“A signature communicated through an electronic medium like email correspondence is not a binding signature unless agreed to by the parties. In the absence of such agreement, a signature will only be valid if it appears in manuscript form regardless of the medium of communication. When entering into contracts, explicit provision must be made regarding what is meant by ‘signature’,” asks Rosalind Lake and Priyanka Naidoo in Norton Rose Fulbright’s General.

“On 18 March 2020 the Supreme Court of Appeal found that funds were improperly transferred by a financial services provider (FSP) when it received fraudulent emailed instructions from a hacker posing as its client. The court found that the FSP acted without receiving proper instructions and contrary to its mandate because there was no signature on the instructions.”

“In terms of the client’s written mandate to the FSP, the FSP was engaged to act as the client’s agent and invest money on his instructions, provided that such instructions would be sent to a stated fax number or email address ‘with client’s signature’. The client’s email account was hacked by fraudsters. The fraudsters sent three separate emails to the FSP instructing that amounts be transferred to certain accounts. Two of the emails ended with the words ‘Regards, Nick’, and the third email ended with the words ‘Thanks, Nick’.”

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“As the global outbreak of coronavirus brings the American economy to a halt, countless companies will undoubtedly have trouble meeting their contractual obligations. But there are a few legal options that may help businesses avoid headaches down the road,” discusses Dan Niepow in Twin Cities Business’ Law + Crime.

“Many contracts often include force majeure provisions, which excuse poor performance under exceptional circumstances. A global pandemic would likely qualify for many agreements, but it’s worth taking a second look at contract language in any case, legal experts say.”

“As with most legal issues, there’s not really a one-size-fits-all answer. Force majeure provisions vary company to company and industry to industry, but generally speaking, they’re pulled out when something happens beyond either parties’ control. Some businesses have relied on force majeure provisions during work outages caused by striking workers or unprecedented weather conditions, said Jonathan Bye, a Ballard Spahr LLP attorney who’s worked on breach-of-contract cases for more than 30 years.”

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“Legal documentation governing subscription credit facilities has certainly improved for both lenders and funds alike since the product first came to market. Funds have effectively negotiated for more flexibility where needed, and lenders have effectively negotiated for more protections where perceived risks may exist. However, as with many other corporate or financial transactions between two or more parties, and especially given the relationship-nature of subscription finance lending, provisions in legal documentation often get replicated from one transaction to the next, including errors and inconsistencies as a result of the fast-paced world in which practitioners find themselves or, in some cases, a failure to connect the dots. Thus, we are presenting a multi-part series on common mistakes, misunderstandings and oversights we have noticed throughout the legal documentation governing subscription credit facilities over the years,” write Holly Loftis and Mark Nesdill in Cadwalader’s Fund Finance Friday.

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“The possibility of a cybersecurity incident—and ensuing litigation—is a fact of life for almost every business. Even companies that do not process or handle consumer information collect personal information about their employees that can be targeted by hackers or phishing scams or even inadvertently disclosed, exposing the company to potential liability,” warns Seth Harrington, Michelle Visser and David Cohen in Orrick’s blog.

“While eliminating cybersecurity litigation risk entirely likely is not feasible, recent cases do highlight some steps that companies seeking to reduce potential exposure to cybersecurity litigation can take:
(1)  Recognize that pre-incident statements about the company’s cybersecurity measures can be used to sustain deception-related claims.
(2)  Assess the “reasonableness” of your cybersecurity, despite the difficulty of doing so.
(3)  Pay attention to how you structure cybersecurity initiatives to protect related documents and communications based on the attorney-client privilege and work product protection.
(4)  Recognize that your statements about a cybersecurity incident may be relied on by courts to sustain plaintiffs’ claims.
(5)  Consider arbitration clauses, but do so cautiously.
(6)  Consider opportunities to contractually allocate or disclaim liability.”

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“In an important lesson for both employers and employees a California superior court judge affirmed a $179 million arbitration award against a former Uber executive, Anthony Levandowski, for stealing Google’s trade secret information and soliciting its employees to benefit Uber. See Google LLC v. Levandowski et al., Case No. CPF-20-516982. Levandowski, who also faces criminal charges from the U.S. Attorney’s office for theft and attempted theft of trade secrets, filed for bankruptcy following the judge’s order,” reports Aaron Goldstein and Jasmine Hui in Dorsey’s Publications.

