A 7th U.S. Circuit Court of Appeals ruling in Northbound Group, Inc. v. Norvax, Inc. indicates that courts will not add parties to a contract after the contract has been negotiated, writes Stephen M. Proctor, a principal in Masuda Funai Eifert & Mitchell Ltd.

The article, published on Lexology.com, describes the case: “Norvax agreed to acquire the assets of Northbound and, for this purpose, formed an acquisition vehicle called Leadbot LLC. The result was an asset purchase agreement executed in February 2009 by and between Northbound and Leadbot LLC. Norvax was not a party to the asset purchase agreement. Northbound was to be paid through an “earn-out” calculated as a percentage of the monthly net revenue of Leadbot LLC.”

Northbound later sued Norvax and Leadbot, claiming a breach of contract.

“Once a contract is negotiated, a party will likely be unsuccessful in persuading a court to rewrite the contract or to add provisions that may not have been considered, are erroneous or, in hindsight, seem unfair,” Proctor writes.

Read the article.

BakerHostetler’s International Disputes practice team will present the first program in a series of in-depth presentations and discussions that explore key legal and commercial issues unique to international contracts. It will include an in-person event and a webinar.

The program will be Thursday, Oct. 29, 2015, from 7:30 – 9 a.m. CDT for the in-person event (WEBINAR will start at 8 a.m. CDT).

Each presentation will be taught by experts from the legal and commercial sectors.

The event will cover:

• Choice of law – avoiding unintended consequences
• Choice of forum – choosing between arbitration or litigation in a foreign land
• Comparison of international arbitration forums – the difference between various international arbitration tribunals
• How to limit the length, scope, and cost of proceedings
• Currency repatriation – how do you make sure you can get paid or return the money home?
• Enforceability or avoidance of an award or judgment

Register to attend in person.

Register for the webinar.

A West Texas jury has awarded more than $43 million to a group of oil and gas investors after finding that their business partners had breached fiduciary duties by crediting themselves for financial contributions they never made and by excluding the investors from a lease acquisition project after it became apparent that the project would be tremendously successful.

Dallas attorneys Frank L. Branson, Eric T. Stahl and Debbie Branson of The Law Offices of Frank L. Branson represented one of the investor groups, consisting of Dallas-based Tiburon Land and Cattle LP and Trek Resources Inc. on behalf of the Three Finger/Black Shale Prospect Partnership. The Fisher County trial was heard in 32nd District Court in Roby.

“In Fisher County a deal is a deal,” said Branson in a report on the firm’s website. “It was very clear to the jurors that the defendants did not honor their word and took opportunities that did not belong to them, and that’s a very serious matter in West Texas.”

Read the article.

A federal district court in New York recently held that a creditor could not be held liable for aggressively protecting its own interests when the plain language of the relevant documents permitted the actions taken by the creditor, according to a legal update from Dechert‘s Business Restructuring and Reorganization Group.

Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank, N.A., No. 11-cv-7670 (RJS) (S.D.N.Y. Sept. 30, 2015) arose out of an adversary proceeding initiated by Lehman Brothers Holdings Inc. and its affiliated against JPM, the update reports.

“The Debtors advanced multiple causes of action and theories against JPM, alleging that JPM improperly and unfairly appropriated value from the Debtors (thus harming their creditors) in the months leading up to LBHI’s bankruptcy filing by allegedly strong-arming the Debtors into providing it with additional collateral and protections,” it continues. “The Court, however, entered summary judgment against LBHI on nearly all counts because it found that the written contracts between JPM and LBHI expressly permitted JPM’s purportedly inequitable actions.”

Read the article.

Savvy owners – especially those with experience in litigation – know the importance of avoiding the growing variety of clauses that limit liability for construction industry vendors, writes Eric A. Grasberger of Stoel Rives LLP. Likewise, general contractors and architects need to be on guard against sub-tier liability waivers often lurking in the fine print or at the end of lengthy proposals.

“Owners are optimists and contractors are negotiators,” he writes. “Maybe this explains the increasing (and for owners, disturbing) presence of liability waivers in construction and design contracts.”

He discusses some of the clauses that should be considered carefully, including the consequential damages (CD) waiver, the limitation of liability (LOL), the warranty illusion, and options.

Read the article.

James Waite, writing in Rental Management Magazine, addresses the problem equipment rental operators can face when a large customer wants to revise a contract or use their own.

