Kilpatrick Townsend & Stockton has compiled a structured guide to outsourcing contracts in the United States. The guide is available on Lexology.com.

The guide covers the various types of contract forms for outsourcing arrangements, due diligence, customer base, business requirements, HR issues, third-party contracts, duration and renewal, supplier selection, service specifications, charging methods, warranties and indemnities, and ending the agreement.

Authors of the article are James Steinberg, Joshua M. Benson, Farah F. Cook, Joshua S. Ganz, Julie C. Grundman, Maha Khalaj, Lance McCord, Michelle Tyde, Amanda M. Witt and Vita Zeltser.

Read the article.

A recent Texas court decision highlights the requirement that any covenants not to compete, including geographic restrictions, must be reasonable to be enforceable, according to a report on the Ogletree Deakins website.

Lawrence D. Smith writes about Fomine v. Barrett, which involved a non-compete agreement for a case manager in a chiropractic clinic. The agreement prohibited the employee from being involved in any competitive business within a 500-mile radius of the employer’s clinic.

The Houston appellate court found the 500-mile radius to be “significantly broader than the geographic scope” of the former employee’s actual employment activities on behalf of the clinic. It is therefore “broader than is reasonably necessary” to protect the employer’s business interests.

Read the article.

The Second Circuit affirmed a ruling that denied a web service’s motion to compel arbitration, finding that the user did not have reasonable notice of the arbitration provision contained in the terms and conditions that were communicated via a hyperlink in a post-sale email, reports Proskauer Rose in its New Media and Technology Law Blog.

Jeffrey Neuburger, a partner in the firm, wrote the article.

“While the court recognized that a party has a duty to read a contract, it stressed that this does not morph into a duty to ‘ferret out contract provisions when they are contained in inconspicuous hyperlinks,’ particularly where, as in this case, the user was presented with multiple documents, each containing different sets of terms,” Neuburger writes.

Read the article.

Writing in Gray Reed’s Energy & the Law blog, Charles Sartain points out that parties to a transaction need to be mindful that if a business deal is a partnership, there will be rights and duties not present in arms-length commercial transactions.

He discusses a recent appellate court opinion and considers the main question: Was a partnership formed by a letter agreement, a participation agreement and the actions of the parties?

Stephens et al v. Three Finger Black Shale Partnership et al. is a complicated petroleum development deal that included all those elements. The jury trial ended with a multimillion dollar judgment for actual and exemplary damages in favor of two separate groups of plaintiffs and intervenors against several groups of defendants.

The appellate court determined that there was no evidence of a partnership, which meant that no fiduciary duty was owed by the defendants.

Read the article.

With increasing attention on trade secrets and a developing body of case law around Defend Trade Secrets Act claims, an emphasis on contracts also is growing, point out Douglas R. Nemec and P. Anthony Sammi in a post for Skadden, Arps, Slate, Meagher & Flom.

“Breach-of-contract claims frequently have appeared alongside trade secret claims in lawsuits over the years and often materially impacted the results,” they write. “But a contract should not be viewed as a mere alternative to trade secret protection. Properly crafted, and if necessary properly litigated, a contract can both strengthen and expand the reach of a trade secret claim.”

Their article covers defining confidential information, term limitations and their risks, and maintaining confidentiality.

Read the article.

In most transactions involving the sale or license of intellectual property, a buyer or licensee will request that a seller or licensor represent and warrant that such intellectual property does not infringe or misappropriate the intellectual property rights of a third party.

In a post on the Morgan Lewis website, Rahul Kapoor and Shokoh H. Yaghoubi explain that this representation and warranty is often heavily negotiated in a license or purchase agreement. That’s because the seller or licensor wants to limit its obligations for breach of this representation to limit its liability under the agreement, whereas the buyer or licensee wants to keep this provision as broad as possible to ensure that it receives appropriate protection from third-party claims for the intellectual property it licenses or buys.

Their article offers some advice on structuring this type of contract clause.

Read the article.

A new post from Contract Logix offers some advice on how to avoid landing in a nightmare business situation: Imagine if a disgruntled employee or ambitious hacker accessed the details of your most important and sensitive contractual agreements and did something malicious with the information. Just think about the potential legal, financial, and brand liability.

Security breaches like this can result in the most severe and highest profile consequences for your business, especially in today’s hyper-connected world of social media. Unfortunately, the contracts at many organizations are scattered throughout the company in file cabinets, on individuals’ hard drives, or in shared folders – exposing the business to significant risk.

Below are 5 security-focused best practices you can implement to better protect your contracts:

1. Centralize all your contracts in a secure electronic repository.

It’s not uncommon for organizations to store contracts in shared folders across multiple locations and formats. However, centralizing your agreements in a password protected and cloud-based repository is the most important step towards secure contract management. Not only will it keep your agreements organized, it greatly reduces the risk of them being accessed by the wrong individuals and stores them in a safe place. It also allows you to securely access any document at anytime from anywhere on any device.