“The court’s ruling underscores the importance of well-crafted confidentiality, non-compete, and non-solicit agreements. Over the course of Levandowski’s employment with Google, he signed at least four separate agreements which included either non-compete, non-solicit, confidentiality, and nondisclosure provisions, or a combination thereof. The panel of arbitrators in the underlying case held, among other things, that Levandowski breached these employment contracts with Google by misusing Google’s confidential information and attempting to solicit Google employees.”

“Google hired Levandowski in 2007, where he co-founded the company’s autonomous vehicle project, which later became Waymo, LLC. In 2015, Levandowski left Google and formed a new self-driving company, Ottomotto, Inc. In 2016, Uber acquired Ottomotto, Inc. and hired Levandowski to head its autonomous vehicle department. Shortly thereafter, Google filed two arbitration demands against Levandowski and another former Google employee who moved to Uber.”

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“Non-disclosure agreements (“NDAs”) can play a key component in encouraging American businesses to hire personnel, entrust them with valuable or confidential information, enter into joint ventures with other companies and resolve disputes in a mutually agreeable way (to name only a few scenarios),” advises E. Phileda Tennant in Vinson & Elkins’ Insights.

“However, NDAs can and have become a point of contention in a world that is – rightly – more focused than ever before on sexual harassment issues and conduct in the workplace.”

She discusses three mandatory items needed to have a firm grounding in basic elements for drafting legal NDAs.

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“Litigation has its place, but most in-house counsel agree: avoid it if at all possible. That’s why Chris Fairey is a proponent of arbitration clauses in his employee contracts. Fairey is General Counsel for American Residential Services (ARS), one of the nation’s largest residential and commercial heating, air-conditioning, and plumbing services companies. ARS earns approximately $1 billion dollars in revenue annually and has more than 6,000 employees across the country. Like any legal leader of a company that size, Fairey spends a lot of time thinking about risk,” discusses Mark P. Henriques in Womble Bond Dickinson’s Articles and Briefings.

“One of the big upsides to arbitration from Fairey’s point of view is that the process takes a lot of the emotion out of a dispute.  He points out that presenting a case to an experienced arbitrator, rather than a jury, removes many of the emotional elements that can go along with litigation, especially when employees or consumers are on the other side. A jury trial can be subject to grandstanding by plaintiff’s counsel, which is not the case in arbitration.”

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“Schick, the shaving product company, recently announced it was abandoning its proposed $1.4 billion acquisition of rival startup Harry’s Razors. The announcement followed the U.S. Federal Trade Commission’s (FTC) threat to block the deal in federal court over antitrust concerns. Harry’s has reportedly threatened to sue Schick for failing to exercise ‘reasonable best efforts’ to get the deal through merger review. It is one of an increasing number of these ‘broken deal’ claims, which may be prevented by more specific antitrust provisions in the merger agreement,” discuss Barry J. Reingold, Jon B. Jacobs and Jeremy C. Keeney in Perkins Coie News & Insights.

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“A certificate of insurance is a document, normally issued by an insurance broker, that supposedly verifies the existence and terms of an insurance policy,” write Gene Killian in The Killina Firm’s Fraud.

He discusses how “It’s common in the construction industry, where contractors and subcontractors are generally required to carry certain types of coverage, but really, the insurance card in your car is also a kind of certificate of insurance. The certificate of insurance is one of the most important documents that you can review in connection with your business contract, because if something goes wrong, you may need to tap that coverage.”

“The problem is, when it comes to enforcing the terms of the coverage reflected on the certificate of insurance, the certificate of insurance is essentially worthless. It’s just a written statement by an insurance broker, not an actual policy.  While it might get the broker or policyholder into trouble for negligence or misrepresentation if it’s not valid, it creates no rights against the insurance company.”

Read the article.

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“Sometimes appellate opinions are issued on a seemingly narrow subject matter that can apply to many other factual contexts.  In one such recent example, a Florida appellate court concluded that a security services provider could not be held responsible for allegedly failing to protect a person who was criminally attacked,” reports Matthew J. Meyer in Ansa | Assuncao’s News & Articles. “The reason for the appellate court’s decision is what is interesting, and could be applied well beyond the factual circumstances involved in the specific case:  the security provider’s contract with Miami-Dade County established the hours of service, and those hours of service ended at 7:00 pm each day, therefore the security provider had no legal duty to provide security to a person who was attacked at 8:00 pm. ”

“In reaching its decision, the appellate court discussed the concepts of ‘zone of risk’ and the corresponding legal duty for a security provider to ‘protect persons lawfully on defined premises.’  Importantly, however, the appellate court explained:  ‘Nonetheless, the extent of the undertaking as defined under the terms of the contract should define the scope of the duty.’ Applying this doctrine, the appellate court explained its conclusion that the responsibility to enact reasonable security measures was borne solely by the County.”

