A “severability” or a “partial invalidity” clause can prevent a court from declaring an entire contract invalid or unenforceable just because a single provision in the contract is declared invalid or unenforceable, advises Julie Brook in a post for California’s Continuing Education of the Bar.

“Whether a contract is severable or entire depends on the parties’ intention, as revealed in the language of the contract itself and the surrounding circumstances,” she explains.

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The United States Bankruptcy Court for the Northern District of Texas issued an opinion holding that an unintentional, duplicate obligation remaining under a contract can render the contract executory, even if perhaps in contravention of the plain language of the contract.

Writing for Weil, Gotshal & Manges’ Bankruptcy blog, David Li discusses In re TM Village, Ltd.:

The TM Village opinion framed the issues as whether the parties’ prepetition settlement agreement was an executory contract, and if so, whether the debtor could reject it in its business judgment (the court held in the affirmative on both issues).  The court reaffirmed that the plain language of a contract may be read in a broader context to avoid an “unreasonable, inequitable and oppressive outcome.” The case serves as a cautionary tale that even a simple clerical error may have unintended and prolonged consequences.

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While certain courts look with skepticism on class-action waivers in arbitration agreements, it is clear from the Supreme Court’s decisions, beginning with AT&T Mobility LLC v. Concepcion through the court’s most recent decision in Epic Systems Corporation v. Lewis, that class action arbitration waivers do not violate the law, according to a Faegre Baker Daniels website post.

Ehren M. Fournier writes that Epic Systems reiterates the Court’s deference to arbitration agreements.

He discusses several points to consider when drafting an arbitration agreement with a class action waiver, including an opt-out option, conspicuous language, delegations to an arbitrator to decide enforcement, authority to allow class action, cost and fee provisions, severance language, and a claimant-friendly forum.

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A post on the website of Baker McKenzie discusses what a general counsel should consider when looking at a contract for cloud and AI services.

“As cloud-based software will continuously change, the user cannot easily prove that certain functionality used to work fine, but is no longer available or working. For this reason it makes sense to check whether the key features are (or can be) described in a document and to refer to that description in the agreement,” according to the post.

The discussion covers moving to another provider, verification that everything is in check, and spelling out the right restrictions on use of data.

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Ira Meislik of Meislik & Meislik, writing in the firm’s Ruminations real estate law blog, examines the use of subrogation clauses in real estate leases in relation to insurance policies.

He states that the term “waiver of subrogation” is a misnomer when it comes to a lease provision.

“It is the insurance policy where the carrier waives its subrogation right. It isn’t the lease that waives an insurance company’s subrogation right. What the lease needs to do is waive claims. Secondarily, but importantly, a lease needs to require each party to have insurance policies that aren’t invalidated by such a waiver of claims,” he explains.

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Parties to a construction project can have a better agreement by addressing six topics described in a post in The Lien Zone blog.

Alex Barthet, author of the post, advises contract drafters to define the scope of the work that will be provided, list all the exclusions, explain the change order process, verify the schedule, refine the dispute resolution procedure, and make sure the winner gets legal fees.

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Many considerations go into drafting appropriate audit rights, including the types of services that the customer is receiving, and the industry in which the customer’s business operates, explain Anastasia Dergacheva and Katherine B. O’Keefe in Morgan Lewis Tech & Sourcing blog.

“In many cases, the customer is the auditing party and the service provider is the audited party, but there are situations where the roles will be reversed,” they write.

The article provides an overview of several key issues to consider when drafting audit rights for services agreements.

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The law firm Polsinelli recently defeated a motion to dismiss a client’s judicial review of an arbitration award, successfully arguing that adopted arbitration rules that waive appellate rights do not waive a party’s right to judicial review under the Federal Arbitration Act.

A post on the firm’s website introduced the case:

The case presented a conflict between the parties’ contractually-adopted arbitration rules and an individual party’s statutory rights under the FAA. Although ultimately successful, the case served as an important reminder for parties to thoroughly review contractual arbitration provisions – and any procedural rules referenced therein – before agreeing to them.

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There are circumstances that allow a departing employee to challenge the legitimacy of a non-compete agreement, even if this type of contract meets all the legal requirements, writes Romy Jurado of Jurado & Farshchian.

In her article, she discusses two questions that arise when an employee challenges a non-compete: Should an employee actually challenge the agreement? And: How exactly does an employee challenge it?

She also discusses the three basic approaches an employee might take to challenge the agreement: Ignoring it; negotiating with the employer; and filing a declaratory judgment action.

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Kim Stanger, writing for Holland & Hart, offers a brief summary of some terms or issues that should be considered in provider agreements.

The article discusses such topics as regulatory compliance, written agreements, parties, the nature of relationships, services, schedules, location, independence, intellectual property, use of information, outside activities, qualifications, representations and warranties, performance standards, medical records, employer obligations, compensation, bonuses, benefits, exempt status, referrals, assignment of fees, liability insurance, and more.

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Nothing is more fundamental to private equity deal practice than limiting the exposure of private equity sellers for post-closing claims, writes Glenn D. West for Weil, Gotshal & Manges LLP’s Global Private Equity Watch.

He believes that exposure to the discussion of fraud allegations, “whether though extra-contractual fraud claims (because of ineffective anti-reliance clauses or undefined fraud carve-outs), or claims based on less than deliberate and knowing misrepresentations (by the private equity seller itself) regarding the express, bargained-for representations set forth in the acquisition agreement (as a result of undefined fraud carve-outs), requires the most vigilance to avoid.”

