Dan Harris writes in the Above the Law blog about how U.S. companies relying on a Letter of Intent (LOI) or a Memorandum of Understanding (MOU) detailing the terms of their proposed China deal may be exposing themselves to substantial liability.

“Most U.S. (and many European companies) assume that no party is exposed to any liability during the negotiation period as liability arises only after the parties have executed a formal, written contract. If their written document states that it is non-binding, no liability can arise,” he writes. But the rule in China is the opposite.

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The New Year is a good time for a company to analyze any form documents that may need to be revisited, including one of the most important in protecting your business, your liability waiver, writes Chelsey Ziegler in the Health & Fitness Law blog.

She writes that this analysis tends to be often overlooked until something tragic happens.

“The timing is also quite perfect for this because for new clients, this will be the first time being presented with your revamped form and, for existing clients; it tends to be a practical statement to say ‘everyone is required to resign the 2016 waiver that is now in place.'”

The article discusses the enforceability of waivers, consideration, applicable risks, representations and warranties, release language, and five pitfalls to avoid when drafting waivers.

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A recent summary order from the United States Court of Appeals for the Second Circuit – which exercises federal appellate jurisdiction over New York, Connecticut and Vermont — serves as a reminder that an employer’s reliance upon its employee handbook can also prove its undoing, writes Michael McKeon of Pullman & Comley in an article published on JDSupra.com.

“In Langenkamp v. Olson, the Second Circuit reversed the federal trial court’s dismissal of a breach-of-contract claim brought by a non-tenured faculty member of New York University. The appellate court held that by expressly incorporating the Faculty Handbook into its offer of employment, NYU had transformed its provisions into contractual terms,” McKeon writes.

His article explains that it is critical that employers use care when drafting and referencing such handbooks.

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The U.S. Supreme Court has reversed a California appellate court’s refusal to enforce an arbitration provision in a contract, concluding that the court’s decision is incompatible with the Federal Arbitration Act and prior Supreme Court precedent, reports John G. Papianou of Montgomery McCracken Walker & Rhoads LLP.

DirecTV, Inc. v. Imburgia involved two DirecTV customers who sued the company in California state court, claiming early termination fees in their service agreements violated California law, Papianou wrote in an article published by Lexology.com. DirecTV cited a provision in the service agreement that called for binding individual arbitration of all disputes between DirecTV and its customers. The trial court denied the request and DirecTV appealed.

He wrote that the message is clear: arbitration agreements that waive class actions or class arbitration are enforceable. And state-court judges must enforce them.

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The insurance relationship is contractual, but when policyholders claim insurers failed to honor their obligations, they typically invoke the tort of “bad faith,” writes Robert D. Helfand of Carlton Fields Jorden Burt.

“When courts try to explain this anomaly, they cite features of insurance making it uniquely important that parties respect each other’s interests. Courts often say these features make the duty of good faith ‘reciprocal,’ ” he explains.

He discusses some cases that provide another reason for asserting that the insured’s bad faith injured the insurer in ways that were foreseeable when the contract was made. Even if the argument falls short, it might still create a basis for reducing the insurer’s exposure.

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As demonstrated by two recent cases, the trends of delegating arbitrability questions to the arbitrator, and precluding parties from contractually modifying appellate rights, are here to stay, writes Timothy J. Abeska of Barnes & Thornburg in an article published by the National Law Review.

In Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015), a dispute in an employment agreement, Brennan sued his employer, Opus Bank, claiming he was entitled to terminate his employment for “Good Reason” and collect a severance benefit. The bank treated Brennan’s termination as a voluntary resignation which did not trigger an entitlement to severance.

The other case was Atlanta Flooring Design Centers, Inc. v. R.G. Williams Construction, Inc., 333 Ga. App. 528, 773 S.E.2d 868 (Ga. Ct. App. 2015).

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ContractRoom has published an ebook on building a transformative contract management practice.