“This is fairly commonplace when dealing with larger customers, particularly schools, governmental entities and some contractors,” he writes. “Importantly, there is no ‘established’ set of rules for dealing with these issues, making it difficult for rental operators to know whether they’re accepting merely ‘industry standard’ modifications or instead, assuming potentially catastrophic liabilities.”

He offers a list of provisions that operators should insist on retaining and another list of provisions that should be rejected.

Read the article.

Common law judicial doctrines in almost every state discourage and restrict arbitration agreements covering personal injury or death claims, write Manton G. Grier and Marcus A. Manos of Nexsen Pruet. They see this point particularly regarding admission contracts to nursing homes or assisted-living facilities, which have superior bargaining power and may offer services on a “take it or leave it” basis.  The Federal Arbitration Act (FAA), on the other hand, encourages arbitration of claims.

“Because the arbitration laws stack the deck against a facility, there is no foolproof way to draft an arbitration agreement; what may be found enforceable by one judge may be found unenforceable by another,” they write. “With so many defenses available to plaintiffs, a bullet-proof agreement just doesn’t exist.  Nevertheless, there are five ways a facility can improve the odds that a court will enforce the agreement.”

Read the article.

CobbleStone Systems has published a white paper designed to help companies implement new contract management software, beginning with preparation and continuing through the complete process.

One of the key steps, the paper explains, is getting key stakeholders on board with the process. Implementation will require a plan and participants will have to stick to it.

More guidelines include mapping out the process, starting out simple, and dedicating the time required for the process without rushing.

Download the white paper.


 


















Hidden perils in oilfield master service contracts have the potential to bring even a thriving company to its knees, making even big business with big clients a big mistake, writes  Jordan J. La Raia in Gardere’s Texas Energy Law blog.

“The good news is that even today big and small operating companies usually expect to negotiate (even with the small guys) and a few small requests can make the difference between meeting budget and bankruptcy,” he writes, before discussing three red flags that could be found in the next contract.

Those flags include the areas of insurance, enforceable indemnities, and catastrophic events.

Read the article.

As intellectual property licensing continues to grow more prevalent, legal practitioners and business personnel are being asked to craft and negotiate agreements that can significantly impact a business’s ability to compete in a particular field or market, according to an article posted by Farella Braun + Martel LLP.

Authors Eugene Mar and Erik Olson collect a number of best practices learned the hard way—through litigation of agreements and arrangements that went awry. “Whether negotiating a complex cross-license of intellectual property rights or drafting a supplier agreement, practitioners should consider the license provisions and practice notes discussed below to ensure that a party’s licensing objectives are met,” they write.

Read the article.

Reed Smith has posted a discussion on drafting and negotiation commodities contracts, with a focus on Chinese counterparties with emphasis on successful enforcement in China.

Simon Jones, William J.G. Barber, Calvin Chan, Ivan Chiang  wrote the article.

“It is inevitable that some commodity trades end in dispute, particularly in current markets where prices are generally low and have been falling. This may happen in any jurisdiction, although this article focuses on China and how you can minimise risks relating to enforcement,” the authors wrote in the introduction.

Read the article.

A Bloomberg BNA article by two Holland & Knight lawyers on blockchain technology and its potential application to the legal industry sets out basic concepts and terminology surrounding smart contracts.

While there is no universally accepted definition of smart contracts, write partner Joe Dewey and associate Shawn Amuial, “most people involved with the blockchain would expect at least the following three elements in order to consider something to be a smart contract: i) the transaction must involve more than the mere transfer of a virtual currency from one person to another (i.e., a payment transfer), ii) the transaction involves two or more parties (as every contract must), and iii) the implementation of the contract requires no direct human involvement after the smart contract has been made a part of the blockchain.  It’s this last element that makes these contracts “smart,” and therefore, merits a more detailed discussion.”

Read the article.

Although major organizations rely on contracts to define nearly every aspect of their business, from sales to vendor relationships to liability, sub-par processes are undermining efficiency and efficacy in the general counsel’s office.

A complimentary white paper from Exari discusses survey findings that highlight gaps in risk and revenue insight created by poor contract management practices.

