Matthew J. DeVries of Burr & Forman offers a few items to think about when drafting contracts, relying on a book titled “Courses on Drafting Contracts.” 

He quotes author and business attorney Peter Siviglia when he writes, “the contract will help define: (1) a transaction, such as the purchase of real estate; (2) a relationship, such as a partnership, or (3) a combination of both, such as a partnership to purchase and develop real estate.”

Other subjects include “A contract is a set of instructions,” and “A contract should include standard provisions.”

Read the article in Lexology.

After a trial court and intermediate appellate court had ruled that an arbitration clause in a consumer contract was unconscionable, the California Supreme Court reversed in a recent ruling, finding the clause was enforceable in Sanchez v. Valencia Holding Co., LLC, reports Liz Kramer in Stinson Leonard Street’s Arbitration Nation.

She wrote: “[T]he court found that because the buyer could not negotiate the provisions of the sales contract, he had established ‘some degree of procedural unconscionability.’ (The buyer did not have to prove he tried to negotiate the arbitration clause.)  The court could then address the buyer’s claims of substantive unconscionability.”

“This decision puts California squarely in the mainstream on the unconscionability of arbitration agreements,” she continued. “It also offers very useful guidance for California courts (or those applying California contract law) facing future arguments about the unconscionability of arbitration clauses.”

Read the article.

The International Association for Contract & Commercial Management and Iron Mountain offer a complimentary on-demand webinar covering the best ways to manage risk with both licensed software and SaaS applications and data.

“Eight out of every 10 new applications are being built for the cloud,” IACCM says on its website.” So, as your organization moves forward with contracting, how can you ensure that your applications and data are protected? Unlike on-premises software, your application and data both reside in the cloud. If something happens to your provider, you need to be prepared.”

Attendees will uncover answers to questions such as:
– What can I do proactively to safeguard my company in case something happens to my SaaS provider?
– How can I mitigate the risk of data loss?
– Are there templates/process documents I can use to evaluate my risk?
– Which terms and conditions should I include in my contracts?
– What are the best practices to safeguard SaaS applications and data?

Watch the on-demand webinar.

The oil price crashes of the 1970s led to a wave of nationalization and changes to petroleum legislation by oil-producing states. Contractual stabilization clauses could help international oil companies (IOCs) protect their interests should the same occur again, reports Pinsent Masons in its Out-Law.com blog.

“Stabilisation clauses can be an effective tool to improve an IOC’s negotiating position when dealing with a change in law affecting the terms of an upstream petroleum contract. It is important to have the right approach to negotiating stabilisation clauses to achieve a mutually beneficial position for the IOC and the host state,” write George Booth, Niazi Kabalan and Leo Shaw for the firm.

Read the article.

The 5th U.S. Circuit Court of Appeals, ruling in a vacatur of arbitral award case, found that an arbitrator exceeded his authority in a multiple-party, multiple-contract AAA arbitration by acting in accordance with one arbitration agreement, but contrary to the arbitrator appointment and forum selection clauses in other arbitration agreements involving an intervening party.

Baker & McKenzie associate Eileen Theresa Flynn, writing in an article posted on Lexology, wrote about PoolRe Ins. Corp. v. Organizational Strategies, Inc.

“Reviewing the vacatur de novo, the Fifth Circuit agreed that Ramos acted contrary to the express provisions of the PoolRe arbitration agreements and affirmed the vacatur decision,” Flynn wrote.

Read the article.

Kane Russell Coleman & Logan has posted an article by Karin Zaner on its blog, The Doctor’s Advocate, discussing 10 tips for physician employment contracts.

The article discusses the importance of reading and understanding the agreement before signing, leverage in terms of employment negotiation, non-compete obligations, non-solicitation and non-ownership obligations, HIPAA, privacy and trade secret confidentiality, income guarantees, logistics, finding a good match, recognizing red flags, and resisting the urge to resign.

Read the article.

China-based employers are required to have written employment contracts with all full-time employees, and if those contracts are not in place, the employer could be on the hook for double wages, reports Dan Harris on Above the Law.

“It is important to note that the above rules apply to foreign employees working in China and that some Chinese labor arbitration commissions and courts do not recognize anything other than Chinese language agreements as a valid written employment contract.” he writes.

He wrote that any business employing anyone in China without an up-to-date written contract in Chinese is at risk for a substantial penalty.

