The other day my aunt had asked me about how New Mexico’s lemon law works. As an Albuquerque business lawyer, I figured that this subject would be of interest to many consumers who have purchased a vehicle in this state. Believe it or not there exists a lemon law with regard to both used and new vehicles. The lemon law comes from the Motor Vehicle Quality Assurance Act (NMSA 1978, 57-16A-1 to 57-16A-9).
With regard to newly purchased vehicles the lemon law applies to new and demonstration vehicles sold by New Mexico car dealers. Basically the law applies to force car dealers to repair all defects which have a substantial impact on the market value and of course the use of the car. The time period to which the law applies is the shorter period of either one-year after which the consumer takes possession of the vehicle, or when the manufacturer’s warranty expires. Basically the law will allow a consumer to be eligible for a replacement or repurchase under the law, if during the one-year period the car has been at the dealership for a total of thirty days or more (this is cumulative), or the car has the same problem repaired four or more times.
NMSA 1978, 57-16A-3.1 applies to used vehicles, and applies to vehicles sold by a New Mexico car dealer. Car dealers must include disclosure of the lemon law in the contract for the sale of the vehicle otherwise the purchaser may cancel the contract. The law provides that used vehicles cannot be sold “as is”; any commercial lawyer would recognize the “as is” language as a disclaimer of warranty, but it does not apply in this context. Additionally the law creates a warranty on the vehicle for the time period of whichever occurs first between 500 miles or 15 days. Once the consumer becomes aware of a problem that limits the use of the car, he or she must return the vehicle to the dealer before attempting to have the car repaired. Failure to follow this key point will make the lemon law inapplicable to the dealer; the essence of this is to give the dealer a chance to repair the problem. The car dealer can charge up to $25 for the first two attempts to repair the vehicle. If a dealer refuses to fix a problem that occurs within the short warranty period, then the consumer can cancel the contract, is entitled to get their money back and if a car was traded in, the consumer can get their old car back. Lastly and obviously, the law does not apply when the problem occurs as the result of abuse, off-roading, racing, failure to maintain required fluids or lubricants and other such operator errors. If you have questions about whether the lemon law applies to your situation, contact one of our Albuquerque attorneys.
Deciding what type of entity you want for your business is certainly important, as this choice has ramifications mainly related to taxes and report requirements. The advantages or disadvantages of forming a certain type of business (either as a partnership, corporation, limited liability company, or nonprofit corporation) is largely based on what the business is going to do. An entity formation attorney can be useful in advising you as to what type of business entity is right for the type of business that you want to run. Having made the choice to form a business as a limited liability company, here are some of the more important things that you will need to do.
1. The first item is to choose a name. One important thing about the name is that it must contain “Limited Liability Company”, “LLC”, or “L.L.C.” after the business name. After a name is selected it must be checked to see that someone else has not already registered the same business name; this can only be done by checking with the appropriate state department (the Secretary of State or some department thereof).
2. After choosing a name, the company must draft “Articles of Organization.” States have different requirements for what has to be included in this document; for example some States require that the documents indicate whether there is one owner (member) or multiple, or whether you will be member or manager-managed. Typical elements that need to be in this founding document include both a clause designating a registered agent and a clause stating the office address for the registered agent. The registered agent is the party that will be served in the event the business is sued or the State otherwise needs to contact the business.
3. After completing the Articles of Organization the incorporator (person who files the documents with the proper State agency) will then send off or deliver the Articles of Organization to the Secretary of State for filing; this usually requires a nominal filing fee which varies by State.
4. After filing the Articles of Organization the business becomes recognized as an entity by the State. The next thing that business owners should do is adopt an “Operating Agreement” (this is analogous to bylaws with a corporation). An Operating Agreement must be adopted by the owners/members of the business, and will dictate how the business must run. These are the rules that govern all LLC action. Common items addressed in an Operating Agreement including voting rights, ownership structure, and management decisions. It should be noted that an Operating Agreement replaces the State’s default set of operating rules. A business attorney is usually retained to draft an Operating Agreement that will meet the business owner’s needs.
5. After adopting the Operating Agreement, the owners generally meet and resolve to complete items that are needed for the business to run, like opening a bank account, and applying for insurance.
Although not an exhaustive checklist of what needs to be done to form a limited liability company (LLC), the above is enough to get the LLC formed; however some States may require more. A good idea is to check with your State’s Secretary of State to determine the precise requirements for formation. A local business lawyer can help you form your limited liability company in accordance with your State’s laws.
