There are a few things every lawyer is expected to be able to do — but every lawyer should be able to review a contract, writes Gary J. Ross for Above the Law.
The first tip Ross offers is “make sure your client can get out. This is most important.”
Other topics include renewal terms, termination, indemnification, collections expenses, amendments, governing law and jurisdiction, and notification.
While a primary goal of any well-crafted commercial agreement is durability — terms that work for the life of the agreement—the only certainty in the course of a long-term commercial relationship is the inevitability of change, write Peter M. Watt-Morse and Glen W. Rectenwald for Morgan Lewis.\
“Once a customer has become dependent on a third party for essential goods or services to operate its business, an unforeseen shift in its business requirements or a change to applicable laws can create holdup problems for customers, leading to costly renegotiations of the original agreement,” they explain. “The right change management mechanisms can manage these risks by allocating the responsibility and costs for changes and creating clear and effective procedures for managing and implementing changes to the agreement.”
They discuss the issues of mandatory changes and allocating the costs of changes.
ValueWalk has posted an audio recording featuring Wharton’s Kevin Werbach and Nicolas Cornell discussing their research on smart contracts.
They recently spoke with Knowledge@Wharton about their paper on smart contracts, “Contracts Ex Machina,” which literally means ‘contracts from the machine’ — a nod to Greek tragedy’s deus ex machina plot device. The question they tackled was this: Could smart contracts one day replace contract law?
On its website, ValueWalk explains: “‘Smart’ contracts on the blockchain are generating a lot of interest because of their innovative nature and potential to substantially boost efficiency in many areas of law and business. But these contracts — digital agreements that automatically fulfill themselves — come with serious limitations as well.”
eSignLive by Vasco is offering a complimentary on-demand webinar featuring Locke Lord LLP partner Pat Hatfield discussing how e-signatures can reduce risk and strengthen enforceability of signed records.
Organizations undergoing digital transformation often have legal questions related to moving paper-based business processes online without introducing new risks, eSignLive says on its website. “Beyond the minimum requirements for electronic and digital signatures set forth in the laws, you will want to ensure you address the risk of fraud, repudiation and compliance as well. In the event of a regulatory audit or legal dispute, avoiding fines and ensuring admissibility is dependent on your ability to produce convincing, reliable evidence.”
This webinar covers:
While arbitration may be a preferable alternative to court for smart contract disputes, it doesn’t happen on its own – it typically requires a properly drafted arbitration clause, points out Jared Butcher in Steptoe & Johnson’s Blockchain Blog.
Butcher discusses some aspects of the arbitration clause that should be re-considered when dealing with smart contracts.
The article covers the topics of arbitrator appointment, governing law and the arbitral body, forum selection, and summary dispositions.
Migrating applications and workloads to a cloud provider has obvious benefits — scalability, flexibility, efficiency, and cost considerations are all driving the dramatic increase in the use of cloud services, write Peter M. Watt-Morse and Glen W. Rectenwald of Morgan Lewis.
In their article on the firm’s Tech & Sourcing blog, they discuss how enterprises that start utilizing proprietary application programming interfaces (APIs) and other vendor-specific development and integration tools can easily become locked into their cloud providers.
“The efficiency and low cost of using cloud services, including form vendor agreements that are provided with such services, can lead to vendor lock-in, making it difficult and expensive to migrate applications in-house or to a new provider,” they write.
Loans secured by stock are an important and popular product offered by many lenders to individuals and other borrowers, according to a post on the website of Loeb & Loeb LLP.
“The ability of a lender to sell the stock held as collateral is very much dependent on the documentation governing the loan. When and to what extent a lender may realize upon (or liquidate) the stock to repay the indebtedness under the loan should be carefully and clearly set forth in the loan documents,” write Bryan G. Petkanics and Anthony Pirraglia. “A recent federal court case analyzed the ability of a lender to act upon stock pledged to secure a loan, and provides insight into valuable language to be included in the loan documentation.”
