hand-on-keyboard-1243602Increasingly a business’ most important assets are digital in nature.  Client databases, business plans, source code and other intellectual property often represent a significant portion of a business’ value.  Technology such as cloud-storage and sharing applications make it simple for such assets to be shared, sent, manipulated, downloaded, transferred, accessed or deleted in a few moments.  Theft of data due to breaches and backdoor access by sophisticated hackers makes the news; however, the most common form of theft of digital assets occurs by a business’ employees.  There are a number of reasons why an employee may steal such assets from being disgruntled, to helping a competitor to becoming a competitor themselves.  Small businesses are more likely to be targeted because they have less sophisticated systems of protection.

So how does a small business protect itself from such theft?  The best way is to implement some common sense best practices to limit such exposure with HR Policies and Practices, Technology Protections, and Trade Secret Litigation.  In this series, we will look at the first of these methods: HR Policies and Practices.  These front-end defenses are so important because laws to protect businesses after the theft occurs are often inadequate.

A business’ HR Policies and Practices should focus on protection of business data.  Some common sense policies include subjecting new employee candidates to a background investigation.  Background investigations may reveal prior crimes of dishonesty or terminations of employment due to dishonest actions.   Identifying and avoiding the hiring of candidates for employment who may have a proclivity for dishonest behavior is one significant way to reduce the likelihood of employee theft of data.

where-s-the-money-gone-1513359Fraud victims often feel embarrassed, humiliated and helpless once they realize that they have been victimized. Business, internet and other fraud schemes are so pervasive that the FBI has outlined and notified the public of  four categories of fraud schemes, each of which may target a business as well as an individual, as (1) Common Fraud Scams, (2) Investment Related Scams, (3) Internet Scams, (4) Senior Citizen Targeted Scams.

From a legal standpoint, a  fraud occurs in Florida when: (1) a person makes a false statement regarding a material fact; (2) that person knew or should have known that the representation was false; (3)  that person intended that the representation induce the other party to act on it; and (4) the other party suffered damages in justifiable reliance on the representation. Jackson v. Shakespeare Found, Inc., 108 So.3d 587, 595 (Fla. 2013).  Small businesses may be defrauded by vendors, suppliers, creditors, customers, employees and others.  One of the most common and devastating sources of small business fraud in Florida occurs between and among business partners.

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contract-1426885Generally, for a person to recover damages under a theory of breach of contract, that person has to prove that the other party committed a “material” breach of a contract causing damages to the plaintiff.  Normally, a failure to perform a certain important task before a required contractual deadline would constitute a material breach if the contract states that “time is of the essence”.  However, many people write their own contracts without the assistance of a lawyer or have no written contract at all.  The result is that the contract may not contain the necessary terms to establish that time is of the essence or the contract does not state a time for completion of performance by the other person.

So what happens if performance does not occur for a long time but there is no deadline in the contract?  Can the non-performing party be held in breach?

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