Five Questions for Better Client Selection- Question 1
Posted on Aug. 20, 2012

Do you know who your client is? The question may seem simple and innocent enough. While technically the correct answer is whoever entered into the contract for your professional services, your analysis should go deeper.  There are five simple questions you should ask yourself and your potential client before any contracts are signed or services are performed. The answers will help you determine whether to enter into a contract with this client and to identify potential pitfalls in the client relationship. We’ll take a look at each of the questions over the next week.

Question 1: What type of business entity is your client?

There are four common entities with which you are likely to enter into a contract:

● sole proprietors;

● partnerships;

● corporations; and

● limited liability companies.

The type of entity you contract with dictates who you need to deal with in negotiating the contract and conducting other business.

A sole proprietor is actually just an individual, including those who do business under an assumed business name. Therefore, do not assume a business is a corporation or limited liability company simply because its name is not the name of an individual. Unless the responsibilities have been delegated, the individual is the decision-maker.

An association of two or more persons engaged in a business is a partnership. Generally, there is no actual business entity formed. Rather, the partners share in the profits and losses of the business as individuals and are likely joint decision-makers.

A corporation is a legal entity separate from its officers and shareholders. It protects them from personal liability for the corporation’s actions, including breach of a contract. Only authorized agents of the corporation may bind it to contracts. Therefore, you should first verify you are dealing with an authorized representative.

Limited liability companies shield their members from personal liability like corporations. However, these companies are not burdened with many of the same formalities a corporation requires. As a result, the use of limited liability companies has increased exponentially in recent years as many discover the ease of their creation and operation. Like corporations, only authorized representatives of the limited liability company may bind it.

Construction Law
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About Adam

Adam
Attorney Adam T. Mow

Adam is a trusted resource for architects, engineers and other members of the construction industry in litigation, risk management, contract negotiations and mechanics’ liens. Adam is also a licensed architect and a past president of the Utah chapter of the American Institute of Architects. He has been elected by his peers to the Utah Legal Elite since 2009.

Awards and Recognition

AV Rating

Excellence in the Study of Architecture, American Institute of Architects Certificate of Merit, 1999

CALI Award for Excellence in Mediation and Advanced Negotiation, 2003

Community Mediator of the Year, Utah Dispute Resolution, 2007

Graduate of the Last Decade, Ball State University, 2008

Utah Business Magazine, Legal Elite, 2009-Present

Mountain States Rising Stars (Construction Litigation), 2009-Present