A post on the website of Pepper Hamilton describes a North Carolina case that involved non-signatories to a construction contract attempting to avoid the contract’s arbitration claim.

When the building’s current owner asserted various claims against the original owner, architect and general and subcontractors, the general contractor moved to have the suit dismissed on the ground that they were subject to arbitration. Plaintiffs argued that the arbitration clauses were not binding on them because the contracts that contained them were not assigned to plaintiffs when they purchased.

“The court held that the plaintiffs’ argument could not be squared with the language of the Contractor Warranty. On its face, the Contractor Warranty stated that [the general contractor] performed all work ‘in accord with the Contract Documents.’ This express reference to [the contractor’s] construction contract put the plaintiffs on notice of the contract’s existence,” explains the article’s author, Jane Fox Lehman.

Read the article.

In a new podcast, two shareholders in Ogletree, Deakins, Nash, Smoak & Stewart discuss a number of important considerations for employers to keep in mind when drafting a severance agreement.

Milwaukee shareholders Bud Bobber and Brian Radloff offer some practical tips for drafting severance agreements, from how to go about deciding how much to offer an employee to the key terms of the agreement.

The [podcast can be accessed on the Ogletree Deakins website.

Listen to the podcast.

New York State has taken steps to smooth the often rough road for resolving international contract disputes, and parties are finding the new procedures comparatively easy to follow, according to post on the website of Daniel Kron.

He explains that “when international contracts have no forum selection clause, New York can be the only — or best — place to obtain personal jurisdiction. At the same time, given the relatively broad views of personal jurisdiction found in New York, foreign individuals may find they are taken to court in New York despite their desires.”

Read the article.

In addition to representations and warranties, merger and acquisition purchase agreements generally include indemnification provisions, pursuant to which any given party agrees to defend, hold harmless, and indemnify the other party or parties from specified claims or damages, according to a post on  the Goulston & Storrs website.

Daniel R. Avery explains that these typically include claims arising from a breach of the indemnitor’s representations and warranties or covenants set forth in the purchase agreement, or with respect to other specific matters.

“Indemnity caps are often one of the most intensely negotiated provisions of an M&A purchase agreement,” Avery writes. “The market amount for indemnity caps has historically been a direct reflection of the relative strength of buyers and sellers in the private company M&A market.”

Read the article.

Federal district courts in New York and New Jersey recently turned aside employee attacks on arbitration agreements challenged on the grounds that the employer’s communication of its arbitration policy via email was inadequate, reports the Gibbons Employment Law Alert.

“The courts in both Lockette v. Morgan Stanley and Schmell v. Morgan Stanley held that the employees’ assertions that they never saw the email forwarding the terms of the arbitration agreement were insufficient to overcome the employer’s evidence that the email had been delivered to the employees’ email inboxes,” explains Richard S. Zackin.

But employers must keep in mind that they must comply with relevant state contract law, cautions Zackin.

Read the article.

A California appellate court has given Tokai Intl. Holdings Inc. the go-ahead to proceed with cleanup cost-related malpractice claims against law firm Paul Hastings LLP, according to a Bloomberg Law report.

“The firm allegedly failed to properly advise the Delaware-based company about environmental cleanup costs taken on by a subsidiary when it bought a holding company in 2005. Paul Hastings provided advice during the acquisition,” writes Bloomberg reporter Peter Hayes.

Tokai alleges an agreement in a contract for the purchase of a holding company left it, rather than the seller, with $2 million or more in reimbursed cleanup costs related to contamination at a former manufacturing site in California.

Read the Bloomberg Law article.

SCOTUSblog reports that in Lamps Plus Inc. v. Varela, the U.S. Supreme Court will decide whether the U.S. Court of Appeals for the 9th Circuit correctly held that an employer consented to class arbitration.

