Minimum Volume Commitments in the Midstream Industry

Oil and gas pipelineMinimum volume commitment contracts (MVCs), often referred to as throughput agreements, are agreements under which a shipper or producer—a counterparty—undertakes to transport an agreed minimum volume of a commodity such as natural gas, NGL or crude oil through a third-party operator’s assets, such as pipelines or processing plants, over a specified period, explains a post on the website of Opportune.

“In the midstream industry, these contracts are typically utilized to enable the operator to recoup the costs of constructing infrastructure, such as a processing plant or pipeline lateral, for the benefit of the counterparty. Under these agreements a counterparty pays a shortfall or deficiency fee if the MVC is not met for a specified period—monthly, quarterly or annually,” the authors write.

Read the article.



Construction Arbitration: The Pros and Cons

Building constructionIt’s an unfortunate fact that many construction projects end in disputes, driving the parties into some form of dispute resolution, writes Jason T. Strickland, a litigator with Ward and Smith.

Many of these construction disputes are resolved through arbitration, he writes in a web post.

His article explains how arbitration is different, the major differences between arbitration and lawsuits, court involvement in the arbitration process, avoiding unfavorable local law, and third-party administration of arbitration.

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Unsigned Contract Still a Written Contract

Can an unsigned contract still be a contract? The answer is yes, for statute of limitations purposes, says the 7th Circuit Court of Appeals, according to Stephen M. Proctor in a post for Masuda, Funai, Eifert & Mitchell.

On this basis, he writes, it permitted a Chicago law firm to pursue a claim of unpaid fees against a foreign company and its U.S. subsidiary.

The court’s ruling quoted prior cases: “A contract is deemed written for these purposes ‘if parties are identified and all the essential terms are in writing and ascertainable from the instrument itself.’”

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NDAs: Confidentiality and Context in the Workplace

The battle between the White House and Omarosa Manigault over the scope of her disclosures brings the issue of Non-Disclosure Agreements (NDA), and their efficacy and enforceability to the forefront, points out a blog post for Obermayer Rebmann Maxwell & Hippel.

“Employers frequently seek to use NDAs as a sword once the employment relationship is broken or a termination takes place,” writes Dove A.E. Burns. “However, employers often require such agreements in order to broadly limit disclosure far beyond what is legally enforceable. Reaching in this manner can lead to legal liability, nullification and an ethical quagmire.”

Her article discusses the law regarding NDAs for government employees and for non=government employees.

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Texas Court Construes Breach of Contract Exclusion Narrowly in Duty-to-Defend Case

In a victory for policyholders, a recent decision from the Western District of Texas narrowly construed a common breach-of-contract exclusion and held that the insurer had a duty to defend its insured against an underlying lawsuit over construction defects, according to the Hunton Insurance Recovery Blog.

“The allegations potentially supported a covered claim, as the conduct of the insured’s subcontractor could have been an independent, ‘but for cause of the property damage at issue, thereby triggering the insurer’s duty to defend’,” explain Lorelie S. Masters and Tae Andrews.

“Many CGL policies have similar or identical breach-of-contract exclusions,” they write. “Longstanding principles of law regarding the duty-to-defend analysis hold that exclusions should be narrowly construed against the insurer and in the insured’s favor, and that when making a duty-to-defend analysis, any doubts or ambiguities should be resolved in the insured’s favor.”

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Contractual Standards: Distinctions Without a Difference?

In many contracts, reference is made to one or the other party to the agreement undertaking its “best efforts,” “reasonable efforts” or commercially reasonable efforts.” Often, much time and attention is devoted to negotiating which of these standards will apply, points out Mayer Brown.

But these standards are inconsistently interpreted by courts and are often subjectively applied, the authors of the article explain. Practitioners generally understand that “best efforts” is considered the highest of these standards requiring a party to undertake every action, short of bankruptcy, to accomplish the stated objective. On the other hand, “reasonable efforts” is perceived to be a less stringent standard, allowing a party to use its discretion “within its good faith business judgment” to fulfill a particular contractual obligation.

“Commercially reasonable efforts” is generally interpreted as requiring a party to undertake some conscious effort to accomplish the agreed-upon goal; however, the standard is understood to limit the amount of effort a party is required to expend.

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Check Those ‘Choice of Law’ Provisions

“Choice of law” clauses in contracts are often overlooked in their potential importance, as the parties and counsel concentrate on the more immediate matter of the explicit commercial terms, write Val H. Stieglitz and R. Bruce Wallace for Nexsen Pruet.

“When the deal goes sour, however, and it comes time for the parties to assert and enforce their contractual rights, the spotlight often turns to the ‘choice of law’ provision – which perhaps no one had paid much attention to previously,” the authors explain.

