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Why California Contracts Need California Counsel
When you hire a California contract drafting attorney, you are buying two things at once: a document that captures the deal you negotiated, and a set of choices about what happens if that deal goes sideways. The clauses that decide *what happens if* – limitation of liability, indemnity, dispute resolution, venue, choice of law, attorney fees – are where most of the value of careful drafting lives.
California contract law has a character of its own. The statute of frauds in Cal. Civ. Code § 1624 still requires certain categories of agreements to be in writing. Post-employment non-competes are largely unenforceable under Cal. Bus. & Prof. Code § 16600, which is a sharp departure from how many other jurisdictions treat them. Liquidated damages clauses face a reasonableness test under Cal. Civ. Code § 1671. And a one-way attorney-fees clause in any contract is read as a two-way clause by statute, courtesy of Cal. Civ. Code § 1717.
A contract drafted without those rules in mind tends to read fine on the day of signing and create headaches later. The point of working with experienced California counsel is to surface those rules at the drafting table, where you still have leverage to negotiate around them, rather than at the courthouse, where you do not.
California Contract Drafting and Review Services We Provide
Daily Aljian works with California businesses in three modes. We draft new agreements when the client is offering paper to a counterparty. We review and negotiate inbound agreements before the client signs paper offered by someone else. And we build templates and playbooks for repeat-volume operators who sign similar contracts dozens or hundreds of times a year. Below are the matter types we handle most often.
Drafting Commercial Agreements
This is the bread-and-butter work for operating companies – services agreements (master services agreements paired with statements of work), vendor and supply agreements, distribution and reseller agreements, NDAs and NNN agreements, and IP licensing and assignment agreements. California’s statute of frauds in Cal. Civ. Code § 1624 sets the floor for which agreements must be in writing, but the practical floor is usually higher: any agreement worth a phone call to a lawyer is worth committing to paper, signed by both sides. The drafter’s job is to document the deal the parties actually made, not to fill in a template and hope the words happen to fit.
Reviewing Inbound Contracts Before You Sign
Many of our clients come to us with a contract drafted by the other side – a customer’s MSA, a vendor’s terms of service, a supplier’s purchase order, an investor’s term sheet. We review the document, flag the provisions that allocate the most risk (limitation of liability, indemnification, termination, IP ownership, dispute resolution), and prepare a redline along with a short business-language summary of the asks ranked by importance. The client decides which asks to push and which to concede. This is also where a California business litigation team earns its keep at the drafting stage – the lawyers who read contracts in disputes write better redlines on the front end.
Entity Governance and Owner Agreements
Operating agreements (LLC), partnership agreements, and shareholder agreements with buy-sell provisions are the documents that govern the relationships among owners. They cover capital contributions and additional capital calls, transfer restrictions, deadlock resolution, voting thresholds, distributions, and the mechanics of exit – voluntary departure, involuntary removal, death, disability, sale. Owner agreements usually follow California business formation, but they can also be retrofitted when an existing entity needs to clean up loose governance or admit a new owner. Done well, they keep partner disputes out of court. Done poorly, they invite them.
Executive and Restrictive-Covenant Agreements
We draft executive employment agreements, equity vesting documents, and separation and release agreements. California’s treatment of restrictive covenants shapes much of this work. Under Cal. Bus. & Prof. Code § 16600, every contract that restrains a person from engaging in a lawful profession, trade, or business is void unless a narrow statutory exception applies. The most commonly invoked exception, § 16601, allows reasonable non-competes in connection with the sale of a business’s goodwill. Outside that and a handful of other narrow carve-outs, California courts will not enforce a post-employment non-compete against an employee or an independent contractor, and a business that tries can find itself on the wrong end of an attorney-fees order. Drafting executive agreements with that rule front of mind means using confidentiality, trade-secret, and non-solicitation tools that California courts actually enforce, instead of importing language from a jurisdiction that treats non-competes differently.
Targeted Clause Advisory
Some engagements are about a single clause in a document the client otherwise understands. We are often asked to look hard at one of the following: limitation of liability (including caps tied to fees paid versus uncapped exclusions for indemnified claims), indemnification scope and procedure, IP ownership and work-for-hire language, dispute resolution clauses (arbitration provider, seat, governing law, fee-shifting), and force majeure. California’s liquidated damages rule under Cal. Civ. Code § 1671 – that liquidated damages in commercial contracts are presumptively valid unless shown to be unreasonable under the circumstances existing at the time of contracting – and the unconscionability doctrine in Cal. Civ. Code § 1670.5 are the two statutes that come up most often in this work. Both reward careful clause drafting.
How a Contract Engagement With Daily Aljian Begins
Most contract engagements begin with a short call to scope the work. We ask what the deal is, who the counterparty is, and what the timeline looks like. From there, we propose a fee structure. For defined deliverables – drafting one contract, reviewing one inbound MSA, papering one transaction – a flat fee usually fits. For open-ended work – ongoing review and negotiation of inbound paper, repeat-volume contract operations, ongoing general corporate counsel support – hourly billing under an engagement letter usually fits better. We do not put clients on a contingency for transactional work; contingency framing belongs on the firm’s plaintiff-side litigation pages, not here.
