In a new online audio discussion, Bloomberg takes a look at “all the stuff you sign when you sign on for a job.”

Citing nondisclosure agreements required for staff and volunteers in the Trump campaign, the turmoil at Fox News after Roger Ailes stepped down from the top post, and a poll that showed that up to 90 percent of respondents did not read their employment contracts, Bloomberg calls on labor and employment lawyer Brett Gallaway to break down the standard terms of a boilerplate contract and what signing that dotted line really means.

Listen to the discussion.

The sixth installment in Bryan Cave LLP’s series about banks’ third-party vendor service contracts covers two subjects: first, ownership of trademarks, copyrights, patents and other trade secrets, source code escrow agreements; and second, confidentialty.

Jerry Blanchard wrote the article for the firm’s Bank Bryan Cave blog.

“The contract should include intellectual property provisions that clearly define each party’s intellectual property rights for their pre-existing materials and materials developed as part of the contract,” he explains.

And: “The bank will want the vendor to maintain the confidentiality of all information provided by the bank. This includes preventing the vendor or its subcontractors from using the information in a manner that is not anticipated by the contract.”

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The risk of a data breach cuts across industries and affects businesses large and small, causing some companies to migrate mission-critical data, including sensitive customer information, to third-party cloud providers, according to an article written by Sidley Austin lawyers Scott Nonaka and Kevin Rubino for Bloomberg Law.

“As data breaches have increased, so have the number of companies migrating mission-critical data to the cloud, including sensitive customer information,” they write. “These companies often turn to third-party cloud service providers to provide data hosting, software or infrastructure services. This trend is driven, in part, by the growing perception that cloud services are more secure than traditional information technology environments.”

They point out that data stored in the cloud faces many of the same threats as locally-stored data and, due to the growing amount of information in the cloud, it can be an attractive target for hackers.

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Laura Bartlow of Zelle LLP writes in a post on JDSupra that the very first item on her list of rules for employers is this: Don’t make promises to your employees that you can’t or won’t keep.

“Employers’ promises include those set out in employment contracts, of course, but there are others promises made by employers that can create legal liability and that are worth regular attention,” she explains. “And it works both ways – employees, related businesses, and vendors may also be obligated by the agreements that they have made with you.”

She discusses some of the most important points to consider, including: obligations in written employment contracts’ obligations in written policies and handbooks; obligations of employees, related organizations, and vendors; and obligations created by government contracts.

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Ed Sohn writes at Above the Law about the the 2016 Nobel Prize for Economics being awarded to Oliver Hart and Bengt Holmström for their research in contract theory, saying the two return to basic principles of contract and are well-reflected in our policy-making and contract negotiation today.

“At minimum, efficient contracts are complicated business, and the financial burden of well-negotiated contracts is high,” Sohn writes. “Whether we’re talking about hidden covenants sneakily obscured in bond indentures or whether we’re looking at bad commercial leases that cripple a small business’s ability to grow, a fair and efficient economy requires fair and efficient contracts. To get there, we need more visibility and fairer incentives.”

The article discusses managed services solutions and technology solutions.

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Investors wanting to sue Chinese companies in U.S. courts for corporate governance violations — using contractual provisions requiring litigation in their home country to replace what they see as “unfair” Chinese laws — may be disappointed in their options, writes Dan Harris in the China Law Blog.

“What will actually happen is that the parties will be required to prove Chinese law in a U.S. court, a difficult, time consuming and expensive process. This is usually exactly the opposite of what the U.S. party assumed would happen in this situation,” he explains.

“A contract provision calling for disputes to be resolved in one country’s court has little to no influence on the law that court will apply to the case. Most importantly, it is difficult to imagine a thoughtful American judge applying U.S. corporate governance law to a transaction that took place wholly in Mainland China and that involves Chinese entities,” Harris adds.

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Many contracts contain no provisions regarding renewal, and the term simply ends after a specified period of time, write Peter M. Watt-Morse and Cindy L. Dole for the Sourcing @ Morgan Lewis blog.

They explain that sometimes this is appropriate:

“For example, contracts will end when a specific project has been completed or by a specified date for reasons related to intellectual property, third-party agreements, or specific business requirements. On the other hand, renewal should not be overlooked. The parties may have incurred significant start-up costs (including negotiating efforts) and want to avoid repeating those costs. For customers, the goods or services (or the price or quality of such deliveries) may not be available from other vendors. For vendors, the customer may be an important client that competitors prize. Therefore, before finalizing the term of any contract, potential renewal provisions should be reviewed.”

The article covers practical considerations of renewal, automatic renewal, and other renewal options.

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The latest installment of Construction Dive’s “The Dotted Line” series discusses a problem many construction contractors see in their business: misinterpretation of terms in their contracts.

Writer Kim Slowey covers five of the most common sources of this misinterpretation, with input for experts.

“Most construction contractors follow custom and standard practice in the industry, or what they’ve always done in the past,” said Chicago attorney Matthew Horn, a long-time construction law attorney and founder of Legal Services Link.

