A Dallas appellate court considered whether California law governed contract and tort claims against California-based former employees who signed employment agreements containing a choice-of-law clause stating that Texas substantive law would apply, according to a report by Neil R. Burger in Carrington Coleman Sloman & Blumenthal, L.L.P.’s Sua Sponte blog.

“Applying the applicable provisions of the Restatement (2d) of Conflicts, the Dallas Court of Appeals affirmed the trial court’s ruling that California law would apply to the claims for breach of the non-competition provision and related tort claims, because of California’s more significant relationship to the dispute and because application of Texas law would contravene a fundamental policy of California,” he wrote.

The case is Merritt, Hawkins & Associates, LLC v. Caporicci.

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Before entering into a construction contract, consider how force majeure events are evolving in today’s world, advise Jonathan Massell and David A. Senter of Nexsen Pruet on the firm’s website.

“In construction contracts, force majeure clauses include events such as “riots” and “acts of war” but courts have found that acts of terrorism did not fit those descriptions,” they write. “After the September 11th attacks, clauses utilizing “acts of terrorism” became more common, but courts have not directly interpreted the phrase and it has not been scrutinized judicially.”

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Exari, a provider of cloud-based contract lifecycle management solutions, has announced the release of its Contract Risk Playbook: Risks Hiding in Plain View, an advanced guide for Corporate Boards and Senior Executives.

Contract risk is a board level issue that has been difficult to quantify, Exari says on its website. Understanding contract risk requires a comprehensive business plan to capture, organize, analyze and improve the contract management process across the entire enterprise. By understanding the rights and obligations contained in contract assets, board directors and executives can better determine the underlying risk profile of their firm. As a result, they can take definitive action to reduce risk and improve long-term sustainability.

The Contract Risk Playbook breaks down the risks for Boards and Executives who lack control over monitoring their contracts. The playbook gives step by step guidance on how to assess contractual risk from an enterprise level, take action and move forward proactively.

Exari says firms often lack the right tools and processes for managing contractual relationships, which can result in major risks, such as regulatory compliance and expensive outside legal costs. Risk exposures need to be managed proactively at an enterprise level in order to reduce risk and improve operational excellence before a crisis emerges. Most companies store contracts electronically but are unable to understand the relationship between contract terms across all their contracts.

Download the playbook.

As a result of the passage of the Dodd-Frank Act in 2010, the use of mandatory pre-dispute arbitration in consumer transactions has become tenuous, according to an article written by Maurice Shevin for Sirote & Permutt, PC.

He explains that the Consumer Financial Protection Bureau was instructed by law to study and evaluate the effect of such mandatory clauses, and it has been doing so almost since its inception.

“The CFPB holds yet another public forum on the subject in May. I won’t be surprised to see a Proposed Rule come out of this hearing that announces the intent of the CFPB to suppress the use of mandatory arbitration. If the CFPB stays true to form, it will give creditors a period of time to comply with any Rule that it may adopt, Shevin writes.”

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Blockchain-based smart contracts have enormous potential to streamline financial transactions and reduce the counterparty risk associated with monitoring or enforcing contractual obligations, write Nicolette Kost De Sevres, Bart Chilton and Bradley Cohen in an article published on the website of DLA Piper.

“Although the blockchain was developed to facilitate cryptocurrency transactions, entrepreneurs are now developing the technology for use in smart contracts,” the explain. “To develop a smart contract, the terms that make up a traditional contract are coded and uploaded to the blockchain, producing a decentralized smart contract that does not rely on a third party for recordkeeping or enforcement. Contractual clauses are automatically executed when pre-programed conditions are satisfied. This eliminates any ambiguity regarding the terms of the agreement and any disagreement concerning the existence of external dependencies.”

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The 5th U.S. Circuit Court of Appeals has affirmed a lower-court decision declining to broaden additional insured coverage afforded under a commercial general liability policy to energy operator Apache Corporation to contractual liabilities assumed by energy service provider Linear Controls, Inc., writes David J. Saltaformaggio of Phelps Dunbar.

The 5th Circuit “found that Apache was specifically named as an additional insured, not a named insured, and only named insureds are entitled to contractual liability coverage under a commercial general liability policy,” according to the article. “In so doing, the Fifth Circuit dismissed Apache’s arguments that the scope of its additional insured coverage should be expanded to include its named insured’s contractual obligations.”

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Most companies take more than a month to go from the initial “handshake” with a customer to a signed contract because they rely on manual tools, according to a survey conducted by SpringCM, a contract management solution for Salesforce customers. The second annual State of Contract Management report is the result of a survey of more than 800 professionals on their contract management processes and challenges.

The report, conducted last month, found:

• 74 percent of respondents’ contract processes are not automated;
• 85 percent attach contracts to emails, where they can be lost or the wrong versions used;
• More than four in 10 keep contracts on shared drives, increasing security risks, and;
• 68 percent said human error affects their contract processes “very often.”