Read the article.

In many software development agreements, the customer has to accept the software before the contract is complete, Scott & Scott reports on its Software & Copyright Law Blog.

“If the product is not acceptable, the parties have a contractually described way to address issues before final payment is due,” writes Scott & Scott IP lawyer Brian Kirkpatrick. “However, in software-as-a-service (SaaS) transactions, SaaS providers often argue that the SaaS is available upon execution of an agreement and software delivery and acceptance is not required.”

He adds that, although physical delivery of software is not necessary for SaaS, delivery is still an important issue to address.

Read the article.

A complimentary webinar presented by Davis Wright Tremaine will discuss the negotiation of Health Information Technology (HIT) contracts, identifying tips and traps based on real world experience with contract successes and failures.

The webinar will be Tuesday, August 11, at 10 a.m. Pacific time.

“Frequently the legal contract is the last hurdle to beginning a new HIT project, and, for many health care organizations, the process can be a source of frustration in acquiring new technologies,” the firm says on its website. “This session will focus on best practices for maximizing the effectiveness of contract negotiations for HIT projects. We will examine key legal issues and practical implications arising from the process and the substantive contract terms.”

Register for the webinar.

The U.S. Supreme Court recently found that a party licensing or selling its patent rights cannot receive royalties after a patent expires, regardless of whether or not the contract allows for the payment of such royalties. But an article published by Womble Carlyle Sandridge & Rice says that contract drafters can still achieve payment deferral and risk allocation without a long-term royalty distribution using creative and strategic provisions.

“Expiration of a patent also terminates the rights to collect royalties on that patent – even if a license contract says otherwise,” Theodore Claypoole writes in the article. “All businesses are reminded to check the termination date of any patent licensed to the business for use of underlying technology. While the license may remain valid, the licensor’s right to collect royalties may be invalid. While it is only natural for patent holders to want to profit from their patents as long as possible, according to the Supreme Court patent holders can only earn royalties for sales made before their patents expire. Royalty-bearing licenses like the one in Kimble should be careful in how payments are allocated, or risk partial or total invalidation.”

Read the article.

Exigis LLC, a minority-owned company, is suing the city of Dallas in federal court for violating its own policy about awarding points for involving minority-owned businesses seeking city contracts, reports The Dallas Morning News.

The issue is whether businesses like Exigis, which lost out to a white-owned company, should get credit just for being owned by minorities and women.

“The Exigis lawsuit could settle the differences of opinion as to whether it’s legal for local governments to consider race in awarding contracts,” The News report says.

Read the article.

When you first enter a business deal, no one ever expects things to go poorly, writes Joe Covelli of Covelli Law Offices in Pittsburgh.

But many of these types of situations often go awry, and contract disputes are becoming a more common concern for businesses throughout the country.

“While each party enters a contract agreement after carefully reviewing a contract and determining its pros and cons, no contract is perfect,” he writes. “Some business deals even require the intervention of an experienced contract attorney to help guide the proceedings.”

The article discusses potential issues, performance under a contract, and the litigation process.

Read the article.

Pillsbury Winthrop Shaw Pittman has posted an article about the American Arbitration Association’s revised Construction Industry Arbitration Rules and Mediation Procedures which became effective July 1, 2015.

George Haley, John Heisse, Clark Thiel and Robert Thum write that, although some changes are relatively modest, others expand the powers of the arbitrator and may alter traditional assumptions underlying the selection of arbitration as a dispute resolution process for construction projects.

“For example, the Rules now provide a procedure for emergency relief that may result in more mid-project disputes being taken to arbitration or court, as the new Rule R-39 provides a party can seek emergency relief from either the AAA or a court, without violating the agreement to arbitrate,” they write.

Read the article.

Legal issues that most often come to mind when a company is closing a facility are terminating a lease or selling the asset(s), but those are just the tip of the iceberg, says Foley & Lardner in a Lexology.com article written by Nicholas Williams, an associate and litigator. He writes that potential problems may arise out of contracts seemingly outside the facility closure’s scope.

“Regardless of the reason, myriad legal considerations accompany a decision to close a facility. For example, we previously addressed the HR considerations. But, in many cases, issues can arise from provisions in unseen depths of contracts,” he writes.

