​By Associate Attorney Ashley N. Bonomini

With various AI programs so readily available, many people have turned to using AI software to draft contracts and other legal documents. But when it comes to contracts, relying on AI can create significant legal and financial risks. Many of these AI generated documents are incredibly general and often lack specific terms that are essential to the enforcement of an agreement. A North Carolina man recently learned this the hard way when he sued to enforce a contract provision that was too vague and missing essential terms.

In Langley v. Autocraft, Inc., a former employee sought to enforce a provision in his employment agreement that stated he would receive a 10% ownership interest in the company after five years of continuous employment. Although the provision appeared to be straightforward, it failed to include terms regarding the purchase price of the ownership interest, how the price would be calculated, financing terms, payment schedules, or other terms that would be material to the transaction. Since North Carolina courts cannot create essential contractual terms that were never negotiated by the parties, the Court found the ownership provision was void for indefiniteness and thus unenforceable.

The inclusion of specific and essential terms in a contract is where AI falls short. AI programs and online templates can be exceptionally good at predicting what legal language should look like. However, they are far less capable of determining the legal language that is actually necessary for a particular transaction. AI does not know your business objectives, does not understand your industry, fails to look at your negotiating leverage, nor addresses state-specific legal requirements that it should address in the agreement.

Instead, AI generates language based on patterns it has learned from training models and other text. Even when you continue to use the same program and it learns more and more about your business and industry, it usually omits critical provisions or leaves out specific details necessary to ensure the agreement is enforceable. These omissions often lay dormant, only rearing their ugly heads when a dispute arises and fixing the problem becomes an incredibly tedious – and significantly expensive – undertaking.  It costs less to pay an attorney to draft the document correctly the first time than pay an attorney to litigate an issue later.

The Langley case is a reminder that just because AI can create a document that is professional and polished, it does not mean that it is the best contract for you.  You will not be protected using AI for your contracts.  Whether you’re entering into an employment agreement, buying or selling a business, contemplating a commercial transaction, or forming a new entity, the attorneys at Jesson & Rains, PLLC are ready and able to assist you in ensuring your contracts actually protect you.

​By Attorney Edward Jesson

When business owners think of employee handbooks, oftentimes they think of it as just one more administrative task that needs to be checked off the list when onboarding a new client. Because there are so many online HR services that will offer an employee handbook as part of their services, it can be tempting to just take whatever they have on offer and call it a day.

However, in North Carolina, and many other jurisdictions, the employee handbook is not just a HR document, it’s a legal document which can create legally binding promises between your business and your employee. Often, what you’ll obtain from your online HR service is a generic template, designed to work for thousands of clients over multiple jurisdictions and over many different industries. However, generic, nonspecific language is a risk when it comes to your employee handbook.

Employment law is highly state specific; what is required in, for example, California, can be vastly different from what is required in North Carolina. For example, North Carolina’s Wage and Hour Act has very specific rules on what can be withheld from an employee’s final paycheck and under what circumstances a business can withhold those funds. Violating the Wage and Hour Act can result in, among other things, an award of treble damages for the aggrieved employee as well as the business having to pay that former employee’s attorney’s fees—that can turn a small mistake into a big financial headache.

One example of an employee handbook that we recently came across discussed final paycheck withholdings and simply (and generically) stated that “state law applies.” In North Carolina, that is insufficient, the employee handbook has to state, specifically, what withholdings may be withheld from that final check. Accordingly, the employer wasn’t able to withhold anything from the paycheck, despite having invested a lot of money in training that the employer wished to recoup.

Your employee handbook is one of the most important legal documents your company has. It governs how you treat your employees, how you handle disputes, and how you hold up in court. Delegating it to an HR platform because it's convenient is like using an online will generator because it's fast — it might technically do the job, until it doesn't. And when it doesn’t, there are going to be real issues that arise as a result.

If you need an employee handbook reviewed, or need a handbook drafted from scratch, the attorneys at Jesson & Rains, PLLC are ready and able to assist in ensuring it’s compliant with your state’s legal requirements.

By Associate Attorney Ashley N. Bonomini

Marriage is one of life's most important commitments, but it is also a legal and financial partnership. When most people think of prenuptial agreements, they think of divorce planning, but it is so much more than that.  A prenuptial agreement can be a foundational component of a sound estate and business plan.

While discussing a prenuptial agreement may not seem romantic, it provides couples with an opportunity to establish clear expectations regarding financial matters and protect their interests before entering into marriage. One of the primary benefits of a prenuptial agreement is the protection of premarital assets. Individuals entering a marriage often have property they wish to keep separate, such as real estate, investment accounts, retirement savings, family inheritances, or ownership interests in a business.

Many people are shocked to learn that, immediately upon marriage, your spouse has automatic rights as it relates to inheritance!  You cannot legally disinherit your spouse in North Carolina or leave them less than the statutory “elective share,” which is a percentage of your estate based on the number of years you are married, unless you have a prenuptial agreement.

Therefore, individuals who expect to receive an inheritance or who wish to preserve family assets for children from a prior relationship often use prenuptial agreements as part of their estate planning strategy.  A prenup can help ensure that inherited assets remain separate property and can clarify how assets will be distributed in conjunction with a comprehensive estate plan. This is significant for individuals entering a second (or third) marriage or those with children from prior relationships who want to preserve assets intended for their children or other beneficiaries while balancing the financial needs of a new spouse.

Likewise, prenuptial agreements are particularly valuable for business owners. A business may represent years of hard work and substantial financial investment. Without a prenup, questions may arise regarding the appreciation in value of the business during the marriage or whether marital efforts contributed to its growth. A carefully drafted agreement can help protect the business and minimize the risk of costly litigation. This is vital for business owners looking to protect their business and livelihood from distribution to a spouse as part of a divorce or at death.

To be enforceable in North Carolina, a prenuptial agreement must be in writing and signed by both parties before the marriage. The agreement should be entered into voluntarily, and both parties should have adequate time to review the terms and seek independent legal counsel. Waiting until just days before a wedding can create unnecessary pressure and may increase the likelihood of future challenges to the validity of the agreement.

Ultimately, a prenuptial agreement is not just about planning for divorce. Instead, it is a proactive planning tool that allows couples to make informed decisions about their financial future.

Jesson & Rains, PLLC, has recently added the preparation of prenuptial agreements to our service offerings.  We understand that discussing a prenuptial agreement can be a sensitive topic. Our attorneys work closely with clients to create customized agreements that protect their interests while promoting fairness, transparency, and peace of mind. Whether you are entering your first marriage, a second marriage, own a business, have significant assets, or simply want to establish clear financial expectations, our team can guide you through the process with professionalism and care.