The article discusses incorporation clauses, pay-if-pay versus pay-when-paid, Change orders and extras must be in writing to obtain payment, indemnify versus defend, and mechanics’ liens.

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The executive director of the Federal Bank of Atlanta’s Center for Financial Innovation and Stability released a paper on smart contracts and their potential to change traditional legal proceedings, finding: “In many circumstances, smart contracts may eventually be a more efficient way of contracting than traditional paper contracts.”

The Cointelegraph reports that Larry Wall, in his paper titled “Smart Contracts in a Complex World,” explored the inefficiency of paper contracts in legal proceedings, which is primarily caused by ambiguity in the language of the law.

“The majority of contracts that are formed between two parties to ensure the fulfilment of the established agreements are often incomplete, because of the difficulty in stating every possible situation where the contract can be utilized,” according to the Cointelegraph article.

“Wall believes smart contracts demonstrate a series of major advantages of paper contracts,” it continues.

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In what it described as a case of first impression, the Northern District of California ruled that a professional liability policy that excluded the insured’s “assumption of liability obligations in a contract or agreement” did not extend to breach of warranty or false advertising claims arising out of a genetic data testing company’s marketing and sale of a personal genome service, reports Mary McCutcheon of Farella Braun + Martel LLP.

She writes in the article on the firm’s website that Ironshore Specialty Ins. Co. v. 23andMe, Inc. is noteworthy by the fact that the insurer challenged coverage on this ground.

“While this issue apparently has never been decided in the context of a professional liability policy, both case law and custom and practice recognize that the same phrase used in a general liability policy applies only to liabilities ‘assumed,’ i.e. created by, a contractual indemnity agreement,” according to McCutcheon.

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An article in Norton Rose Fulbright’s Data Protection Report discusses a recent ruling by the 11th U.S. Circuit Court of Appeals that affirmed a decision in Silverpop Systems, Inc. v. Leading Market Technologies, Inc., finding that all damages flowing from a vendor’s data breach were barred by a standard provision in IT service contracts, disclaiming all liability for consequential damages.

Matthew Spohn and David Navetta explain that the court’s analysis could apply to almost any breach of data provided to a vendor under an IT service contract, and highlights the need to carefully scrutinize a proposed waiver of consequential damages when confidential or sensitive data is involved in the contract.

“In contracting for IT services, it is important for purchasers to thoughtfully consider the risks of harm presented by the services, and then negotiate terms that appropriately allocate those risks between the parties.  This requires both parties to reconsider the standard vendor-friendly term waiving all consequential damages,” the authors write.

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The value of Contract Lifecycle Management (CLM) solutions is primarily based on their ability to standardize the contract authoring process through clause and contract templates and self-service wizards, and guide new contracts through a standard workflow through to signature and execution, according to an article published by Seal Software on its website.

Many CLM solutions have performed these process-oriented tasks, but some other critical functional requirements needed to meet everyday challenges in contract management still remain unaddressed.

“The challenge is that many organizations have tens of thousands of active (legacy) contracts that existed prior to a CLM implementation and likely reside across any number of file share drives, document management systems, personal computers and other types of “make-shift” repositories.” the article says. “This is sometimes due to nature of contracting, where the Procurement team has its requirements and solutions for contracting, the Sales team has theirs, Facilities has theirs, and the Legal team uses their own processes for managing various types of legal agreements. Add some M&A into the mix, where thousands of new contacts may be coming into an organization and the problem is magnified. Each legacy contract likely contains more exposed risk due to the typical ad hoc creation and negotiation process than any new contract being created through a new CLM system.”

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When a client wants to pursue a lawsuit or arbitration, one of the first things an attorney should do is determine whether the statute of limitations has run on the client’s claim, advise Darren Rowles and Scott Cahalan in a post for  Smith, Gambrell & Russell, LLP’s Construction Law blog.

“Many people are not aware, however, that parties to contracts, including construction contracts, may have the ability to increase the statute of limitations for a written contract by a factor of more than three hundred percent just by adding a few words to make their contracts ‘under seal.’ As a result, these people may increase their exposure to breach of contract/warranty claims without knowing they are doing so,” according to their post.

They explain that, in Georgia, for example, a written contract that is not for the sale of goods would normally have a six-year statute of limitations measured from the date of breach, But a contract signed “under seal,” has a statute of limitations of 20 years from the date of breach.

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The term of a contract is one of the most basic questions with regard to any agreement, but drafting provisions regarding the “Term” raises multiple issues, both legal and practical, write Peter M. Watt-Morse and Cindy L. Dole in the Sourcing blog at Morgan, Lewis & Bockius LLP.

In their article, they review some important considerations to keep in mind when drafting this common contract provision.

They start by discussing the effective date, then the end date, and conclude with a section on length of the agreement.

The post  is part of the firm’s recurring “Contract Corner” series, which provides analysis of specific contract provisions.

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Arbitration clauses seriously harm many consumers. Yet it is nearly impossible to avoid signing them, if a person wants or needs to use the internet, phone, credit cards, loans, medical or long-term care services, and so on, according to an article posted by Newsome Melton on its Arbitration Law blog.