As a business attorney, as well as small business owner, I have experience in forming and running businesses. Here are some of the things that I’ve learned almost every business must do in order to sell services or manufacture goods while in compliance with State and federal law.
- Choose an entity type – This can be very complicated and the entity type you chose has ramifications, which mainly deal with taxes and recordkeeping. Depending on the type of operations and ownership structure the company will have it can form a business as a partnership, limited liability company (LLC), limited liability partnership, corporation, s-corporation, of even a nonprofit corporation.
- After choosing the proper entity type, the corresponding incorporation documents (articles of incorporation for a nonprofit or corporation, or articles of organization for an LLC) must be filed/registered with the Secretary of State or a department thereof. Partnerships do not file corporate documents, but they do file election documents with the IRS.
- The owners of the business should then adopt appropriate governing documents which will dictate the rules by which the business will operate; these documents contain many different terms but include items such as notice, voting rights, management decisions, tax allocations, share structure, and much more. Hiring a business lawyer to draft your business’ governing documents is better than being subject to your State’s default set of governing rules.
- After the business receives its incorporation documents from the Secretary of State, it must make resolutions to file for a federal tax identification number, open bank accounts, apply with the appropriate state tax entities, apply for appropriate municipal business licenses, and more.
- The business will also have to obtain rent, which typically involves entering into a commercial lease for a period of time which can vary from as little as one month to several years.
- The business will need to obtain insurance; obtaining proper insurance coverage is essential in that it protects the business owners should uncontrollable events occur that make the business liable. If the business has employees it will need workers compensation insurance.
Although each of these items is presented briefly, each could be an article in itself. Completing this process can also take lots of time; for example it can take several weeks to receive filed incorporation documents from the Secretary of State. Business attorneys can help with large portions of this process and leave the business owner time to actually run the business itself; lawyers are also useful because a mistake in the incorporation documents can delay a business for weeks and even months.
Being registered with the Secretary of State along with having a bank account, a tax identification number, insurance, and proper licenses is what a business needs to operate. From that point on it requires the actual implementation of business itself (setting up equipment, or purchasing inventory, or whatever else the business does). And then of course, pay the taxes.
The business formation process can be an very challenging, and one may find regulations, permits and contracts totally confusing. However, all of these are not illogical obstacles towards establishing your company as they are just part of the many requirements that allow authorities to monitor or keep track of every business formation occurring in one place while informing the government that has jurisdiction.
It is greatly important for any business to have its contracts undergo contract review. Contract review is important and is basically done to ensure that each contract is detailed, well-crafted and skillfully negotiated as the contracts protect the business and prevent legal battles and potential lawsuits. Few things must be considered when undergoing contract review.
- Ask – Do not hesitate to ask rather than simply signing off a contract. This is a good way for you to understand the risks or get a better deal.
- Read – Take time to read the entire contract before signing to avoid unanticipated issues. Always remember that once you have signed, you will be legally bound to all the terms in your contract, whether or not you have read and understood them; the law imposes upon individuals a duty to read the contracts they sign.
- Discuss – Address potential problems that may arise. It would be best if you have discussed possible problems along with negotiated resolutions before you sign the contract.
- Define – Every word in the contract counts and the best contracts are the least confusing ones. Specify each detail and discuss. Every detail tackled and orally agreed upon by both parties should be put in writing; failure to do so can be detrimental should a legal conflict arise.
- Innovate – Contract negotiations don’t have to involve money at all times. Parties involved may include services, a side service, co-promotion, small project partnership or possible contracts to perform in the future.
These particular business dealings often include the services of a business attorney who could stand as a part of the business team dedicated to legal matters. A business law attorney has expertise that enables him to explain the legalities and limitations of the different business practices of a company. The attorney will also be aware of standard contract provisions that can be included into a contract to protect the parties.
If you are after a smooth start in your business endeavors, dealing with the legalities first would be the best thing to do. It would be more favorable if you have already settled all these legal issues prior to officially opening and running your business. That will most likely help you face less legal battles in the future, if any. Often times, people start a business together and the terms are not clear from the outset; it usually is not until the business is turning a profit that the owners decide to determine what the terms should be; Do not let this happen to you, contact an attorney before you get the business going,