Exari surveyed more than 90 corporate and general counsel to better understand the impact of common contracting trends and pain points on productivity and risk assessment at organizations handling large volumes of contracts. The report lays out these findings, as well as tactics for preventing key contract information from slipping through the cracks, empowering general counsel to take a seat at the executive table during high-stakes events or crises.

Download the white paper.

Merrill DataSite is offering a complimentary evaluation tool that addresses the challenges faced in the ever-changing world of corporation compliance. This tool provide a process for evaluating compliance challenges and a method for considering solutions.

The process also helps readers learn more about specific compliance challenges, as well as this three-step program to determine a company’s specific needs:

• Assess the current compliance challenges and impacts
• Review the existing program against a standard of best practices
• Create a comprehensive program that ensures effective compliance

Download the paper.

Charles Sartain, writing in Gray Reed & McGraw’s Energy and the Law blog, uses a football metaphor to describe how a negotiating party could fail to score an enforceable contract while near the end of the negotiation process.

He describes a case involving the sale of a 2,232-acre Texas ranch and the sale of an oil and gas lease on the property. A broker agreed to sell the tract even though he didn’t have a brokerage agreement, and time was of the essence. During the process, the broker and the seller made offers and counteroffers about the commission and other benefits to the broker.

The appellate court found that a counteroffer operates as a rejection of the original offer, thus no agreement was reached.

Read the article.

In a case involving “clickwrap” and “signwrap” agreements, the Eastern District of New York denied a motion to dismiss and compel arbitration filed by an in-flight wifi provider, according to Buckley Sandler LLP in its InfoBytes blog and posted on JDSupra.

“At issue in the motion to dismiss was the enforceability of two separate agreements used to enroll customers, and in particular terms in those agreements related to mandatory arbitration and exclusive venue, which the defendant sought to invoke,” the firm wrote.

Plaintiffs argued that the agreements should not be enforced because the website design was intended deliberately to hide terms and were never seen or agreed to by them. The court denied the defendant’s motion to dismiss and compel arbitration, concluding that the agreement was unenforceable.

Read the article.

Most contracts prose is dysfunctional, but training is available to help contracts professionals draft clearly and concisely, write Chris Lemens and Kenneth A. Adams on ACC Docket. It helps to supplement training with centralized initiatives, they contend.

“Any given contract will likely be riddled with deficient usages that collectively turn contract prose into ‘legalese’ — flagrant archaisms, botched verbs, redundancy, endless sentences, meaningless boilerplate, and so on.”

They write that it’s possible to train contracts personnel in how to draft and review contracts consistent with a set of guidelines.

Among those guidelines: lose the archaisms, gain control of verbs, stop using the phrase “best efforts,” and don’t rely on mystery usages.

Read the article.

An article on Holland & Hart’s Health Law Blog provides a 40-point checklist that can be used when preparing or reviewing contracts involving the work of physicians.

Kim Stanger, Pia Dean and Bill Mercer wrote the article.

Topics covered include regulatory compliance, written agreement, nature of relationship, services, schedule, location, independence, intellectual property, use of information, outside services, qualifications, representations and warranties, performance standards, medical records, employer obligations, compensation, benefits, exempt status, referrals, assignment of fees, liability insurance, workers compensation insurance, indemnification, terms, termination, post-termination obligations, confidentiality, noncompetition, nonsolicitation, penalties for violation, notice, assignment, governing law and venue, alternative dispute resolution, entire agreement, meaningful use assignment, construction, no third-party beneficiaries, and survival of terms.

Read the article.

Failure to follow contractor licensing laws can have draconian consequences, writes Kraftson Caudle of Virginia on its blog.

“In California, for example, if a contractor is not licensed at all times while performing work, which includes bid submittal, then
the contractor is not entitled to any future payment and forfeits all prior payment,” the firm writes.

“In some states, like Virginia, a contractor’s good faith effort to comply with the licensing law is a factor
in determining whether that contractor may recover in equity,” the article continues.

Read the article.

Non-disclosure agreements or “NDAs” are often the first contract entered into by parties desiring to do business together, but it is important not to rush to sign a form NDA just to get the conversation started, write Emily R. Lowe and Glen Rectenwald on a Morgan Lewis blog.

They describe key provisions and potential pitfalls that should be considered when negotiating NDAs, including mutuality, requirements to label confidential information, restrictions on use and disclosure, definition and standard exclusions, residuals clause, disclaimer of consequential damages, and term.

Read the article.