A post by Fredrikson & Byron P.A. highlights five of the most commonly overlooked IT/IP provisions and considerations for banks as they review and negotiate software contracts.

The authors discuss how the banking community has become increasingly reliant upon third-party resources, chief among them: software. This two-part series focuses on these partnerships with vendors that expose banks to a whole new world of risk and liability.

Banks need to ensure the products and vendors in which they invest will operate reliably, compliantly, and safely – and that the bank’s rights and remedies are preserved in the event of failure, according to Fredrikson & Byron’s Caitlin B. Houlton Kuntz and Nadja Baer .

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A post on the Tech & Sourcing blog of Morgan Lewis offers 10 contractual mechanisms for providing meaningful performance commitments and consequences if the commitments in a system development or implementation contract are not met.

For example, system implementation deals costing 300% more than the original budget, go-live dates for development projects being way past the scheduled dates, and deliverables that do not meet the customer’s expectations, write Barbara Murphy Melby and Morgan L. Richman.

They discuss numerous contractual mechanisms that are designed to provide guideposts and checkpoints to enable success.

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The Eight Circuit has rejected a plaintiff’s claim that an arbitration clause in a retainer agreement she signed with a law firm was unconscionable, according to Carlton Fields’ Reinsurance Focus.

The plaintiff claimed she had received a call from a purported agent of the firm informing her of a purported life-threatening medical condition, leading her to have surgery that she considered to be less than successful. She sued the law firm and other defendants, and the firm sought to compel arbitration pursuant to a retainer agreement.

The district court found the arbitration agreement was unconscionable and refused to compel arbitration. Despite acknowledging that the circumstances that gave rise to this lawsuit were “troubling,” the Eighth Circuit determined that the retainer agreement was not procedurally unconscionable.

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Before agreeing to a real estate sales contract or lease, the parties may prepare a letter of intent, term sheet or other form of preliminary agreement (together, called here an “LOI”), writes Stephen Siegel of Novack and Macey.

An LOI reflects that the parties have agreed on certain important terms of a deal, though not on all of its provisions or details.

“A well-crafted real estate LOI should address the parties’ intentions on such questions in clear terms. An LOI that is unclear as to what, if anything, it obligates the parties to do can invite uncertainty, disagreements and even litigation,” Siegel writes.

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A Davis Wright Tremaine post illustrates the application of a forum selection clause in a contract.

In Down-Lite International, Inc. v. Chad Altbaier, a federal magistrate judge denied defendant’s motion to transfer venue from Ohio to California largely because the parties’ forum selection clause designated Ohio as the venue for disputes.

Down-Lite’s holding illustrates that courts tend to enforce forum selection clauses unless there is a compelling showing of prejudice to the party opposing the agreed-upon forum, according to the post.

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While prohibiting disparagement of co-workers, products and services is lawful, prohibiting disparagement generally of the employer, management, or policies is not, according to a memo from the  National Labor Relations Board, the Office of General Counsel.

Fiona W. Ong discusses the memo in an article for Shaw Rosenthal.

The memo was in part a response to a law firm’s employee agreements that contained a provision prohibiting critical comments about the firm. Several former employees posted negative reviews about the firm on various websites, including Glassdoor.com, Indeed.com, Avvo, Yelp, and Yahoo.business. The law firm then filed suit against them for breach of contract and defamation.

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The Morgan Lewis Tech & Sourcing blog discusses a model agreement developed by the Clearing House as a voluntary starting point to facilitate data sharing between financial institutions and fintech companies.

The model agreement covers such provisions and concepts as flow-down obligations, data breach, liability, warranties and disclaimers, intellectual property, disclosure and consent, termination and suspension, and assignment.

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Lewitt Hackman discusses two recent cases concerning franchise agreements, one involving a forum selection clause and the other covering indemnification.

Inn the first case: “A California Court of Appeal held that courts should not enforce forum selection clauses in contracts that also contain a jury waiver. For franchisors that have California franchisees, this ruling could complicate the ability to litigate claims in their chosen forum.”

And in the second case, a federal appellate court held that a franchisee must indemnify a franchisor for its litigation defense costs, vacating a district court’s order of summary judgment for the franchisee.

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The office of the National Labor Relations Board’s general counsel has released an advice memorandum finding an employer violated federal labor law by requiring employees to sign a broad non-disparagement agreement at the time of hire, according to a Kramer Levin post.

The memo referred to a case in which a law firm required all newly hired support staff and attorneys to sign an employment agreement containing a non-disparagement provision, according to the post’s authors, Kevin B. Leblang and Emily M. Wajert.

The GC rejected the law firm’s reasoning for the broad provision, explaining that “[t]he employer’s asserted interest . . . is not a unique interest nor strong enough to outweigh the significant interference the [provision] has with employee rights.”

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A post by Davis Wright Tremaine proposes that professional services and particularly IT outsourcing agreements provide a better model for analytical artificial intelligence services than the widely used cloud services contracts.

“AI services have already become an important component of the IT portfolio for many large and small businesses,” writes Patrick E. Basinski. “The easy application of existing cloud services agreements as a contractual structure for AI services has helped accelerate AI’s adoption. As the reach of AI expands, new structures are needed to drive adoption of a set of potentially valuable AI solutions.”

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The U.S. District Court for the Northern District of Texas compelled arbitration in a putative Fair Labor Standards Act class action based on language in a “notice to employees” that put the plaintiffs on notice that they were agreeing to arbitrate claims in an incorporated (and hyperlinked) arbitration agreement, according to Carlton Fields; Reinsurance Focus.