After the fee proposal is accepted and the engagement letter is signed, we ask for the documents that matter: prior versions of the contract at issue, any existing template the client uses, any prior agreements with the same counterparty, and a short summary of the business terms the client has already negotiated.
Why California Businesses Choose Daily Aljian for Contract Work
We see you as a partner.
The clients who get the most out of us treat the engagement as a long arc, not a one-off. Contracts are easier to write when the lawyer already knows the business – its operating model, its risk tolerance, its prior contracts with the same counterparty. We work to build that knowledge with every engagement, so that the next contract takes less time and produces a better document.
Trial-ready drafting.
The firm’s litigation work informs the drafting. Contracts that have to be enforced – or defended – are easier on everyone when the language can stand up to a careful read by a judge or arbitrator. Reading contracts in disputes is how we learned which clauses to fight for at the drafting table, and that experience travels back into the documents we draft today.
Quality over quantity.
We deliver the highest quality legal work available at a reasonable rate, and we maintain that standard by taking on fewer engagements than a high-volume shop. The contracts we draft are reviewed by senior attorneys, not pushed through a forms factory. That tradeoff is deliberate, and it is the reason our clients come back for the next deal.
What the Drafting and Review Process Looks Like
The work itself follows a predictable arc. We start with an intake call to confirm the business deal, the counterparty, and the timeline. We collect the documents – any existing template the client uses, any prior versions of the agreement, any related side letters or addenda – and read them before drafting begins.
For a drafting engagement, we prepare a first draft and send it to the client with a short cover memo explaining the choices the draft makes. We revise based on client input, then either send the contract to the counterparty or sit with the client through the counterparty’s redlines. For a review engagement, we prepare a redline of the inbound paper alongside a business-language summary that orders the asks by importance. The client decides which to push.
Negotiation rounds usually run two to four redlines. We participate on calls with counterparty counsel as needed. Once both sides agree on language, we coordinate signature, confirm the executed version is the version both parties signed, and provide guidance on document retention – which is itself a useful conversation for any business that signs more than a few contracts a year.
Frequently Asked Questions About California Contract Drafting and Review
Are non-compete clauses enforceable in California employment contracts?
Generally no. Under Cal. Bus. & Prof. Code § 16600, every contract that restrains a person from engaging in a lawful profession, trade, or business is void in California, with limited statutory exceptions. The most-used exception is § 16601, which allows reasonable non-competes in connection with the sale of a business’s goodwill. Outside of those narrow carve-outs, California courts have consistently refused to enforce post-employment non-competes against employees or most independent contractors.
Does a California business contract have to be in writing?
Some categories do. California’s statute of frauds, codified at Cal. Civ. Code § 1624, requires certain agreements to be in writing and signed by the party to be charged. The most common categories include agreements for the sale of real estate, leases longer than one year, agreements that by their terms cannot be performed within one year, and certain credit agreements. Even where a writing is not legally required, putting business agreements in writing is almost always the better choice.
What is a liquidated damages clause, and when will a California court enforce one?
A liquidated damages clause is contract language that sets, in advance, the amount one party will owe the other if a defined breach occurs. Under Cal. Civ. Code § 1671, liquidated damages provisions in commercial contracts between businesses are presumptively valid and will be enforced unless the party challenging the clause shows it was unreasonable under the circumstances existing at the time the contract was made. Consumer contracts face a stricter standard.
Who pays attorney fees in a California contract dispute?
By default, each side pays its own. But under Cal. Civ. Code § 1717, if a contract provides that one party may recover attorney fees in a dispute on the contract, the prevailing party – regardless of which side the contract names – is entitled to recover reasonable attorney fees. A one-way fee clause is, by operation of statute, a two-way clause. That has practical drafting implications: a fee-shifting clause is a real risk if your business turns out to be the losing party.
Should I have a lawyer review a contract before I sign?
When the dollars or the risk justify it, yes. The cost of pre-signing review is almost always far less than the cost of dealing with a problem clause after the fact, particularly for contracts that allocate IP, contain indemnities, or run for multiple years. The decision is really a question of what is at stake – for a low-dollar, short-term agreement with a familiar counterparty, the calculus may be different.
Can a California contract require arbitration or waive a jury trial?
Arbitration clauses are generally enforceable in California commercial contracts, both under California arbitration law and under the Federal Arbitration Act. Pre-dispute jury-trial waivers in pure court litigation are a different question – California courts have refused to enforce such waivers as inconsistent with the constitutional right to a jury trial in civil cases, outside the arbitration context. If avoiding a jury matters to your business, arbitration is usually the route, not a litigation jury waiver.
What is the difference between contract drafting and contract review?
Drafting is preparing a new agreement from the ground up, usually because the client is the party offering paper to the counterparty. Review is reading and redlining a document drafted by someone else, usually because the client is being asked to sign the counterparty’s paper. We handle both, and for businesses that sign contracts often, we also build contract playbooks and templates that standardize the drafting and review work for repeat transactions.
Contact Our California Business Law Attorneys Today
Whether you are drafting a new commercial agreement, evaluating an inbound contract before signing, or working through a single clause that has implications for the rest of the deal, the right time to involve experienced California counsel is before the document is signed. To schedule an initial consultation with Daily Aljian, call 949-861-2524 or use our online contact form. We will review the matter, scope the work, and propose a fee structure that fits the engagement.