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“Agreeing to arbitrate a dispute, whether in a contract or by agreement, is a serious decision for any business.  There are pros and cons to binding arbitration versus trial in a court that go beyond a series of blog posts, but the fact is that when a dispute is arbitrated, finality is the rule. It is very difficult to appeal an arbitration award. In many instances, representing a party in an arbitration requires more due diligence and work than a trial. Great “arbitration” lawyering is therefore essential but many times does not happen.” warns David K. Taylor in BuildSmart Bradley’s Arbitration.

“Arbitration is a matter of contract. Federal and state law allow for the enforcement of arbitration clauses. Courts now favor arbitration. There are plenty of articles out there on drafting arbitration clauses, but far too often drafters fail to consider the basics.”

Read the article to learn the basics.

A “plaintiff entered into an exclusive listing agreement with the defendant, Deal Lake Village Gardens, LLC to broker a sale of the defendant’s apartment complex. The agreement included the following provision: “If a sale or exchange is consummated after the termination of this agreement to or on behalf of a party who was introduced to the property by [plaintiff], [plaintiff] will also be entitled to a full commission.” writes Gary M. Albrecht in Cole Schotz’ Real Esate & Construction Law.

“The property was sold, but not until after the term of the plaintiff’s exclusive listing expired. At the trial court level, the plaintiff argued that even though the property was sold after the exclusive listing agreement expired and the defendant had hired a new broker, it had earned a commission because it had introduced a principal of the purchaser to the property while its exclusive listing agreement was in effect. The trial court rejected the plaintiff’s claim, but its reasoning came under the Appellate Division’s scrutiny.”

“When negotiating exclusive listing agreements or other forms of commission agreements, whether on the side of a property owner or broker, any right to a commission after a broker’s agency has expired must be discussed and memorialized in a contract to avoid a similar fate to the parties of this case, which in the case of the defendant, may include the payment of two full commissions (in addition to legal fees) depending upon the disposition of the remanded case at the trial court.”

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“One often sees a definition of “Business Day” in purchase agreements and other legal documents, usually to define when an event such as delivery of a legal notice or payment of an amount can legally occur. The idea is that it is somehow inconvenient to deliver an annoying default notice or a satchel of cash on a weekend or holiday when the recipient might be out enjoying a day at the beach and would not be paying attention to the notice or satchel,” writes Jose Sariego in Bilzin Sumberg’s Insights.

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“The recent decision of the Bankruptcy Court for the Southern District of New York in In re AAGS Holdings LLC, Case No. 19-13029 (SMB) (Bankr. D. Del. Nov. 12, 2019), underscores the ability of debtors — and specifically, for purposes of this client alert, parties to real property purchase contracts — to take advantage of the Bankruptcy Code’s 60-day tolling period to get more time to close on a purchase despite a “time of the essence” (TOE) closing deadline. The SDNY Bankruptcy Court … held that a debtor’s bankruptcy petition is not filed in bad faith when the petition is filed in order to obtain a statutory 60-day extension of a TOE closing deadline. The decision underscores the need for sellers to consider the effect of this automatic bankruptcy extension when negotiating with buyers over the terms of a consensual closing extension (e.g., fees and increased deposits) even if the contract does not have a financing contingency.” warn Adam C. Rogoff, Daniel Ross Berman and Caroline Gange in Kramer Levin’s Perspectives.

“The court found that the term “Closing Date” as defined in the PSA was, in fact, ambiguous.”

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“Florida’s Second District Court of Appeal recently issued a decision that serves as a reminder not to take for granted a proposition that most practicing attorneys regularly encounter: a motion for summary judgment must be supported by competent evidence, and an affidavit that does little more than mimic the motion for summary judgment will not suffice.” write Dean A. Morande and Rachel A. Oostendorp in Carlton Fields Insights.