The article offers five tips designed to help manufacturers avoid unwanted contractual surprises in the facility-closing process.

Read the article.

An article posted on the website of Neal, Gerber & Eisenberg discusses the adoption of the estoppel principle as a remedy for policyholders who have been wrongfully denied a defense by their liability insurers, as covered in the American Law Institute’s Preliminary Draft No. 1 of the Restatement on Liability Insurance.

“The rule that the duty to defend is triggered by unproven allegations, referred to as the ‘potentiality standard,’ recognizes the reality that the insured has no control over how the allegations are plead in liability matters,” writes Jill Berkeley.

“Estoppel, or forfeiture of defenses against coverage, in the end, is the penalty for a wrongful breach of the duty to defend. If there were no estoppel or additional risk to the insurer, there would be no downside to the insurer for wrongfully denying the policyholder the benefit of its bargain,” she writes.

Read the article.

Seyfarth Shaw reports on a contract case in which a California court found that an arbitration agreement between Texas-based Neiman Marcus and a California-based employee was unconscionable because the agreement designated Texas law as the law to apply.

“Many companies doing business in California have implemented arbitration agreements for resolving disputes with their employees,” the article says. “Companies headquartered in states other than California often prefer to use the law of their own state as the law to govern their contracts. In the context of arbitration, a valid choice of law can tell the arbitrator what law to apply.”

The case is Pinela v. Neiman Marcus Group, Inc.

“This holding should cause non-California employers pause prior to implementing an arbitration agreement that chooses a law other than California’s for disputes involving California employees,” the article says.

Read the article.

The 5th U.S. Circuit Court of Appeals has further addressed the area of contract and insurance interplay with its decision in Ironshore Specialty Insurance Co. v. Aspen Underwriting Ltd. et al., No. 13-51027, (5th Cir. June 10, 2015), reports Liskow & Lewis in an article posted on Lexology.com.

“The appellate court was asked to determine whether, under Texas law, contractual requirements in a master service agreement obligating the contractor to name the oil company as an additional insured and provide $5 million in additional insured coverage served to limit the amount of insurance provided to $5 million notwithstanding that the liability limit of the contractor’s insurance program was significantly greater ($50 million),” the article says.

The Court ultimately concluded that the “Insured Contract” provision discussed in Deepwater Horizon was sufficient to incorporate the limitations of the MSA.

Read the article.

Not all construction contracts are written, and contractors don’t always provide a written policy at the end of a project, writes Austin B. Calhoun of Florida-based Jimerson & Cobb. This raises the question: are oral multi-year warranties enforceable?

The article discusses a case involving Florida’s Statute of Frauds, which bars the enforcement of oral agreements that are not to be performed within one year. But Loper v. Weather Shield Mfg., a recent Florida First District Court of Appeals case, appears to have opened the door to enforcing oral multi-year warranties.

The article focuses on the Loper holding, as it applies to the Statute of Frauds and oral warranties for more than one year.

Read the article on Lexology.com.

Although, typically, a commercial general liability insurance policy doesn’t cover breaches of contract, there are exceptions to that rule, and according to one recent decision those exceptions include breach of warranty claims, according to an article published by Spencer Fane Britt & Browne.

In Continental Cas. Co. v. Greater Omaha Packing Co., Inc., a wholesaler sued its supplier, asserting claims for breach of contract, breach of express warranty (premised on the product guarantee), and breach of the implied warranties of merchantability and fitness for particular purpose.

The court found that the contractual liability exclusion didn’t apply and, even if it did, the exception to the exclusion applied.

Read the article.

A recent settlement by a private defense and government contracting company should put government contractors on notice of the corruption risks and the potentially severe consequences of FCPA violations, writes Fatema Merchant of Sheppard, Mullin, Richter & Hampton.

She describes how IAP Worldwide Services Inc., a private defense and government contracting company, agreed to pay $7.1 million to settle criminal charges of the U.S. Foreign Corrupt Practices Act (FCPA) related to bribing Kuwaiti government officials to secure a Kuwaiti government contract.

And on the same day IAP’s Former Vice President of Special Projects and Programs also pleaded guilty to FCPA charges.

“For U.S. government contractors, the opportunities to provide services and expertise to foreign governments are lucrative, but this enforcement action also highlights the risks associated with obtaining such contracts,” Merchant writes.

Read the article.