Dentons has published the latest edition of its “Government Contracts Legislative and Regulatory Update,” a summary of the relevant changes that took place during January.

Highlights of the report include:

• President Trump orders regulatory freeze pending review
• President Trump’s executive actions and their impacts on the government contracting community
• FAR Council issues final rule prohibiting contracting with firms that require confidentiality agreements restricting disclosure of fraud or abuse

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The Ninth Circuit, in an unpublished opinion, has found that a contract, and therefore an arbitration clause within it, was unenforceable due to fraud in the inception, despite the fact that both parties had ample opportunity to review the contract in its entirety, reports Reinsurance Focus, a publication of Carlton Fields Jorden Burt, P.A.

“This result was required, the court found, because, assuming the allegations of the complaint to be true, the plaintiff did not know that by signing the contract it was agreeing to be a victim of defendants’ scheme,” writes Jason Brost.

The court cited a California Court of Appeals decision for the proposition that it was enough that defendants, as the party drafting the contract, drafted the contract “‘in such a way as to not apprise’ the other party of its intentions.”

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Comprehensive due diligence review of any target company is imperative when determining whether to buy another company, writes Kimi Murakami for Piliero Mazza.

“Layer on the fact that the target company has government contracts then several unique issues must also be critically evaluated when performing due diligence. Failure to do so could result in a significant loss in value of the target – and its contracts – after the acquisition has closed. What follows is a list of certain key issues that should be analyzed when engaging in due diligence review of a government contractor,” she explains in an article in the firm’s PM Legal Minute blog.

The article covers subjects such as set-aside contracts, pending proposals, security clearance, import/export issues, oci issues, subcontracts, non-us buyer, and novation.

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A family business’ significant commercial relationships are usually reflected in written agreements, writes Michael P. Connolly in Murtha Cullina LLP’s Family Business Perspectives blog. But who is authorized to sign those agreements and to bind the company to the terms?

“Typically, a company’s management will have actual authority to sign agreements,” Connolly explains. “However, the company may give the impression to third parties that other employees (for example, purchasing agents, account managers and IT personnel) that those employees have ‘apparent’ authority to sign contracts relating to their areas of responsibility and thus bind the company to agreements. It is therefore important for family business owners and management to clearly instruct their employees and agents – and to communicate to third parties – as to whether those employees or agents are authorized to sign contracts and other important documents on the company’s behalf.”

Connolly describes a recent court decision that highlights the confusion and potential for liability that can arise when an employee signs a document on a company’s behalf without express authority to do so.

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With international and domestic supply chain contracts, there is little or no room for error. according to an article posted by a team of lawyers at Foley & Lardner LLP.

“While some supply chain contracts incorporate negotiated provisions in the form of a letter agreement or long-term agreement, many supply chain contracts rely on standard purchase order terms and conditions. This can result in contracts of considerable value and corresponding high risk receiving  little attention from in-house or outside counsel,” they write.

They offer advice on how to manage supply chain contract risk, supply chain contracting in light of regulatory changes, and international contracting.

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Attorney Barbara Dunn O’Neal and Lance Ewing, executive vice president Global Risk Management & Client Services at Cotton Holdings Inc., recently discussed some of the basics of contract drafting when they spoke at a meeting of professional meeting planners.

MeetingsNet.com reported on their presentation, including a discussion of some of the basic terms used in contracts.

The speakers also discussed the importance of updating contracts and insurance related to meetings.

And they wrapped up with “the drone horror story.”

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A report on the website of Low,  Ball & Lynch discusses a case in which the California Court of Appeal addresses whether attorneys’ fees can be awarded when a plaintiff alleges both tort and contract causes of action and dismisses the entire complaint before trial.

In the case, Neeshat S. Khan v. Michael Shim, “The Court of Appeal concluded that when a plaintiff voluntarily dismisses an action involving both contract and tort claims, Civil Code § 1717(b)(2) does not preclude a defendant from recovering attorneys’ fees if the fee provision is broad enough to cover the tort claims.”

The article concludes that parties need to pay particular attention when drafting fee provisions when contract and tort claims may be brought together. “For cases with a fee provision, a liability analysis regarding the impact of attorneys’ fees should be assessed when determining whether to voluntarily dismiss a case,” in says.

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A survey report released by Baker McKenzie reveals it is critical to understand what parts of the cloud contract are negotiable and what is not, particularly in newer portions of the marketplace that have greater variance in solutions and contracting terms, the firm reports on it website.

“The survey report, now in its third year, highlights the top objectives, hesitations, and criteria that buyer respondents factored into their cloud procurement determinations,” the firm says. “These factors are almost identical to the responses from cloud providers, potentially indicating further convergence in the marketplace.”

“Our survey results indicate that there may be convergence in the more established parts of the cloud marketplace, such as Software-as-a-Service, but less so in others, such as Infrastructure-as-a-Service and integration with machine-to-machine/Internet of Things solutions,” said Peter R. George, a Partner in Baker McKenzie’s TMT Group.