But lately, many state and federal government representatives, judges, politicians, and interest groups have been speaking up about arbitration, the article adds. Some have publicly pulled away from upholding universal “forced arbitration.”

“Individual arbitration clauses are now on the radar of many attorneys, judges, politicians, regulators, journalists, and consumers. It is too soon to tell whether the new or proposed regulations and rules preserving court trials and permitting class actions for consumers will be upheld or overturned,” the article says.

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Commercial construction projects necessarily involve many moving parts, including multiple parties from the owners to the construction managers to the project financiers to the contractors and to the sub-contractors, points out Larry P. Schiffer in Squire Patton Boggs’ Insurance and Reinsurance Disputes blog.

“These moving parts generally result in a web of interrelated insurance policies covering the project. Typically, when there is no controlled insurance program, contractors and sub-contractors are required to obtain liability insurance covering their potential negligence and very often are also required to add others, like the property owner or construction manager, as additional insureds onto those insurance policies,” Schiffer writes.

In his post, he discusses what a New York appellate court recently called an “additional insured by written contract” clause. The language of an additional insured clause may make all the difference as to whether a party is covered as an additional insured or not.

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Constant vigilance, skilled lawyering and good deal-making skills remain critical to the proper drafting of contractual arrangements, points out Glenn West in a post on Weil, Gotshal & Manges LLP’s Global Private Equity Watch.

He discusses the seriousness of drafting and interpreting contracts, and the care required in doing so, in light of the recent decision by the United States Court of Appeals for the Second Circuit in Chesapeake Energy Corp. v. Bank of N.Y. Mellon Tr. Co., No. 15-2366-cv (7th Cir. Sept. 15, 2016). The appellate court affirmed the judgment of the district court awarding damages in favor of the noteholders against Chesapeake Energy for $438,717,561.67 for redeeming notes at par after the period specified for redemption at par, the second time the Second Circuit has addressed Chesapeake’s of its $1.3 billion in notes based on the company’s interpretation of the Notes’ Supplemental Indenture.

The actual subjective intent of an  agreement “may well have been to provide Chesapeake a four month period in which to provide the required 30-60 days’ notice of redemption rather that to complete the actual redemption, but the Second Circuit, reading the actual words used to convey that intent, concluded that the words unambiguously conveyed a contrary meaning,” according to West.

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NBC News reports that a class-action lawsuit filed against Wells Fargo might be hamstrung at the starting line, legal experts say.

Martha C. White writes that mandatory arbitration contract clauses may protect the bank from class-action suits brought by customers who had bank or credit card accounts opened in their names without their knowledge.

“Five years ago, a Supreme Court ruling said it was legal for companies to shield themselves from lawsuits by requiring that customers address grievances through a private arbitration system. Since then, consumers seeking redress from banks, even earlier cases against Wells Fargo in California, have been effectively stopped at the courthouse door,” according to the report.

“There’s no question that it’s very difficult to overturn an arbitration clause, although the facts in this case are pretty damning,” said Ed Mierzwinski, consumer program director for U.S. PIRG.

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Commercial construction projects necessarily involve many moving parts, including multiple parties from the owners to the construction managers to the project financiers to the contractors and to the sub-contractors. Larry P. Schiffer of Squire Patton Boggs writes that these moving parts generally result in a web of interrelated insurance policies covering the project.

“Typically, when there is no controlled insurance program, contractors and sub-contractors are required to obtain liability insurance covering their potential negligence and very often are also required to add others, like the property owner or construction manager, as additional insureds onto those insurance policies,” he explains. “But not all additional insured clauses are the same. In this post, we discuss what a New York appellate court recently called an ‘additional insured by written contract’ clause. The language of an additional insured clause may make all the difference as to whether a party is covered as an additional insured or not.”

He concludes that the case demonstrates that New York courts will interpret insurance policies based on the plain meaning of the words used by the parties and will not alter the contracts for equitable reasons if the language is clear and unambiguous.

Read the article.

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In closely held businesses, it is common practice to provide for the succession of the business upon the death of an owner. More often than not, such succession planning involves the use of life insurance on the life of an owner, whether to fund a redemption of the deceased-owner’s interest in the company, to make up for lost revenues resulting from the owner’s death, or to achieve other economic results, writes Mitchell Goldberg of Berger & Singerman.

“Where the company is the owner and beneficiary of the life insurance policy, the company and its principals (i.e. shareholders, members, partners) need to be mindful that certain formalities under the Internal Revenue Code (the “Code”) must be followed to ensure that the death benefit proceeds are completely tax-free under the Code,” he explains.

“The Code generally excludes from gross income amounts received (whether in a single sum or otherwise) under a life insurance contract, if such amounts are paid by reason of the death of the insured. However, in the case of an employer-owned life insurance contract (i.e. a life insurance contract owned by a “person” engaged in a trade or business and under which such person is a beneficiary and that insures the life of an employee of such person on the date the contract is issued), unless certain requirements are satisfied, the amount excluded under the Code is limited to the aggregate amount of premiums and other related amounts paid by the employer.”

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