Their article examines a recent case experience highlighted how “choice of law” distinctions can become significant once matters enter litigation.

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Morgan Stanley Lawsuit Highlights Pitfalls of Emailed Employee Contracts

Litigation pitting Morgan Stanley against one of its former sales assistants could have implications for its employees and those of other wirehouses, warns Financial Advisor IQ.

Miriam Rozen explains:

“That will be particularly true if the wirehouse employees receive — but don’t always read — emails sent by their employers to set employment conditions.

“The wirehouse contends that if they’ve sent you an emailed contract, you’ve essentially agreed to the contract just by continuing to work.”

A lower court had ruled that an employment-arbitration agreement between Morgan Stanley and the employee was enforceable, even though the former sales assistant claimed she never read a 2015 email that the wirehouse sent notifying her she would be entered into such a contract.

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Site Cannot Compel Arbitration Based on Amended Terms Without User Notification of Change

A D.C. district court ruled that an eBay user did not assent to a later-added arbitration clause to the user agreement by virtue of a provision that stated eBay could amend the agreement at any time, as the user may not have received sufficient notice of the amendment, according to the Proskauer Rose New Media and Technology Law Blog.

“Notably, the court declined to find adequate notice sufficient to demonstrate an agreement to arbitrate merely based on the fact that the amended user agreements were posted on eBay’s website (at least under Utah, Louisiana or Texas law). This case is interesting as many websites and services have added mandatory arbitration clauses to their terms in recent years, yet may have a stable of legacy users that agreed to a prior set of terms that did not contain such a provision,” writes Jeffrey Neuburger.

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IP Warranties v. IP Indemnification

Morgan Lewis discusses a frequent point of contention between parties negotiating the allocation of risk related to intellectual property rights in connection with the acquisition of intellectual property: the interplay between the warranty and indemnification sections.

In the post, authors Emily R. Lowe and Susan Milyavsky break down what to look for in these sections and how minor changes in the language can significantly change the rights a party is granting or receiving.

The post is part of the firm’s Contract Corner series in the Tech & Sourcing blog.

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Court Holds that Attorney is Not Bound by Confidentiality Provision

Confidential - nondisclosureAlthough a settlement agreement may bind one or more parties to its confidentiality provision, an attorney’s signature under the words “approved as to form and content” does not impose any specific obligation on the attorney to maintain the confidentiality of the settlement, according to a recent California appellate ruling.

The Jackson Lewis California Workplace Law Blog discusses a case in which the court found the attorney was entitled to the granting of an anti-SLAPP motion in a case against him for breaching the confidentiality provision of the settlement, finding that he was not a party to that agreement.

“Recognizing that confidentiality is often a material term of a settlement agreement, the Court noted that a way to avoid this issue is to draft a settlement agreement that explicitly makes the attorneys parties to the agreement (even if only to the confidentiality provision) and explicitly requires them to sign as such,” according to the authors, Ellen E. Cohen and Hazel U. Poei.

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Five Issues When An Employer Is Considering An Employment Agreement

When operating its business, an employer should consider whether and when to implement employment agreements with certain employees, explains Judy Yi in a post for Polsinelli.

When considering whether an employee should execute an employment agreement, employers should consider five factors.

Yi discusses those five factors, which include complex or specialized compensation, restrictive covenants, employment for a definite term, change in control, and specific post-termination provisions.

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Defining Personal Information in Contracts

The terms “personal information,” “personal data,” “personally identifiable information,” and “PII” are often left undefined in contracts and treated as if they were terms of art for which there was a single definition, according to a post on the website of Bryan Cave Leighton Paisner.

“Because different statutes, regulations, and guidance documents define the terms differently, you could either say that they are not terms of art, or that they are terms of art that are highly dependent upon context,” the post says.

The article provides an example of one of the most expansive and one of the most-narrow definitions of near identical phrases, and illustrates the degree to which the meaning of such terms can differ depending upon context.

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CobbleStone Software Announces Contract Data Discovery and Extraction Services

CobbleStone Software, developer of contract lifecycle management solutions, announced the release of Contract Data Discovery and Extraction Services.

The company said this service solves one of the most volatile pain points in the contract migration process through proprietary Al-powered data extraction.

“Previously, when organizations had a difficult time locating specific information in a sea of contracts, they had nowhere to turn for help. To complicate the contract lifecycle further, curating contract data proved to be a time-consuming and tedious endeavor,” the company said in a release.

CobbleStone’s Contract Data Discovery and Extraction Services gives contract professionals a way to enter all necessary data and key terms into one centralized system, the company said.