They discuss Kinzel v. Merrill Lynch, in which the Sixth Circuit affirmed the judgment of the district court in favor of Merrill Lynch, finding that the financial services company breached neither the contract nor its duty of good faith under the terms of the loan management account agreement.
Fox Rothschild’s Labor and Employment and Securities Industry practice groups have updated the firm’s quick reference on restrictive covenants for in-house counsel and human resource professionals.
“The law in this area not only varies considerably from state to state and changes frequently, but its application is fact-specific,” the firm says in its introduction to the updated guide.
The guide breaks down the use of restrictive covenants for each state. It gives details about each state’s factors on the topics of non-competes, non-solicitation, non-hire/”raiding,” and confidential information.
In the sale of family-owned business interests, parties can be bound by term sheets or similar documents, even when such documents expressly contemplate the preparation of further documents to finalize the transaction, explains Michael Connolly, a partner in Murtha Cullina’s litigation department.
Writing in the firm’s Family Business Perspectives blog, Connolly discusses a case in which a court “recently ruled upon a claim by one family member against another to enforce a ‘Settlement Memorandum’ which provided for the purchase and sale of stock in the family business, even though the Memorandum contemplated the drafting of later documents to finalize the transaction.”
“Parties to negotiations involving the sale of family-owned business stock or assets should therefore be cautious in their drafting and conduct in order to ensure that it is clear to all parties what documents are – and are not – intended to create enforceable rights and obligations,” warns Connolly.
A properly drafted arbitration clause with a class action waiver should be enforceable and can be a good and useful line of defense against expensive and costly litigation, especially class action lawsuits, write .
Their article explains how arbitration works, what type of arbitration agreements are generally enforceable, what features that have or can cause problems, and how such provisions can reduce the risk of class actions.
They also discuss the possible effect or non-effect that could come from the Consumer Financial Protection Bureau’s proposed arbitration rule.
A federal court has set the precedent that licenses like the GNU General Public License (GPL) can be treated like legal contracts, and developers can legitimately sue when those contracts are breached, reports Keith Collins for the digital news outlet Quartz.
The GNU GPL requires that anyone using GPL-licensed software to produce some other software, must provide the resulting software as open-sourced with the same license if it’s released to the public. Or the second developer could pay a licensing fee to the original developer.
South Korean developer Hancom Office incorporated an open-source PDF interpreter called Ghostscript into its word-processing software, but it declined to open-source its software or to pay Ghostware’s developer.
On their firm’s website, Gaetan J. Alfano and Joseph L. Gordon of Pietragallo Gordon Alfano Bosick & Raspanti discuss a recent case that dealt with the question of what happens to the restrictive covenants in an employment contract when an employee converts to at-will status.
In Metalico Pittsburgh Inc. v. Douglas Newman, et al., an employer had three-year contracts with two high-level executives. After the three-year period ended, they continued to work as at-will employees. A year later, the employees joined a competitor and solicited Metalico’s customers and solicited Metalico employees to join the new employer.Metalico sought a preliminary injunction to enforce the restrictive covenants.
“According to the Superior Court, because the employment agreements contained express language indicating that the employees agreed to be bound to the covenants for the duration of their employment, their status as at-will employees was irrelevant.,” the authors write.
A U.S. magistrate judge in the Southern District of New York has ruled that the terms of a settlement negotiated via email can be enforced as a binding contract.
In a post on Steptoe & Johnson’s SDNY Blog,
Dykstra’s lawyer had written “we have a deal” in an email chain with settlement terms but later argued that the terms also needed to include a “standard” mutual release, writes Michael.
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The 11th Circuit ruled in Liberty Surplus Ins. Corp. v. Norfolk Southern Railway Co. that the unambiguous language of Liberty’s “Completed Work” exclusion did not bar coverage for injuries sustained by a motorist injured at a railroad crossing who later sued Norfolk Southern, reports Hunton Williams.
“Before the Court is, once again, the classic case of the insurer requesting relief from the consequences of the inartfully drafted, yet plain, terms of its insurance policy,” the opinion reads.