The report findings also highlight the need for visibility to speed up the contract process and increase revenue. In fact, 49 percent of respondents said that a transparent contract process would assist in reporting and predicting revenue.

“Our research found the contract process typically lasts weeks – and for large enterprises, it can be months – and involves multiple departments, increasing the chances for mistakes that can cause even more delays,” said Greg Buchholz, CEO of SpringCM. “But if companies can shorten the time it takes for contracts to get signed, then the closing cycle decreases, revenue increases, cash flow accelerates and risks are reduced. In one case, a customer took their contracts process from two weeks to two days.”

Contract management software automates the contract process while providing visibility to each stage of the contract lifecycle to improve coordination between sales and legal teams. In the State of Contract Management report, 40 percent of respondents said implementing a contract management tool has saved their companies money.

“The real key is the advantage of eliminating sales reps from heavy involvement in the process.  Sales leadership wants their revenue generators finding and closing the next deal, not spending their time involved in the back and forth between inside counsel, customer counsel, and procurement departments,” Buchholz said. “If a company can cut the time sales teams waste getting contracts signed, then they can do more prospecting and selling, and the company has a better chance of hitting its revenue goals.”

More information and a free download of the State of Contract Management Report are available here.

The former chief digital officer of the Epix cable television network was arrested on Tuesday on charges that he defrauded the company of more than $8 million, reports Reuters.

FBI agents arrested Emil Rensing, 42, at his Manhattan home and charged him with wire fraud and aggravated identity theft, authorities said.

“He was released on a $500,000 bond following a court hearing later in the day. His lawyer, Henry Mazurek, in a statement said Rensing disputed the allegations and ‘did not steal any money or identities from anyone.'” the report says.

Rensing worked at Epix from April 2010 to August 2015, and is alleged to having contracted with vendor companies he owned to perform digital media services. The complaint says he hid the scheme by using false and stolen identities.

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From two different courts in two different states on two very different claims come the same concept: an agreement to arbitrate may be binding even without a signed contract, according to a report by Stan Martin on the Commonsense Construction Law website.

“One comes via an unsigned law firm partnership agreement, and the other via an agreement placed on the wrapping of a bundle of roofing shingles, held to be binding on the property owner who hired the contractor who engaged, in turn, the subcontractor purchasing the shingles,” he writes.

“These cases serve as a reminder that (1) a person or company can be bound by a contract without signing that contract, based on other actions, and (2) if that (unsigned) contract calls for arbitration, the person/company is bound to arbitrate disputes that arise under the contract.”

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A fundamental principle of contract law is that a written contract is an agreement in writing that serves as proof of the parties’ obligations, writes Virginia Whitehill Guldi of Zuckerman Spaeder LLP. What happens, however, when the parties forget some of the niceties of formalizing a written contract?

For one answer, she offers the recent decision in the case of Shank v. Fiserv, Inc., in which the Eastern District of Pennsylvania addressed Fiserv’s motion to dismiss and compel arbitration at the outset of the case.

In that case, employee Shank had been dismissed after returning from a medical leave. The company cited a reorganization, but the plaintiff claimed proffered reason was pretextual and that she had been fired in violation of various federal laws, including the Americans with Disabilities Act, the Family Medical Leave Act, and Title VII.

“Fiserv sought to dismiss the case and force arbitration, citing a ‘Mutual Agreement to Arbitrate Claims’ that Ms. Shank had signed when she was hired and that would have contractually obligated her to arbitrate her claims. However, Fiserv’s argument had a flaw, said Ms. Shank, because it did not sign the agreement,” Guldi wrote.

The court agreed with the plaintiff.

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David Conaway of Shumaker, Loop & Kendrick LLP has posted an article describing the key provisions to address in international sales contracts, other than normal trade terms.

The article covers what law applies, where will disputes be resolved, arbitration of foreign disputes, who pays the costs of dispute resolution, and miscellaneous important contract provisions.

“Companies ideally would have bespoke contracts that address these differences. However, given that many companies do business in numerous foreign countries, it may be impractical to have a bespoke contract for every country. A reasonable approach would be to consider an over-arching ‘international’ sales or supply contract, and variations for key market countries, or material customer relationships,” he writes.

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If your company is providing professional services as opposed to selling a product, you may find that you need a good Agreement for Professional Services, writes Richard Harroch for AllBusiness. This type of agreement lays out the terms and conditions under which a business provides certain services, such as accounting, engineering, consulting, software development, and property inspections.

The article discusses the key points to keep in mind when drafting or negotiating an Agreement for Professional Services.

Those points include services to be rendered, nonsolicitation of employees, fees, reimbursable costs, liability limitations, late charges, period for bringing claims, time to perform services, suspension of services, and force majeure.

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Josh Stark, lawyer and head of operations and legal at blockchain consulting firm Ledger Labs, comments in an opinion piece on CoinDesk on “smart contracts” as an alternative form of legal agreement, speculating on how they could come to impact his industry.