The book covers:

1. The roles and duties and essential qualities of a top contract manager
2. How to assess candidates for suitability during the recruitment process
3. What can and cannot be controlled in the contract management process?
4. Planning for the transition of arriving and departing contract manager employees
5. Monitoring the productivity of your contract managers
6. Looking towards the future of contract management

Download the ebook.

A recent Delaware Court of Chancery decision illustrates why anti-reliance and exclusive representations contractual language must not be overlooked as meaningless “boilerplate,” writes Brad Reid, Senior Scholar, Dean Institute for Corporate Governance and Integrity, Lipscomb University.

“Additionally, an integration clause means that the written agreement is all that one should rely upon,” he writes in the article. “An individual should not slip into a comfortable feeling of having a personal relationship in a commercial transaction. It is important to recall that modern business involves arms’ length transactions requiring a high degree of due diligence.

The case is Prairie Capital III, L.P. v. Double E Holding Corp.

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In a recent article, ContractRoom examines some of the best practices for determining whether candidates for contract manager possess the necessary qualities to perform the job.

The article starts with tips about the pre-interview process and then progresses to the questions that should be posed to the applicants.

Most of those questions involve asking the candidates to describe negotiation and management situations they’ve faced in the past and having them outline how they reached the decisions in those cases.

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Termination rights are a crucial and frequently negotiated aspect of complex commercial agreements, write Peter M. Watt-Morse and Glen Rectenwald in the Morgan, Lewis & Bockius blog, Sourcing @ Morgan Lewis.

In addition to providing protection in the event that a vendor defaults, the ability to walk away from negotiations regarding modifications or renewals can also be a powerful tool for creating negotiating leverage,” they explain. “Flexible termination options, termination assistance, and other termination rights can manage the risks of transitioning to a new provider and provide credible alternatives for future negotiations.”

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Consumer Financial Protection Bureau determined that pre-dispute arbitration clauses harm consumers by forcing them to sign or click away their right to pursue future remedies in a court of law, reports Julie Goldsmith Reiser is a partner at Cohen Milstein Sellers & Toll PLLC in an article published by Bloomberg BNA.

Consumers “undervalue the importance of mandatory arbitration clauses even in the rare instances where consumers might be able to opt out.” she writes. “CFPB correctly concluded that binding individual customers to mandatory arbitration before a dispute arises, rather than encouraging its voluntary use, is harmful to public interest and consumer protection.”

She details the CFPB’s study and results and examines a critique offered by the Mercatus Center.

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D.C. Toedt III, an attorney and adjunct professor at the University of Houston Law Cen­ter, has published an article that he calls “a useful teaching case for people drafting (i) merger-and-acquisition agreements, and (ii) related employment agreements, especially those being offered to employees of an acquired company.”

The article is on the On Contracts website.

The case is Cardoni v. Prosperity Bank, No. 14-20682 (5th Cir. Oct. 29, 2015), involving the acquisition of an Oklahoma bank by a Texas bank.

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In a post on the Business Law Prof Blog, Joan MacLeod Heminway, professor law at the University of Tennessee, discusses the question: Is an LLC operating agreement a contract?

She writes that “with judicial and legislative attention on freedom of contract in the LLC, the status of the LLC as a matter of contract law may shed light on the extent to which contract law can or should be important or imported to legal issues involving LLC operating agreements.”

The writer discusses some recent court rulings that address the issue, and says there are some other LLC questions that may be impacted by the determination that an LLC operating agreement is or is not a contract.

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CobbleStone Systems, a provider of contract lifecycle management software, announced it has launched an enhanced Microsoft Word App for Contract Insight Enterprise Edition. The latest version of Contract Insight Enterprise offers an Install Pak with an innovative MS Word Application for seamless contract revisions and version control.