Author Brendan Gooley adds that the court also rejected various other defenses to arbitration raised by the plaintiffs in an attempt to avoid arbitration.

The court found that the notice to employees contained sufficient language to incorporate the arbitration agreement by reference, and the notice to employees was also clear on that point.

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Disclosure schedules supplement the purchase and sale agreement in the sale of a business by incorporating disclosures about the business being sold, according to a post on the website of Thompson Coburn.

The authors explains:

“Generally, each disclosure schedule falls into one of two categories: a ‘list’ or an ‘exception.’ A ‘list’ schedule makes a representation that the schedule contains a complete record of certain aspects of the business (i.e., a list of leased or owned real property, registered intellectual property, insurance policies, employee benefit plans, etc.). An ‘exception’ schedule allows the seller to qualify a representation made in the purchase and sale agreement and, therefore, limit the seller’s potential liability.”

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Construction disputes often involve voluminous amounts of discovery, including documents in the hand of third parties, points out Matthew DeVries in Burr & Forman’s Best Practices Construction Law blog.

If the case is subject to arbitration, it is likely there will be a dispute about whether the arbitrator has the authority to compel production of third-party documents or witnesses for deposition, he writes.

DeVries discusses a case in which the 11th Circuit  concluded that Section 7 of the Federal Arbitration Act precludes all pre-hearing discovery from non-parties.

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In a post on the American Medical Association website, AMA senior attorney Wes Cleveland discusses physicians’ letters of intent and when an attorney should be retained during the contracting process.

He explains that the letter of intent represents an effort for the physician and employer to be sure they’re on the same page on such issues as compensation, length of employment, benefits, responsibilities and more.

He also discusses binding versus non-binding agreements.

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A recent New York case sheds some light on the use of contract clauses that cover cardinal changes in construction, according to an alert by Henry L. Goldberg for Moritt Hock & Hamroff.

The case involves a $5,320,000 subcontract for masonry on a project. In a dispute that arose during the project, the subcontractor alleged that the general contractor had interfered with its work and wrongfully deleted an excessive portion of the subcontractor’s work in material breach of the subcontract. In other words, in its defense it asserted the “cardinal change doctrine.”

“The standards for finding a cardinal change are imprecise; courts have wide discretion,” writes Goldberg. “What, in fact, is the ‘essential identify’ and ‘main purpose’ of your contract? Here, the court failed to find the subcontractor in breach for walking off the job.”

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A Texas court of appeals ruled that “oil or gas” is not limited to “crude petroleum,” but includes refined petroleum products gasoline and diesel, according to Charles Sartain, writing in Gray Reed’s Energy & the Law.

The case involves a pipeline easement that allows a production company to transport oil or gas across the plaintiff’s property. The property owner contended that “oil and gas” referred to crude petroleum, but not refined products.

The court researched definitions of “oil” and “gas” and found that refined petroleum products “fell within the commonly accepted meaning of the terms oil or gas at the easement’s approximate date.”

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The outcome of a suit involving a contract between a general contractor and a subcontractor hinged on an apparently missing apostrophe in the agreement, writes Keith Paul Bishop in the Allen Matkins California Corporate & Securities Law blog.

The provision reads: “Ten percent (10%) of Subcontractor’s contract amount shall be withheld and will be released 35 days after completion of subcontractors work.”

The subcontractor abandoned the job, but later argued that the reference to “subcontractors” (no apostrophe) must mean any subcontractor, not just itself.  Thus, it was entitled to payment of the retention when the replacement subcontractor finished the job, the original sub argued.

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Peter M. Gillon, writing in Pillsbury’s Policyholder Pulse blog, discusses an important decision in the world of professional liability (including D&O and E&O policies).

He explains that the Seventh Circuit recently held that a “contractual liability” exclusion—i.e., an exclusion for claims “based upon or arising out of … breach of contract”—when inserted in a professional liability policy, that is, a policy intended to insure professionals for services they perform under contract, renders the coverage “illusory.”

He adds that the court concluded that the exclusion as written eliminated all coverage under this professional liability policy for the very kinds of claims the policyholder sought to insure—on its face, not just as applied to the particular claim.

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The U.S. Court of Appeals for the Sixth Circuit held that employers cannot by contract shorten the statutory limitations period (i.e. the time period within which a claim must be brought) under Title VII, writes Fiona W. Ong for Shawe Rosenthal’s E-Updates.

Ong explains:

“In Logan v. MGM Grand Detroit Casino, the employee signed a job application containing a provision that established a six-month limitations period for bringing any lawsuit against the employer and that waived any applicable statutes of limitation. The employee, 216 days after her resignation, filed a charge of discrimination with the EEOC, and after she received a notice of right to sue, brought suit in federal court. The employer moved to dismiss her lawsuit because it was not timely filed within the contractual six-month period.”

Addressing the issue for the first time, the court found  that contractual limitation in Title VII cases to be unenforceable.

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Several court cases in 2019 dealt with (or are still dealing with) key issues faced by parties to commercial contracts, including contracts for technology products and services, writes Eric Begun in a post for King & Fisher Law Group.

The post briefly discusses four of those cases and their corresponding issues of contract assignment, representations and warranties, and data security.

Begun’s discussion of the four cases provides take-away lessons for each.

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