The employer in that case included language in the arbitration contract that committed the parties to use arbitration “in lieu of any and all lawsuits or other civil legal proceedings,” specified that arbitral claims include those “that, in the absence of this Agreement, would have been available to the parties by law,” and authorized the arbitrator to “award any remedy allowed by applicable law.”

Lower courts have found that the arbitration agreement could be read to authorize class arbitration, and that California contract law called for ambiguity on that point to be resolved against the contract’s drafter, Lamps Plus, writes Charlotte Garden.

Read the article.

Writing in ContractsProf Blog, Myanna Dellinger discusses a case that “nicely demonstrates how the consideration doctrine is still relevant and, as always, the importance of getting contracts in writing even though they do not have to be.”

The plaintiff had agreed to do some work for the defendant for $10 an hour, with the understanding that he would receive a $150,000 bonus after nine months. Somewhere along the way, the employer gave him a raise to $11, and then, after a total of 18 months of labor, fired him and refused to pay the bonus.

Dellinger explains that the court apparently found that because the plaintiff actually received one single dollar more per hour over nine months, there was no consideration for the original promise of working for a “reduced salary.”

Read the article.

A post on the website of Morgan, Lewis & Bockius takes a look at some of the issues involving the latest contracting trends for services agreements.

“At the outset of the contracting process, it is important for the deal team and the key stakeholders to evaluate and properly define the types of data that the service provider will access or process as part of the services,” advise the authors, Edward J. Hansen and Christopher C. Archer.

The assessment should consider the scope and types of data, and define company data and personal data.

Read  the article.

Lawyers generally associate artificial intelligence with predictive coding software that is used for analyzing data during the discovery phase, but there also isAI software specifically designed for contract analytics, according to a post on the Epiq website.

“AI contract software is ideal for organizations regularly involved in contract analysis and negotiations. For example, both corporate and estate lawyers would likely benefit from this technology because they are frequently exposed to a large number of contracts,” the post states.

The author writes that AI can speed up review and negotiations, strengthen contract capabilities, promote consistency, and give lawyers a competitive edge.

Read the article.

Some state attorneys general and the U.S.  Department of Justice are looking into no-poach agreements that some companies are including in their franchise operating agreements, reports Skadden, Arps, Slate, Meagher & Flom.

“Such clauses typically prohibit franchisees from hiring employees directly from the franchisor or other franchisees for up to six months following the end of their employment. [Washington State Attorney General Bob] Ferguson has been touting the ongoing success of his investigation with respect to fast food chains, and franchise-based chains in other industries appear to be his next target,” according to the authors.

“Any employers that currently utilize no-poach agreements or are considering doing so should be sure to examine whether there are valid pro-competitive justifications for the agreement that outweigh any anti-competitive effect and whether the benefits of the no-poach agreement are worth the risk of the potential governmental or private challenge that is likely to occur.”

Read the article.

Equipment leasing presents a company with an opportunity to acquire the use of equipment without using its own cash or its bank line of credit, according to a post on the website of Steptoe & Johnson.

“An understanding of the unique features of equipment lease contracts should help a company work with its bank to structure and document a mutually acceptable lease agreement,” writes Andrew J. Kalgreen.

His article discusses end-of-term purchase and return options, maintenance requirements, tax benefit protection, third-party liability protection, disclaimers of product warranties, and termination risks.

Read the article.

Backdating legal documents is frequently permissible. However, under other circumstances, it can be fraudulent or illegal, warns Elizabeth A. Whitman in a post on the website of Whitman Legal Solutions LLC.

Her article discusses when legal documents might be backdated and how legally to do so when it is appropriate.

She explains that sometimes a document must be backdated to make it accurate, how backdating is accomplished, when it is illegal to backdate a document, and how to assure the use of backdating is legal.

Read the article.

A recent presentation at the ACC Colorado Fall Frenzy in Denver addressed how blockchain platforms are reshaping contracting, particularly how blockchain can be used to protect the security and integrity of contracts and automatically execute based on external conditions.