“CobbleStone has been providing industry-leading contract management software which allows legal resourced to more easily track, manage, negotiate and approve organizational contracts for over 20 years,” the company said in a release. “We understand the need for a seamless connection with MS Word and our web-based CLM to effortlessly track all versions of each contractual document. Our new features save our clients’ time and effort during the contract redlining process.”

The release continues:

CobbleStone Systems Corp. is a leader in user-friendly, enterprise contract lifecycle management software solutions. CobbleStone has been a best-of-breed vendor since 1995, provides the benefit of years of experience, is a Federal GSA vendor, is rated by Gartner, Forrester and Dun & Bradstreet, and offers one of the most feature-rich products on the market.

When heading off to China, foreign companies all too often make the mistake of trying to protect their IP from China by using a U.S.-style non-disclosure agreement (NDA), writes Dan Harris of Harris Moure. In a new article on the website of Forbes, he explains how to protect intellectual property from China with a China appropriate NNN (non-use, non-disclosure, non-circumvention) agreement.

The article focuses on why U.S.-style NDA agreements do not work for China.

“The Chinese company that steals your idea does not do so to reveal it to the general public. It steals your idea to use for its own benefit. This means that your contract with Chinese companies must make clear that whether the information provided is a secret or not, the Chinese factory agrees not to use the information in competition with you.” he writes.

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A China-centric written contract is an effective tool for doing businesses in or with China, explains Steve Dickinson of Harris Moure in an article published on the China Law Blog.

“A first step in creating this effective tool is to carefully follow the rules for execution,” the explains. “Chinese courts are bureaucratic and formalistic. Make use of that tendency so that you can prevail. Don’t blunt the edge of your instrument with sloppy execution procedures. A casual approach to execution is neither appropriate nor effective for China. A failure to follow China contract law formalities can lead to a Chinese court not enforcing your contract.”

“Chinese courts are hyper-technical when working with written documents. If there is any surface flaw, a party will object to the authenticity of the document and then force the party offering the document to prove its authenticity,” he writes in the article.

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Chris Brown, founder of Kansas City law firm Venture Legal, offers seven quick factors to review in every contract to help you protect your interests.

In the article published on SiliconPrairieNews.com, he starts his discussion with the importance of properly naming the parties. “The first thing you need to do is make sure the parties are identified correctly. If you are a business, then make sure you are signing the contract on behalf of the business and not yourself individually.”

He continues the discussion with the issues of naming the parties, obligations, payment terms, termination rights, intellectual property, confidentiality, and miscellaneous terms.

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In a new article on Lexology.com, Jonathan Reich of Womble Carlyle Sandridge & Rice LLP discusses the difference between an insurance policy with a deductible compared to one with a self insured retention (“SIR”) and how that impacts business contracts.

“Deductibles and SIRs are often conflated; the differences are poorly understood by those outside of the insurance industry as well as the practical implications,” he writes. “Two policies can have a $1 million limit, with the only difference between the two policies being that one has a $100,000 deductible and the other a $100,000 SIR.”

He explains the differences, but adds that these simple distinctions have stark real-world implications.

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A contract manager’s role involves an enormous amount of relationship building as well as highly developed problem solving skills, ContractRoom says in an article on its website.

“Organizational skills are also required but advances in technology have meant that contract managers can relax a little as software can be programmed to guide them at each stage of the process. This means key deliverables can be met and all processes and procedures can be complied with without contract managers having to rely solely on their memories or manual organizational abilities,” according to the article.

The article outlines principles of relationship management, problem solving and organizational skills.

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A contract between an executive and an employer does not always have to be in writing, writes Jason M. Knott of Zuckerman Spaeder in an article published on Lexology.com.

“Sometimes, employees can enforce oral promises,” he writes. “Agreements can also be implied based on the parties’ conduct, even when no one made a promise, either in writing or orally.”

He discusses a ruling in a Third U.S. Court of Appeals case, Steudtner v. Duane Reade, Inc., to shows that contracts that aren’t in writing can be much harder to enforce.

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