“At CobbleStone, we recognized a need that many users and potential users shared. They have mass amounts of data that isn’t organized and makes it harder to migrate to CobbleStone’s platform. What was once a daunting task typically handed off to lower-level employees, can now be accomplished in as little as 20 minutes. With our intelligent data extraction services, you can source the work to us and we take care of the rest,” said Mark Nastasi, Vice President. “Our 20+ years of contract management software experience allowed us to develop a 3-step process that blends machine-learning with ‘human-like’ evaluation.”

CobbleStone Software is committed to evolve and develop products and services that most effectively and efficiently benefit current and future clients.



Decision Chips Away at the Enforceability of Teaming Agreements

A recent decision from the Virginia Supreme Court further weakens the enforceability of teaming agreements, which may mean trouble for prospective subcontractors, according to an alert from Baker & Hostetler.

The post explains:

“In light of CGI Federal, contractors should assess whether they can reasonably rely on the terms and conditions of their teaming agreements to provide meaningful assurances regarding the negotiation of a prospective subcontract without binding themselves to more definite terms prior to any prime award, at least under Virginia law. Accordingly, unless contractors wish to consider the law of other forums when negotiating their teaming agreements, they must pay close attention to the specific terms and conditions of their contracts when evaluating what is and is not enforceable and govern their pre-award conduct accordingly.”

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You’ve Got Contract: An Email Establishes Binding Settlement in the Second Circuit

A recent Second Circuit opinion provides a reminder of the importance of reserving rights pending final documentation and the risks of being bound despite the absence of definitive agreements in place, writes Rama Douglas of Kramer Levin Naftalis & Frankel.

The circuit upheld the bankruptcy court’s and district court’s ruling that an email by defendant’s counsel to the opposing side stating that the defendant will sign a settlement agreement creates a binding contract even if the defendant later chooses not to sign the settlement agreement.

The case is Shinhan Bank v. Lehman Brothers Holdings Inc.

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Circuit Split – Allowing Receiverships by Contract

There is a circuit split on the weight courts should give contractual provisions allowing the appointment of a receiver in loan documents, points out William Easley in a post for Bryan Cave Leighton Paisner. While some courts treat the provision as granting a contractual right to a receiver, others treat it merely as a factor to be considered.

He writes that “many district courts recognize that allowing the appointment of a receiver upon a contractual provision is imperative to give the creditor the benefit of its bargain.”

“A creditor’s contractual right to appoint a receiver under the loan documents will differ drastically between the circuits. Potential creditors need to consider the likelihood of succeeding on a motion to appoint a receiver to determine whether these provisions should be included in their loan,” he adds.

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AIA Changes – It’s Time to Convert Before It’s Too Late

Jeffrey M. Reichard of Nexsen Pruet offers a reminder that the American Institute of Architects (AIA) will discontinue support of older versions of its most popular standard form contracts after Oct. 31, 2018.

“This means you will no longer be able to create, edit or even finalize a 2007 AIA document after that date,” he warns. “If you haven’t already done so, now is the time to convert your standard form contracts to the 2017 versions.”

He writes that one important change is the creation of a new insurance exhibit which changes and expands the terms related to insurance coverage previously included in the body of the A201.

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Download: Guide to Delegating Legal Contract Responsibility

ContractWorks has published a new guide designed to show how to reassign appropriate tasks and simplify workflows by tapping into the skills and experience of non-legal staff in ways that will optimize the legal department’s time without introducing additional risk or oversight.

A Guide to Delegating Legal Contract Responsibility” is available at ContractWorks’ website at no charge.

“Delegating contract management activities to your non-lawyer professionals has a variety of advantages, but it needs to be planned deliberately and strategically,” the company says on its website. “Make sure that you understand the strengths of the different personnel on your roster, and collaborate with the other areas of your business to make sure that everyone is committed to this new process change.”

The guide discusses:

  • How Delegating Tasks Will Benefit Your Entire Team
  • Ways to Maintain Control Without and Mitigate Risks
  • Best Methods for Building Dedicated Teams
  • How to Assign Ownership to Individual Business Units

Download the guide.



10 Contract Issues to Consider When Implementing an ERP System

A Tech & Sourcing blog post on the website of Morgan Lewis offers 10 framework issues to consider when in-house lawyers start thinking about how to support a business client that is looking to implement a new or replacement enterprise resource platform (or more commonly known as an ERP system).

The list, compiled by Barbara Murphy Melby and Ada Finkel, is intended to help in-house lawyers understand the objectives, parameters, and potential risk areas of a transaction.

Some of the issues discussed include key objectives, deal structure and success factors, third-party dependencies, an implementation plan, fees, key risk areas, and more.

Read the article.