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To get around the unilateral character of adhesive contracting, U.S. courts have, over the past five decades, refocused contract formation on constructive notice, points out Henry Allen Blair in Arbitration Nation.

“If a reasonable person in the position of the recipient of boilerplate should have seen the terms, the recipient will be bound by those terms, regardless of whether she ever actually read or understood the them. Constructive awareness coupled with an individual purchasing something from a commercial party amounts to assent,” he adds.

The article discusses Starke v. SquareTrade, Inc., in which the Second Circuit concluded that the a purchaser of a consumer product protection plan did not have reasonable notice of an arbitration provision contained in the terms and conditions communicated via a hyperlink in a post-sale email.

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A recent Texas Supreme Court opinion provides a definitive answer to the question of whether a party can ignore the written words of a contract that directly contradict what you are being told by your counterparty is the real deal.

Glenn D. West, writing for Weil, Gotshal & Manges LLP’s Global Private Equity Watch, discusses Mercedes-Benz USA, LLC v. Carduco Inc.

“While it is often said that fraud vitiates a contract that was entered into based upon that fraud (and such fraud would also trump the parol evidence rule), that statement is only true if there was actually legally-recognized fraud that induced the making of the contract. But a fraud cause of action does not consist simply of an allegation that the defendant made a false statement of fact to the plaintiff, knowingly or recklessly,” West writes.

The Texas Supreme Court found that “[b]ecause the conduct and action of [the defendants] on which [the plaintiff] relies to establish its fraudulent-inducement claim are directly contrary to the unambiguous terms of the contract it signed, we conclude that [the plaintiff’s] reliance thereon was unjustified as a matter of law.”

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Forbes contributor Jack Garson says a company’s contracts can be remendous assets that lock down rights to money, goods and services. But common mistakes can ruin all of that.

In his article, he discusses five mistakes that can turn contracts into liabilities.

They include using a one-sided agreement, bad drafting, using outdated contracts, using agreements that ignore the law, and failing to prioritize.

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CobbleStone Softare, developer of contract management software, announced the “Mastering Contract Management Blog Series.”

In a release, the company said the goal for this blog series is to address the biggest challenges of contract management by providing insights on how to improve contract management processes and optimize contract lifecycles with leading contract management software.

Blog posts released, to-date, in the “Mastering Contract Management Blog Series” include:
• Contract Tracking
• Contract Approvals
• Contract Clauses

The Ninth Circuit has ruled in a contract arbitration case that incorporated multiple Federal Acquisition Regulation clauses that govern the recovery of expenses in the event a contractor is terminated for convenience, i.e. required documentation and procedures.

Pepper Hamilton’s Constructlaw blog discusses Aspic Eng’g & Constr. Co. v. ECC Centcom Constructors LLC, in which an arbitrator had awarded Aspic more than $1 million. The arbitrator concluded that Aspic was not required to strictly comply with the FAR requirements based on several factors.

“The crux of the decision turns on whether the arbitrator’s decision draws its essence from the contract. The Ninth Circuit also explained that whether the award directly conflicted with the subcontracts was insufficient—on its own—to vacate the award,” the blog post explains.

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Companies should use a conservative approach when offering protection plans for products, advises Weil, Gotshal & Manges LLP in its Product Liability Monitor.

The article points out that the terms “extended warranty” and “service agreement” are likely to cause confusion, in relation to the Magnuson Moss Warranty Act, which governs the terms of these warranties.

Two cases discussed in the article cover the differences in “service agreement” and “warranty” and how to avoid potential MMWA issues.

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Virtually every business relationship or merger and acquisition these days involves some sort of data sharing, transmission, access or use between the contractual parties, but often there is no contractual language applicable to data privacy and security, writes Linn Foster Freedman for Robinson+Cole LLP.

Writing in the firm’s Data Privacy + Security Insider blog, she explains:

When there is no language to address data privacy and security issues, the parties duke out what they will agree to or not agree to, who will pay for what, and who has insurance, and they end up pointing the finger indiscriminately. It is much easier to address a data security issue when there is contractual language in place between the parties.

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Employers requiring lower-wage employees to sign and abide by non-competition and non-solicitation of clients provisions may want to find another mechanism to protect business goodwill and confidential information, advises Rachel Powitzky Steely in Foley & Lardner’s Labor & Employment Law Perspectives.

Courts across the country are refusing to enforce non-competes against lower-wage employees and now states are taking action to preclude these agreements, she explains.

Steely offers some advice on how companies can achieve their non-compete goals through alternative methods.

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CobbleStone Software, a developer of contract management and eProcurement software, announced its 2019 Seminar Series coming soon to major U.S. cities.

The 2019 event series, The Road to Contract Management & Procurement Success, is designed to help attendees discover new technological advances for contract management and procurement processes while developing a plan built for success, the company said in a release.

The free educational seminar is being held in the following locations:

• San Diego, CA – March 28th, 2019
• Houston, TX – April 25th, 2019
• Boston, MA – June 27th, 2019
• Philadelphia, PA – July 26th, 2019
• New York, NY – August 23rd, 2019
• Orlando, FL – September 26th, 2019
• Chicago, IL – October 25th, 2019

Register for the seminar.