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Narges Kakalia of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo asks and then answers some pointed questions about arbitration in an article on the firm’s ADR Advice website.

“Is an arbitration clause mandatory or permissive when it provides that either party to the contract may elect to submit a dispute to binding arbitration? What if the contract also provides that the right to arbitrate is not exclusive of any other rights that a party has to pursue legal action in an appropriate forum? Such an arbitration clause certainly sounds permissive. But courts have invested a lot of ink addressing the question, and (spoiler alert!) they have more or less consistently come to the conclusion that such a clause makes arbitration mandatory if any party chooses it,” she writes.

She explains that many litigants and their lawyers misinterpret the real meaning fo the word “may” in this context.

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eSignLive by Vasco will present a complimentary one-hour webinar providing practical evidentiary considerations of electronic records and signatures and guidance on how to reduce your risk.

The event will be Tuesday, Feb. 7, 2017, beginning at 2 p.m. Eastern time.

Organizations undergoing digital transformation often have legal questions related to moving paper-based business processes online without introducing new risks. Beyond the minimum requirements for electronic and digital signatures set forth in the laws, addressing the risk of fraud, repudiation and compliance is of utmost importance as well. In the event of a regulatory audit or legal dispute, avoiding fines and ensuring admissibility is dependent on a company’s ability to produce convincing, reliable evidence.

Presenters will be Pat Hatfield, Partner at Locke Lord LLP, and Andrea Masterton, Corporate Marketing Director at eSignLive.

Highlights will include:

• A brief overview of e-sign legislation
• Insights gained from relevant case law
• How e-signature laws overlay with existing commercial and industry regulations
• The challenges of defending electronic transactions
• A live demonstration of ‘best practice’ e-signature audit trails & process evidence

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Dentons has published the latest edition of its “Government Contracts Legislative and Regulatory Update,” a summary of the relevant changes that took place during December.

Highlights this month include:

• President Obama signed into law legislation which extends and cements whistleblower protection for certain contractor employees
• FAR Council issues final rule amending the FAR in response to injunction of certain Fair Pay and Safe Workplaces rules
• DoD issues class deviation regarding controversial IR&D costs rule
• FAR Council issues final rule mandating privacy training for contractor employees privy to PII

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Sometimes there’s a disconnect between “fairness” and the “justice” that is doled out by the legal system. One notable exception is the application by the courts of the concept of “the implied covenant of good faith and fair dealing,” writes David Allen of Jaburg Wilk.

Every contract consists of one or more express agreements, legally referred to as “covenants” between the parties, Allen explains. But inherent in every contract is also an unwritten “implied” additional covenant that is not expressly set forth; namely, the implied covenant of good faith and fair dealing.

In his article, he explains the obligations mandated by the implied covenant and how courts can be expected to enforce them.

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Among the many subjects to receive President-elect Trump’s attention in coming days are venerable defense contractors and their performance of major systems contracts, points out an article published in Covington & Burling LLP’s Inside Government Contracts.

Sandy Hoe and John Sorrenti write that a president always can pressure high-profile government contractors to “voluntarily” take actions to their detriment and in favor of the government, but what legal tools or contractual remedies are available if a president forces a particular outcome?

“From a purely legal standpoint, however, the Administration’s powers are circumscribed by the remedies available to contractors and challenges that prospective offerors can bring through the bid protest process.” the authors content.

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Most contracts prose is dysfunctional, but training is available to help contracts professionals draft clearly and concisely. But that gets you only so far; you also have to supplement training with centralized initiatives, write Chris Lemens and Kenneth A. Adams for the Association of Corporate Counsel.

They discuss the style of writing in most contracts (“fundamentally flawed”) and consider what is required to produce clear, concise contracts (training and guidelines).

In their article, some of the advice they discuss includes: lose the archaisms, gain control of verbs, stop using the phrase “best efforts,” and don’t rely on mystery usages.

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A new article in CoinDesk provides an overview of the ongoing issues with smart contract development, selecting just three that could remain barriers to mainstream use.

“With more than $17bn in assets stored in just the top 10 cryptocurrencies, there currently is a huge opportunity to give existing blockchain assets additional flexibility and utility by adding smart contract capabilities,” write CEO Arthur Breitman, and COO Kathleen Breitman of Tezos.

The three ways smart constract systems can earn our trust in 2017: Provide formal verification capabilities, ensure transparency so code can be inspected, and provide a clear governance mechanism.

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Pierre Mitchell, writing for Spend Matters, continues his series on artificial intelligence (AI) in contract management by discussing AI and knowledge representation.

“Intelligence is meaningless without knowledge, and vice versa. Albert Einstein as a baby (high intelligence, low knowledge) would be as bad at chess as Wikipedia (high knowledge, low intelligence),” he explains. “Expertise is built on knowledge that adequately models the richness of a certain domain, but high intelligence allows the knowledge to be more effectively and efficiently applied to solve problems.”

