s debts and liabilities similar to a corporation. And at the same time, the LLCs’ “pass-through” nature, distributing profits to partners, means that the startup’s founders can avoid the “double-tax” from corporate and individual filings. While this is partially true, if you’re doing a cost-benefit analysis of an LLC, make sure you understand the true implications of its structure. Because it turns out that the very same reasons an LLC may appeal to you may be reasons why investors may decide not to join your company.  

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Consumers Legal Remedy Act (CLRA): Advertising & Other Competitive Practices

Posted by Mohsen Parsa | Sep 15, 2021 | 0 Comments

The CLRA prohibits certain kinds of competitive practices. It tells sellers what they can’t do to persuade a potential buyer to purchase or lease a product or service “for personal, family, or household purposes.” In a highly competitive market, it’s not always easy for sellers to do the right thing. And even though the customer service maxim is “the customer is always right,” sellers need to know how to handle false CLRA complaints.

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Consumers Legal Remedy Act (CLRA): False or Deceptive Representations

Posted by Mohsen Parsa | Aug 30, 2021 | 0 Comments

California’s consumer protection law — CLRA — provides ways for individual consumers (“private right of action”) and qualified consumer groups (“class actions”) to seek damages from a business — which could be anything from a mom-and-pop store to a large corporation. The businesses that offer their products or services to consumers in California should educate themselves with the CLRA requirements to avoid hefty and expensive CLRA lawsuits.

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How to Spot a Phony CLRA Letter and What to Do with It

Posted by Mohsen Parsa | Jul 15, 2021 | 0 Comments

California enacted the California Civil Code §§ 1750 et seq. in 1970 to protect consumers from being taken advantage of by businesses and allows consumers who have been deceived in this way to recover damages. As with many aspects of the law, responding to CLRA demand letters is complicated. To reach a satisfactory outcome—and to avoid paying exorbitant legal fees racked up by plaintiffs—legal help is necessary.

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How to Handle a False CLRA Complaint

Posted by Mohsen Parsa | Jun 30, 2021 | 0 Comments

There's no easy way to respond to a false or exaggerated Consumer Legal Remedies Act ("CLRA") claim for California businesses. You need to prove the claim is invalid with evidence and documentation. However, an experience attorney who specializes on CLRA defense can formulate a strategy to either mitigate your liability to completely defuse the false CLRA claim.

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Is the CLRA Demand Letter You Received a Prelude to a Class Action?

Posted by Mohsen Parsa | Jun 01, 2021 | 0 Comments

When you get a demand letter, review it immediately. If the claim is legitimate, you only have 30 days to cure the defect or provide a correction offer before the consumer can sue for damages under the CLRA. Don’t ignore the demand letter. A legitimate claim also raises a real possibility that you could face a class-action lawsuit if you don’t cure immediately.

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Understanding Correction Offers Under California Consumer Legal Remedies Act ("CLRA")

Posted by Mohsen Parsa | May 12, 2021 | 0 Comments

When a consumer suspects or discovers a CLRA violation, they must send a written notice to the business describing the violation. The business then has 30 days to respond and remedy the situation. Whatever the allegation from the consumer, if the company provides a reasonable correction to repair, replace, or otherwise remedy the situation, the consumer cannot seek additional monetary compensation from the business. There is no set-in-stone definition of what a reasonable correction offer entails, and therefore businesses are encouraged to involve an attorney who is well versed with CLRA requirements.

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Does the California Consumer Legal Remedies Act ("CLRA") Protect Consumers Who Don’t Discover Problems Until Later?

Posted by Mohsen Parsa | Apr 06, 2021 | 0 Comments

The California Consumers Legal Remedies Act (CLRA), provides consumers with protection against false advertising, fraud, and other unfair business practices. It also allows consumers to bring legal actions to recover damages when they have been misled. But what if they don’t discover the fraud until quite a bit of time has passed? It appears that absent exigent circumstances, California courts are inclined to adhere rather strictly to the three-year statute of limitations on CLRA cases.

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If You and Your Family Members Own Stock in the Same Corporation, This is What You Need to Know About the Tax Consequences of I.R.C. Section 318(a)(1)

Posted by Mohsen Parsa | Jan 11, 2021 | 0 Comments

Does the family that invests together stay together? Under Internal Revenue Code section 318(a), you might be taxed together. Or at least one of you might bear the burden for the entire family’s corporate stock investments. If you and your spouse and children all own stock in the same corporation, section 318 could lead to some surprises at tax time.

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Starting an Online Business in California

Posted by Mohsen Parsa | Dec 22, 2020 | 0 Comments

The internet makes online innovation and entrepreneurship an easy endeavor. But if you’re contemplating starting an online business in California, there are many legal considerations you should take into account. And it doesn’t end with simple contracts for business ventures. You’ll need to consider the legal ramifications of every decision you make, from your business entity to online data privacy.

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Dissolving a California LLC or Corporation

Posted by Mohsen Parsa | Dec 10, 2020 | 0 Comments

Ending a business is rarely an easy decision. But following the proper procedures to formally close it down should be a no-brainer. Formally dissolving your business entity will end its legal existence, but it also reduces the individual liability of a business’s members or shareholders. Failing to end a business formally can leave you open to creditors, lawsuits, and ongoing state filing requirements, penalties, and taxes.

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CLRA Mistakes Can Be Costly–Here's How to Avoid Making Them

Posted by Mohsen Parsa | Nov 20, 2020 | 0 Comments

The CLRA is one of the most powerful consumer protection laws in California. Not only does the CLRA make practically every type of misrepresentation illegal, but it also requires companies that are found guilty of violating the Act to pay the attorney's fees and court costs of a consumer who is successful in showing that the company violated the Act. There are several mistakes merchants frequently make that can cause them to run afoul of the CLRA.

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