“Banks, exchanges, and other financial institutions are actively developing blockchain technologies that will enable them to store and trade real assets over blockchain systems. Nasdaq, in partnership with blockchain startup Chain, has developed and begun testing a private-market equity trading platform,” he writes.

“The impact will not be limited to financial contracts, although these are the most obvious use cases. As techniques are developed that enable other types of property to be recorded and transacted on a blockchain, the possible applications for smart contracts will multiply,” he adds.

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A recent decision from the Northern District of Illinois illustrates the pitfalls that could arise from current insurance industry practices involving the issuance of privacy statements and insurance policies if done without the appropriate precautions, according to a report by Carol J. Gerner and Cinthia Granados Motley for Claims Journal.

“The process of issuing an insurance policy, either directly or through an employer group, requires care and deliberate action when it comes to issues of proper integration, documentation and transmittal,” they write.

“In Dolmage v. Combined Ins. Co. of Am., (No. 1:14-cv-3089, N.D. Ill. Feb. 23, 2016), the court denied the defense motion to dismiss a breach of contract claim based on a ‘Privacy Pledge’ document that was included in insurance policy documents provided to employees of Dillard’s department store (Dillard’s). The decision raises a novel theory by plaintiffs and warrants attention given the number of ‘privacy statements’ consumers receive in the mail every day from banks and credit card issuers and the use of third-party vendors in the management of personal data.”

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Though most business-to-consumer transactions do not involve the signing of contracts, a lot of business-to-business transactions do, which is why it is important to remain current on the law to ensure that your electronically signed contracts are enforceable, writes John Di Giacomo for Practical Ecommerce.

“In the United States, the federal government has adopted the E-Sign Act, which states that a signature cannot be denied legal effect simply because it is made in an electronic form,” he writes. “The E-Sign Act preempts state law concerning electronic signatures to the extent that states haven’t adopted their own electronic signature laws.”

He also discusses the enforceability of e-signed contracts in the European Union.

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A physician signed a non-compete covenant, agreed to be enjoined if he breached, and allegedly did breach. But when his former employer asked a Providence, Rhode Island Superior Court judge to enter an injunction, the judge refused to prevent patients from being treated by a doctor of their own choosing, reports Paul E. Freehling of Seyfarth Shaw on the firm’s Trading Secrets blog.

The case involved a physician employed by a provider of health care services principally to nursing home residents. He signed an employment agreement with a non-competition covenant but several years late, he left the employer but continued treating its clients.  The company sued him and sought an order preventing him from competing with the provider.  The judge ruled, however, that the requested order would violate Rhode Island public policy.

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The protracted time for a construction case to get to trial and the attendant cost and expense has led the construction bar away from the courthouse and into the arbitration room, writes Ira M. Schulman of Pepper Hamilton LLP.

The prudent negotiation of an arbitration clause is as important to an arbitration as jury selection and jury charges are to litigation, Schulman explains.

He offers 10 individual pieces of advice, covering such topics as who can demand arbitration?, where will the arbitration be held?, how much discovery will be permitted?, how much discovery will be permitted?, and modification of award.

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An office of Economic Policy Report published in March 2016, entitled “Non-Compete Contracts: Economic Effects and Policy Implications,” estimates that 18% of all workers, or nearly 30 million people, are covered by non-compete agreements, reports Barry J. Waters on the website of Murtha Cullina. The Treasury Department is concerned that the prevalence of these agreements raises important questions about worker welfare, job mobility, business dynamics, and economic growth.

The article reports on the conclusions reached by the Treasury Department.

And it offers five take-aways for lawyers and employers.

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The most dangerous terms of a contract — the terms in the “boilerplate” — are often ignored and overlooked, writes Brad N. Mondschein in an article published on Pullman & Comley LLC‘s website.

“Because similar boilerplate language is included in all contracts, many parties ignore the language as unimportant ‘legalese’ that has no real effect on the contractual relationship and is only understood by lawyers,” he writes. “While there is boilerplate language that is standard and is looked at only in passing (such as the ability to sign the contract in counterparts or the fact that changes to the contract must be in writing signed by the parties), technology contract boilerplate language has become increasingly complex and important to the relationships of the parties.”

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Arbitration agreements are evaluated on a case-by-case basis, writes Vanessa L. Goddard, of counsel with Steptoe & Johnson.

While many are still disfavored, they are more likely to be upheld if they are not unconscionable, she writes in an article posted on the firm’s website.

“The procedural component of the unconscionability analysis usually deals with the formation of the agreement itself. This includes the characteristics of the parties (e.g., age, literacy, sophistication), the manner and circumstances under which the contract was executed, and whether terms of the agreement are hidden or complex, among other things.  The substantive component looks at the unfairness of the agreement,” according to the article.

She provides some tips that make arbitration agreements more likely to be upheld by courts in the employment context.

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