2. Implement role-based security to your contracts and related information.

Another challenge with storing contracts in multiple places is that it’s impossible to govern tiers of access to them. Once you’ve centralized your contracts online, you’ll be able to set role-based permissions for enhanced security. This allows someone to read or write certain document or contract types but denies them access to others that would be inappropriate to edit. It also prevents unauthorized users from seeing or editing contract details.

3. Ensure all your contract data is encrypted in transit and at rest.

An important best practice to protect your contracts from unauthorized users is to encrypt all your document data. You’ll want to encrypt information both at rest and in transit using the latest AES 256-bit encryption and TLS 1.2 standards. Data at rest refers to any data that is stored within your contract management system. Data in transit refers to any data that is being sent externally to or from your contract management system to a user or another application.

4. Leverage E-signature capabilities.

The most time-consuming part of any contract process is getting approvals, especially for those chasing down paper-based signatures. E-signatures are a best practice to get documents signed faster. More importantly, however, is that e-signatures are more secure than paper ones. They have been legally binding for over 15 years thanks to the ESIGN Act of 2002. E-signatures carry a digital record about who, when, and where a document was signed to ensure authentication and help with audit trails. Be sure to fully capitalize on the benefits E-signatures offer your organization.

5. Intake your contract data through secure forms.

Many organizations still rely on email to request contracts and capture required data to create them. This often leads to incomplete or incorrect information which adds time and creates risk. Email attachments are also the most common way hackers infiltrate corporate networks with malicious software. With pre-defined and encrypted intake forms, team members can quickly and accurately submit an existing contract, request the creation of a contract, or if they have the authority, instantly create a contract. This ensures the integrity and security of data captured for your contracts, eliminates the need for double data entry or chasing down missing data, and minimizes mistakes.

Takeaway

The number of security breaches and malicious hacks continues to skyrocket. Given that contracts are the backbone of your business, you can increase the security of them by implementing these five best practices. Not only will you have greater piece of mind, you’ll also avoid potential financial, legal, and brand risks.

A post on the Carlton Fields website updates the latest ruling in a class action alleging violation of the Fair Labor Standards Act and breach of contract.

A U.S. district court had compelled arbitration pursuant to an agreement between the plaintiff and defendant, but it struck as unlawful a waiver clause that appeared to forbid class or collective arbitration of her claims, reasoning that the plaintiff could not waive her right to bring a class action under the National Labor Relations Act.

On appeal, the Seventh Circuit was faced with reconciling the district court’s decision with a subsequently-decided U.S. Supreme Court case, writes Gail E. Jankowski.

Read the article.

Snell & Wilmer offers some advice for businesses that may need to take a look at their existing contract templates to evaluate a refresh or, in certain circumstances, a major overhaul.

The article, posted on JDSupra.com, discusses updating contracts for changes in the law, creating a family of templates with consistent legal terms, creating a state addendum for use on contracts across multiple states, new delivery models, and new technologies and techniques.

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A post on the website of  McGuireWoods LLP discusses three recent cases before the Supreme Court and the Third Circuit relating to the interpretation and enforceability of arbitration agreements.

The Third Circuit found in favor of Kaplan University in a case in which a student challenged an arbitration agreement included in an e-signed enrollment.

The Supreme Court ruled in a case in which the justices rejected a judicially created exception limiting enforcement of arbitrability.

And the Supreme Court upheld statutory exemption for an independent contractor.

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Employment agreements between publicly-traded issuers and their executive officers often contain severance pay provisions that are heavily negotiated at the time of entering into the agreements, explains a post on the website of Hunton Andrews Kurth.

The post by Anthony J. Eppert considers whether the amount of contractually-provided severance pay could, over the employment term, be reduced proportionate to the increase in the executive’s wealth accumulation over the same time period (i.e., an inversely proportional relationship between the amount of severance pay and the amount of wealth accumulation by the executive over the employment term).

Read the article.

Image by NY Photographic

Unless an employment contract specifies the forum for arbitration and the process by which the arbitration will be conducted, a court may find that the parties have not reached an agreement to arbitrate, warns a post on the website of Porzio, Bromberg & Newman.

The authors discuss a New Jersey case that illustrates the need to use care in drafting.

An appellate court found that the arbitration clause in the contract did not specify what forum would substitute in place of the jury trial.

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A recent post on the  Farrell Fritz website describes the uses and possible pitfalls of using fixed price buy-sell agreements.

Author Peter Mahler explains:

“A fixed price buy-sell agreement is one in which co-owners of a business select a specific dollar amount, expressed either as enterprise or per-share value, for calculation of the future buyout price to be paid an exiting owner or his or her estate upon the happening of specified trigger events such as death, disability, retirement, or termination of employment.”