A post on the website of Kilpatrick Townsend expands on the three takeaways: Blockchains have important uses besides cryptocurrencies; smart contracts are already in use by companies; and the technology is in its infancy and several pitfalls exist.

Read the article.

If your client is going to contractually commit to using commercially rea­son­able ef­forts to do something — and if your client expects that obligation to require some­thing less than “all reasonable efforts” — then you’ll want to make that expectation clear in the contract itself, advises D.C. Toedt III in the On Contracts Blog.

He discusses a case in which the influential Dela­ware chancery court noted the chasm be­tween the meaning of that term to transactional lawyers versus to courts.

“Seemingly disregarding practitioners’ views, the chancery court continued the Delaware trend —which that court itself started — of treating com­mer­­ci­al­ly rea­sonable efforts as requiring the obligated party to take ‘all rea­son­able steps.’”

Read the article.

A new Seventh Circuit Court of Appeals case demonstrates the importance of filing suit in a timely manner in order to retain one’s contractual rights, writes Myanna Dellinger in ContractsProf Blog. It also shows just how nasty contractual parties may act towards each other in violation of the duty of good faith and fair dealing.

The article details the case in which JTE distributed products in Chicago for Bimbo Foods Bakeries Distribution Company for over a decade. The contract had no duration, but stipulated that it could be terminated in cases of non-curable breaches by one of the parties.

Bimbo allegedly did not meet the standard of good faith because, according to JTE, Bimbo “began fabricating curable  breaches.” However, because the four-year statute of limitations had run, JTE could still not have asserted that argument, the court found.

Read the article.

Michael Volkov of Volkov Law group has posted an article that says a contract management system is imperative for businesses.

The article discusses the four important purposes for such a system:

• To maintain consistency in the formulation and enforcement of contractual relationships;
• To mitigate business risks between the company and a party (e.g. customer, vendor, supplier);
• To protect the company’s culture and mitigate compliance risks through imposition of certifications, representations and warranties, and specific compliance obligations;
• To protect the accuracy of the company’s financial payment and receivables system by verifying the accuracy of payment terms and conditions in accordance with the company’s contractual agreements.

Read the article.

Liability in the construction process is usually determined and allocated by contract, explains a post on the website of Faegre Baker Daniels LLP.

“It is quite common for construction contracts to contain indemnity provisions requiring one party to defend and reimburse the other against various expenses or losses. When contracts include express indemnity provisions, they will likely receive more attention, and be the subject of more negotiations between counsel, than any other provisions. Yet, if pressed to state what it means to ‘indemnify’ or ‘hold harmless,’ many are at a loss,” according to the firm.

The post discusses strict construction, express negligence, and the liberal or fair construction rule.

Read the article.

You can do a lot of damage with a signature, warns Jack Garson of Garson Law LLC in Bethesda, Maryland. You can go broke.

In an article on the website of Forbes, he discusses five types of contracts that have caused the most disasters.

First, he warns of the dangers of assuming that leases are standard, so there’s no reason to read every clause.

On the subject of loan agreements, Garson’s advice is to negotiate, consult advisors, and bargain. Most of all, he adds, get the right to prepay the loan.

He also covers construction contracts, partnership agreements, and personal guarantees.

Read the article.

A recent Ninth Circuit ruling that Uber’s arbitration agreements did not violate the National Labor Relations Act provides a major victory to Uber by requiring each plaintiff to separately arbitrate his or her claims.

Christine M. Fitzgerald, writing in the Jackson Lewis California Workplace Law Blog, explains that plaintiffs filed a putative class action against Uber for failure to remit gratuity paid by customers, and for misclassification of the drivers as independent contractors and failing to pay their business expenses. The O’Connor plaintiffs sought an order declaring Uber’s 2013 arbitration agreements unconscionable.

The panel rejected plaintiffs’ argument that the lead plaintiffs constructively opted out of arbitration on behalf of the entire class.

Read the article.