“In Rodriguez v. Avatar Property & Casualty Insurance Co., a plaintiff sued her insurer, alleging that it had breached her homeowners insurance contract by denying coverage for water damage. The trial court granted the insurer’s two separate motions for summary judgment” which the Second District reversed “concluding that the 37-page affidavit lacked sufficient information to demonstrate that the affiant possessed the competency or personal knowledge to testify on those matters, which ranged from contract interpretation to trade specialties of plumbing and contracting. ”

Further, “The affidavit failed to identify her title or corporate duties, did not state that it was made on personal knowledge, and did not set forth her relevant skill set or experience.”

Read the article for the three “musts”.

“Most construction contracts, and sometimes even estimates or purchase orders, require that changes to the original scope of work be approved in writing. Despite the requirement, there are many instances where the parties do not follow this and do not properly document changes. As a result, costly disputes often arise.” write Rhiannon K. Baker and Philip S. Bubb in Fredrikson & Byron’s News & Media.

“Changes are often needed in the course of a construction project. And those changes typically include work that is either added or removed from the original scope of work. While that might sound like a unilateral request or decision, in practice, it is not.”

“In fact, a change order is a contract amendment. ”

The article provides a list of what should be included in a change order.

Read the article.

ContractPodAi®, the award-winning provider of AI-powered contract lifecycle management software, today announced that a majority of corporate counsels use outdated and unsecure technology to manage contracts, according to its report “Down the Road with AI Based Contract Management and Corporate Legal Hazards.” The report highlights the current state of contract lifecycle management and whether corporate legal departments are using technology to improve processes. Despite evolutions in AI for Contract Lifecycle Management (CLM), 62% of companies are still using Excel, SharePoint or email to manage contract data and only 18% are applying contract management technology to gain a competitive advantage.

The report interviewed 50 large corporate legal departments that manage an excess of 10,000 active contracts each, and found significant differences between market leaders and laggards:
• 48% of leaders will adopt AI-based contract risk mitigation technology in the next 12 months.
• 56% of leaders’ corporate general counsels analyze contract performance.
• 62% of laggards use Excel, SharePoint or email to manage contract data.
• 64% of laggards believe it would take at least a year to adopt an AI-based contract management system.

However, even corporate counsels who are lagging behind believe there is value in adopting technology. Regarding technology requirements for 2020, 74% want metrics and analytics to better evaluate contract portfolio performance, and 64% want ready to use contract management tools that don’t require extensive preparation.

“The findings from our report demonstrate the industry’s interest and excitement in moving toward more efficient, technology-driven contract management processes,” said Sarvarth Misra, co-founder and CEO, ContractPodAi. “Trusted AI technology like systems built on an IBM Watson platform can jumpstart a corporate counsel’s digital transformation, automating and streamlining services so that legal teams are empowered to focus on more strategic aspects of their business.”

View the full findings from the report here.

“Legal technologies promise to flourish in the coming decade, and although it is not possible to predict all the innovations that are likely to become mainstream, the use of smart contracts appears to be on the rise. A typical smart contract uses computers and code to automate performance of some or all of the parties’ obligations. However, the legal terms of the contract are likely to remain in written form in a contract that people can read. If a dispute arises, the parties may prefer arbitration as an alternative to court, but arbitration doesn’t happen on its own – it typically requires a properly drafted arbitration clause.”

Steven K. Davidson, Michael J. Baratz, Jared R. Butcher and Molly Bruder Fox provide some tips in Steptoe’s News/Publications to keep in mind when considering how to draft these clauses.

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“It is important for contractual language to be not only precise but also accurate. Many agreements govern multiple individuals, some of whose gender is unclear or variable. This article will give you advice and guidance on how to adjust contract language to be gender-neutral. As society moves towards treating all genders equally, legal contracts should too.” advises Kati I. Pajak in Mintz’s Insights Center.

“Conversations around gender and gender neutrality are becoming more and more mainstream. Thompson Reuters reported that in the past year (2018), there has been an increase in the number of clients requesting gender-neutral documents. Start-ups are at the forefront of change and industry disruption, so it is logical that they stay ahead of the trend.”

“Now, the shift towards non-gendered pronouns and away from binary choices of “he” or “she” means attorneys need to adopt new drafting techniques. As entrepreneurs and leaders of your own business, you can encourage this shift.”

Read the article.