Fixed price buy-sell agreements in theory offer two main advantages over pricing mechanisms that utilize formulas or appraisals at the time of the trigger event: certainty and the avoidance of transactional costs.

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A post on Foley & Lardner’s Labor & Employment Law Perspectives blog discusses negotiation styles for employers when the time comes for a new labor contract.

“There isn’t a one-size-fits-all answer as to what works best,” writes Thomas C. Pence. “Some people yell a lot and are very effective with it. Others try yelling and come off sounding cartoonish (never a good thing in negotiations). The best advice is to be true to yourself.”

Pence advises contract negotiators to be self-assured and determined in arguing their positions.

Read the article.

Above the Law  and Concord will present a complimentary webinar titled “The Process of Negotiating: Focusing on the Business Processes of Contract Management for Successful Negotiation.”

The event will be Wednesday, Jan. 31, 2019, at 1 p.m. Eastern time.

The webinar will be moderated by Brad Blickstein, consultant, speaker and writer on law department operations. He will be joined by Travis Bickham, VP of sales and marketing at Concord, and Jeff Barlow, co-founder at Nimble Services.

The webinar will explore how to reimagine the negotiation process as a business process:

• How to rethink contract processes to increase efficiency and effectiveness
• Negotiation processes, best practices, and how to avoid an adversarial tone
• Tools and technology that will help create repeatable, scalable processes

Register for the webinar.

Steven P. Gallagher of Akerman LLP offers some tips on what to do — and not do — when considering arbitration agreements for new hires.

He discusses some of the advantages and potential disadvantages to having arbitration agreements in place for employees.

“Because arbitrations are private, the proceedings, claims, and ultimate outcomes are ordinarily confidential. Most interesting to employers is that arbitrators tend to award lower damages than juries,” Gallagher writes.

But sometimes arbitration is “neither quicker nor less expensive than litigation, and arbitrators are sometimes inclined to ‘split the baby,’ even if the law is clearly on your side.”

Read the article.

Even an informal email can constitute acceptance of a contractual offer, warns The In-House Advisor.

“Moreover, just a few months ago, Judge Timothy Hillman took this principle one step further by ruling, in Witt v. American Airlines, that an exchange of emails can form a binding settlement agreement, even if the parties have not agreed to all of the terms of that settlement,” explains author Shepard Davidson, a Burns Levinson partner.

The judge found that both sides had agreed to a settlement in an email exchange. When the plaintiff later tried to reopen discussions, American Airlines filed a motion to enforce settlement agreement. The court allowed the motion.

Read the article.

The Texas Supreme Court recently heard oral argument in Barrow-Shaver Res. Co v. Carrizo Oil & Gas, Inc., on the interpretation of a farmout agreement providing that an assignment could not be made “without the express written consent,” according to a post on the website of Porter Hedges.

“The issue—whether the provision means consent can be withheld arbitrarily or only reasonably,” the post states. “Regardless how the Texas Supreme Court rules, there are three lessons in Barrow-Shaver for contract drafters: (1) be precise in contractual language; (2) address the use of non-final drafts in interpretation disputes; and (3) consider other provisions that may be impacted by the implied reasonableness issue.”

The post offers some pointers on each of those three points.

Read the article.

Many of the recent U.S. Supreme Court rulings on arbitration agreements cases have been decided by narrow 5-4 majorities, which has raised the possibility that the replacement of Justice Anthony Kennedy by Brett Kavanaugh might lead to some softening of the court’s position in those cases.

But as Ronald Mann, writing in the SCOTUSblog points out, the latest such ruling will shed no light on that broader question, because even the justices more skeptical about arbitration saw no merit in the arguments against arbitration here.

Kavanaugh wrote the opinion for the unanimous court. In this case anyway, none of the justices saw any merit in a process calling for collateral litigation over the gateway question of arbitrability.

“At bottom, the question is whether a court or an arbitrator decides whether an arbitration agreement governs a particular dispute,” writes Mann.

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A new U.S. Postal Service change to the standard terms and conditions that apply to its newly awarded Highway Contract Route (HCR) and Contract Delivery Service (CDS) contracts could be unenforceable, according to David P. Hendel, writing in the Husch Blackwell Contractor’s Perspective blog.

The changes apply to existing CDS contracts as well as newly awarded ones. In an email, the Postal Service asked contractors to sign, without any “alterations or additions,” a contract modification that incorporated the new terms. If the contractor did not so, the Postal Service’s email threatened contract termination, Hendel writes.

He cited problems with the way the changes are presented, including lack of consideration, violation of the implied covenant of good faith and fair dealing, and the legal theory of coercion and duress.

Read the article.