A recent ruling illustrates how courts will typically enforce a valid forum selection clause, absent a compelling showing of prejudice to the party opposing a lawsuit in the agreed-to forum, according to a post by Murtha Cullina’s Family Business Perspectives blog.

Michael P. Connolly explains that “while substantive disputes under an agreement may still arise, a forum selection clause at least may provide a measure of certainty from the outset as to the location of any future legal action. Without such a clause, a party to an agreement may be forced to litigate in a distant, inconvenient or otherwise unwanted location, which may ultimately increase the expense, disruption and risk in connection with any future lawsuit.”

Read the article.

ContractWorks has published a guide titled “The Contracts Checklist for M&A Due Diligence” and made it available for downloading from the company’s website at no charge.

“Reviewing the contracts and commitments of a target company is one of the most time-consuming and crucial components of a due diligence inquiry,” ContractWorks says on its website. “This guide serves as a non-exhaustive checklist of important contract types to consider during the M&A due diligence process.”

The guide covers:

• Contract due diligence pre- and post-transaction
• Categories of contracts that are important to review and understand
• Tips for getting started and ensuring success

Download the checklist.

Business owners often fail to carefully review the pre-printed sections of contracts to know what the contract actually says, warns Nancy Park in an article for Best Best & Krieger. The form may include terms that were not intended or conflict with the parties’ intent.

“Reading just the filled-in blanks for key monetary or timing terms may result in unintended consequences,” Park explains. “Also, the form user should beware that the party who drafted it may have included clauses favorable to that party. For instance, a broker-drafted form may include payment protections for that party, even though a buyer and seller are the intended actual signing parties to the contract.”

Read the article.

Morgan Lewis’ Tech & Sourcing blog has a new post that focuses on how customers in outsourcing deals handle the disposition of legacy third-party contracts—one of the thorniest and most work-intensive work streams—once diligence has concluded.

The post discusses commonly used disposition categories, factors to consider when applying the dispositions, financial impact, and postsigning changes.

Read the article.

A court recently ordered the seller of a car wash property in New Jersey to fully remediate previously undiscovered environmental contamination at the property in accordance with its contractual obligations, according to a post in the Riker Danzig Environmental Law Blog.

Jaan M. Hause explains in the post that “the seller could have more carefully crafted the language of the rider to limit its remediation obligations. Unfortunately for seller, the language in the rider obligating seller to remediate was extremely broad, and thus exposed seller to additional, costly liabilities that it did not intend to assume.”

Read the article.

By explicitly listing sexual harassment within the definition of “cause” for dismissal in an executive’s employment agreement, a company can avoid paying out hefty benefits to potentially bad actors, advises Ashley K. Pittman in Hutchison PLLC’s employment law blog.

“This can have a big impact,” she writes. “In addition to the direct economic effects and the ability to terminate someone to preserve and strengthen your corporate culture, your company can potentially avoid the public perception that the departing executive was somehow rewarded for bad behavior.”

Read the article.

The U.S. Chamber of Commerce and other business and employer groups have just submitted amicus briefs calling on the 9th Circuit to reconsider decisions that, in the views of these amici, eviscerate mandatory arbitration provisions, writes Alison Frankel in a Reuters report.

The briefs come in the wake of the 9th Circuit’s June 28 rulings in which plaintiffs claimed they couldn’t be forced into arbitration because they sought injunctions against corporate defendants.

The court found that because California’s policy of allowing consumers to pursue public injunctions does not specifically obstruct arbitration, it’s not precluded by the Federal Arbitration Act.

Read the Reuters article.

For the company that is outsourcing part of its business functions to a third party, reviewing existing third-party contracts for certain key terms is an important part of the outsourcing process, points out Morgan Lewis in a blog post.

Authors Barbara Murphy and Kevin P. Dermody discuss typical terms to focus on when reviewing the third-party contracts: contract expiration date/auto renewal provisions, third-party use rights and restrictions, assignment provisions, pre-paid expenses/annual fees, and termination rights/fees.

Read the article.

Nothing is more basic to private equity deal making than shielding the private equity firm and its funds from liability for the obligations of the fund’s affiliated acquisition vehicles and portfolio companies; and this certainly includes liabilities for breach of an NDA, points out Glenn D. West in the Weil, Gotshal & Manges Global Private Equity Watch blog.

The article discusses a case that distinguishes between affiliates entitled by the non-disclosure agreement that are entitled to receive confidential information and affiliates actually bound by the agreement.

Read the article.

A Mississippi federal court denied a defendant’s motion for partial summary judgment in connection with a limitation-of-liability clause, according to a post on the Constructlaw blog of Pepper Hamilton.

Anthony Finzio writes that the Court also denied the defendant’s motion for reconsideration, concluding that the defendant had not carried its burden as the movant of demonstrating that the limitation-of-liability clause limited the plaintiff’s rights as a matter of law.

The case is DAK Americas Mississippi, Inc. v. Jedson Engineering, Inc. et al.

Read the article.