First, courts continue to construe exclusionary provisions narrowly and against the insurer, even where the provision utilizes plain and unambiguous wording. Second, in the context of contracts and agreements to supply services, work or operations over time, exclusions designed to bar coverage for completed work or operations must be explicit as to when the services, work or operations are deemed to be “complete.”
Bass, Berry & Sims attorney Chris Lazarini provided insight on factors a court should consider when determining whether a party has waived a contractual right to arbitration, the firm reports on its website.
“The factors, which are tied to potential prejudice to the non-moving party, include: (1) the time elapsed between commencement of litigation and the request for arbitration, and (2) the extent to which the moving party has participated in the litigation process,” according to Lazarini’s article.
His article examines the issue as presented in the case Chehebar vs. Oak Financial Group, Inc., No. 14-2982 (E.D. N.Y., 3/7/17)
The American Institute of Architects has released several revised documents including the primary agreements between the owner and contractor and the owner and architect, reports Dickinson Wright PLLC.
The article on the firm’s website explains that any of the revisions are attempts to clarify existing provisions. A number of changes, however, are more significant.
The update covers general conditions of the contract for construction, such as building information modeling and digital data, evidence of owners’ financial arrangements and minor changes in the work.
It also discusses agreements between the owner and the contract, including assumptions, contractor progress payments and owner termination.
Topics also include the agreement between the owner and arthitect.
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A recent decision of the New Jersey Appellate Division considered the enforceability of arbitration agreements by non-signatories, writes .
She discusses a case in which the plaintiff filed a putative class action complaint against defendant alleging violations of New Jersey’s Truth-In-Consumer Contract, Warranty and Notice Act, as well as the state’s Lemon Law.
The panel determined, among other things, that by signing a lease agreement, plaintiff agreed to arbitrate her dispute not only with the underlying signatories of the lease, but with any of its affiliates. Now the plaintiff will need to decide whether to pursue her claims in arbitration, Tillem explains.
In a merger-and-acquisition transaction, the convention is for the seller to make representations and warranties to the buyer regarding the target business, according to an article posted by Womble Carlyle Sandridge & Rice.
“When the target business is a private company, the acquisition agreement typically provides the buyer with a post-closing right to indemnification if any of the seller’s representations and warranties prove to be untrue,” writes partner Melinda Davis Lux. “The purchase agreement also typically provides that the buyer’s right to indemnification is the buyer’s exclusive remedy for breaches of the seller’s representations and warranties.”
In her article, she discussindemnification time limits, shortening the statute of limitations and its consequences, time extensions, and lengthening the statute of limitations.
In construction law, general contractors have largely negotiated a shift in the distribution of risk away from the general contractor and to the subcontractor with the inclusion of “pay-if-paid” contractual clauses,” writes Dana Chaaban in Shutts & Bowen’s Construction Law Blog.
Writing for the Florida firm, Chaaban explains that such clauses make the general contractor’s receipt of payment from the owner a condition precedent to the general contractor’s ultimate payment to the subcontractors. Absent such a provision, general contractors bear the risk of an owner’s potential insolvency.
Subcontractors have sought to circumvent contractual “pay-if-paid” provisions by bringing claims against both the general contractors and their sureties who may guarantee payment.
Chaaban discusses some cases on the subject.
A recent presentation at Apttus Accelerate conference in San Francisco discussed how to take control of a company’s quote-to-cash process.
Diginomica reports that some company lawyers explained how they automate contracts to remove manual, paper-based logjams from the process.
Michelle Swan talked with two companies that have recently invested in Contract Lifecycle Management (CLM) — software that automates the process of managing a contract from initiation through execution, compliance and renewal. People from their legal teams told her about the benefits they are seeing from taking control of these defining moments.
Those companies were: Cadence, a company that sells software and hardware that other companies use to design everything from robotics and mobile phones to jets and medical devices, and Silicon Labs, a semiconductor company that makes the silicon, sensors and other software used in various devices.