He adds his “second main step in a CLM journey is to ‘derive key intelligence from within your contract data … to decipher the legalese down to a granular contract clause level (including metadata).'”

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Stacey Lantagne writes in ContractsProf Blog about an interesting dispute over a non-compete provision that resulted in a preliminary injunction.

The plaintiff in Our Town v. Rousseau operates a community publication called “Our Town.” The defendants in the case entered into a contract to franchise the “Our Town” brand in a county in New Jersey, with a non-compete provision limiting similar businesses or names for three years, and within 50 miles.

The plaintiff later learned that the defendants were operating a similar publication called “Home Town” in the franchise location and sought a preliminary injunction.

Lantagne explains how the court came to grant the injunction.

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By Christopher Barnett
Scott & Scott LLP

Companies with experience licensing Microsoft software and services through Enterprise Agreements know that small forests could be felled to produce the paper required for the typical document stack. EAs often incorporate a dozen or more different components, including some or all of the following:

• Microsoft Business and Services Agreement or Microsoft Business Agreement (Microsoft sometimes will agree to use existing master agreements)
• Online Services Supplemental Terms and Conditions (if an existing, older-form master agreement is to be used)
• Enterprise Agreement (Microsoft sometimes will agree to use existing base EAs)
• Enterprise Enrollment
• Customer Price Sheet
• Product Selection Form
• One or more custom terms amendments (if custom terms have been negotiated)
• One or more standard-form amendments (to cover product-specific or service-specific matters for which Microsoft offers off-the-shelf terms)
• Product Terms (typically incorporated by reference)
• Online Services Terms (typically incorporated by reference)
• Service Level Agreement for Online Services (sometimes incorporated by reference)
• Supplemental Contact Information Form
• Tax Terms and Conditions Form
• Signature Form

Many of the standard forms are administrative in nature and rarely incorporate substantive terms or conditions. However, Microsoft occasionally will incorporate substantive or potentially substantive language in forms that otherwise would appear to have only administrative purposes. A good example is the Customer Price Sheet (CPS).

The primary purpose of the CPS is to list the products and services being ordered under an EA, the order quantities, and the prices to be paid. The CPS also typically identifies the prices that will apply to true-up orders during the term as well as end-of-term buy-out prices for subscription licenses.

Toward the end of the CPS, there usually are included sections labeled “Product Notes” and/or “Terms and Conditions.” Ideally, those sections should be used exclusively to help navigate the CPS and to clarify any custom license metrics that may apply to the EA transaction. However, Microsoft sometimes will include language in those sections that should be the subject of legal negotiations or even that contradicts substantive terms that may have agreed in a custom terms amendment. For example, the parties may reach a special agreement regarding the mechanics for placing incremental true-up orders, but the notes in the CPS may reference standard true-up procedures. This can be especially problematic in time-sensitive negotiations, because the CPS often is among the last documents to be finalized for legal review and approval.

Businesses neglect a thorough review of all EA document components at their peril. Business and legal teams need to push early and often to insist that Microsoft circulate final-form versions of each and every part of the document stack as soon as possible to ensure a smooth transaction. Those teams also need to be prepared to scrutinize every page of that stack to ensure that there are no surprises that are inconsistent with the business’s expectations.

John M. Newman of the Cecil C. Humphreys School of Law at the University of Memphis has compiled a guide to drafting for dispute resolution, covering mandatory-arbitration provisions, class waivers, choice of law, choice of venue, exculpatory and liquidated-damages clauses, fee and cost allocations, and more.

He writes that some defendant-friendly U.S. Supreme Court decisions, critical coverage in the popular press, and efforts by federal agencies to stymie the private sector’s increasingly widespread use of contractual dispute-resolution provisions have made the topic particularly timely.

“In light of the growing importance of dispute-resolution provisions, this guide seeks to concisely identify and explore, from a transactional perspective, the relevant questions, considerations, and law relating to these powerful tools,” Newman writes. “It also provides illustrative examples of well-drafted provisions, often drawn from real-world legal instruments. The target audience includes practitioners, scholars, businesspersons, and other analysts seeking to learn and apply best practices when planning and drafting for dispute resolution.”

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There is perhaps no area where the impact of artificial intelligence (AI) systems (i.e., systems that exhibit intelligent behavior) will be felt more than in legal departments and, more broadly, in the area of managing contracts, according to an article in Spend Matters.

“Every commercial contract is like a little knowledge base that contains critical data on organizational commitments (usually legal obligations), rights, remedies and rules that reflect business decisions made in the past that will affect performance in the future,” writes Pierre Mitchell. “Unfortunately, the amassed collection of thousands of these artifacts does not provide a ‘collective intelligence’ that can be used efficiently to reduce commercial risks and increase economic value for the firm.”

In this first part of a series, Mitchell discusses three basic steps for building commercial intelligence.

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