Posting an arbitration section in your employee handbook may put an employee on notice of a company policy or “offer,” of which the employee could be said to be “generally aware,” but it might not, without more, establish that there is an agreement to arbitrate, pints out Gilbert A. Samberg for Mintz, Levin, Cohn, Ferris, Glovsky and Popeo.

There must be evidence of the employee’s acceptance, he explains in a post on the firm’s website.

He illustrates his point with a case from the Eighth Circuit, concluding: “An employer needs to be able to prove acceptance by each employee of an ‘offer’ of arbitration.”

Read the article.

Dan Harris, a founder of Harris Bricken and lead writer of the China Law Blog, discusses why he sometimes has to explain to  companies why he never does “template” manufacturing agreements anywhere in the world and why they should not want such an agreement.

The blog post includes part of an email a lawyer in his firm wrote to an international manufacturer, illustrating why an off-the-shelf manufacturing cannot work and makes no sense, even in a rush situation.

Read the article.

A post on the website of Mackay, Caswell & Callahan discusses the basics of drafting contracts associated with Section 1031 exchanges.

The author explains that this section in the tax code allows taxpayers to use borrowed tax money to purchase more investment or business property.

The article covers the required elements in the exchange agreement, the differences between these agreements and qualified exchange accommodation agreements, assignability, the cooperation clause and release of liability, compliance with receipt requirements, and more.

Read the article.

Three court cases reveal the importance of ensuring that contracts for an enterprise resource planning software system and other digital transformations be carefully negotiated, writes Marcus Harris in Taft’s Technology Insights blog.

It’s important to remove the possibility that a lawsuit over a failure can be blocked by seemingly harmless clauses that vendors and integrators insert as a matter of routine in their template agreements, he explains.

“Never sign the vendor’s or integrator’s template contract without negotiating and redrafting key provisions – even the boilerplate ones,” Harris advises. “Failing to do so may restrict your ability to sue for damages in the event of a failure.”

Read the article.

On the heels of the Supreme Court’s recent pro-arbitration pronouncements, the U.S. Court of Appeals for the Eighth Circuit issued a reminder that, although agreements to arbitrate are favored under the law, arbitration agreements must still be contracts, writes Susan Fitzke for Littler Mendelson.

“In order to enforce an agreement to arbitrate, therefore, the employer must prove that a valid contract to arbitrate was created,” she explains. “This may seem self-evident, but in an era where some arbitration programs are contained only in employee handbooks or on-line, this is a point worth closer review.”

Read the article.

If a contract is too one-sided, it can be ruled illusory and unenforceable, warns Shepard Davidson in the Burns Levinson In-House Advisor blog.

That is exactly what happened to the defendant in McNamara v. S.I. Logistics, Inc. when it tried to enforce its contractual right to arbitration he writes.

In that case, the defendant sought to compel arbitration based on an agreement that  purported to grant the company the unilateral right to modify its terms without any prior notice to McNamara, a former affiliate.

The court found in favor of McNamara, finding that the agreement was illusory.

Read the article.

A post by Material Handling & Logistics offers 12 tips for a company to reduce legal risk while building a foundation for a long-term relationship with a new transportation provider.

Authors Martin Robins and Lauren Pittelli explain that “the contract is the beginning of your relationship with a transportation provider. A collaborative contracting process with shared goals and understandings, clear expectations and mutual obligations will reduce your company’s legal risk while building a foundation for a long-term relationship.”

The tips cover such topics as due diligence, enforcement practicalities, insurance, performance requirements, and more.

Read the article.

The United States Supreme Court has agreed to resolve a key issue in international arbitration agreements: whether the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards permits a non-signatory to an arbitration agreement to compel arbitration against a signatory to arbitration based on the doctrine of equitable estoppel.

A post on the Harris Bricken China Law Blog points out that the question has split the circuit courts, meaning that now the answer to the question depends on where in the United States the dispute is being litigated.

Read the article.

Many employers have offices in multiple states, but want to have one form of employee agreement prohibiting solicitation of employees and customers, points out Dorsey & Whitney.

Because some state laws, namely California, may be too different to reconcile with other states, author Gabrielle Wirth considers the question: What sort of non-solicitation agreements work in California?

“In California, non-solicitation agreements are reviewed as contracts which prevent a person from engaging in a profession, trade or occupation which, with limited exceptions, are void under Business and Professions Code section 16600,” Wirth explains. “Thus, recent cases have held that an agreement between an employer and employee prohibiting the solicitation of customers is not enforceable unless tied to the employee’s use of trade secrets or some other legal duty owed by the employee.”

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The Blockchain & Financial Services Blog of Frost Brown Todd features a discussion in which a court ruled that where a contract between a credit card processor and its sale agent had conflicting clauses, the clause should be read in favor of the sales agent, resulting in the credit card processor being liable for withholding residual payments.

Courtney Rogers Perrin writes about Infinity Capital LLC v. Francis David Corp., from the Northern District of Ohio.

The ruling offers a lesson in contract drafting and the need for clear, non-contradictory provisions, as well as enforceable damages clauses, according to Perrin.

Read the article.