When putting together a contract for the first time, many business owners may turn to standard form contracts to make agreements between customers, vendors, and other businesses, writes Corey F. Schechter of Butterfield Schechter LLP.

“Calling these contracts ‘standard’ may make it seem like they will protect your interests and provide for any contingencies that arise,” he explains. “However, many businesses find that a standard form contract ends up hurting their business.”

Because a form contract is designed to cover all bases, it may avoid language that is specific to a particular type of business, according to the article.

“Not only do these vague business contracts fail to address important issues that may arise between the two parties, they may also lead to confusion over what terms will actually govern the agreement,” Schechter writes.

Read the article.

Blockchain consortium R3 has contracted global law firm Norton Rose Fulbright to determine the contractual effect and enforceability of smart contracts, reports Finextra.

The issue is whether, or in what circumstances, smart contacts have legally binding contractual effect, are enforceable and whether disputes arising from smart contracts can be resolved by an automated resolution process built into a smart contract.

The Finextra report quotes Todd McDonald, co-founder and COO of R3: “The past few years have seen a great deal of talk about distributed ledger technologies given the profound impact they will have on the future of financial services. In order to fully realise the benefits of the technology, it is essential that we design smart contracts that are legally enforceable. Working with our partners at Norton Rose Fulbright, we’re exploring various ways to ensure smart contracts meet that threshold.”

Read the article.

Lack of precision in reinsurance contract wording has been known to engender anomalous results, points out Larry P. Schiffer in Squire Patton Boggs’ Insurance and Reinsurance Disputes Blog.

“Often a single word or phrase can cause a court or arbitrator to construe an agreement in ways unintended. In reinsurance arbitrations, when the panel majority decides how a contract operates based on its construction of a word or phrase, the losing party is likely stuck with that result even if a court might have construed the contract differently,” he writes.

He describes a recent case that illustrates his point that legalese and unnecessary words can cause a trier of fact to interpret a clause in a way that is unexpected.

Read the article.

Practical Law and Epstein Becker Green attorneys will present a free, 75-minute webinar providing insights into recent developments and expected trends in the evolving legal landscape of trade secrets and non-competition agreements on Wednesday, Nov. 30, 2016, at 1 p.m. EST. This webinar will focus on how to navigate this developing area and effectively protect client relationships and proprietary information.

Epstein Becker lawyers Peter A. Steinmeyer, Robert D. Goldstein and Anthony J. Laura will be presenters.m The moderator will be Barbara J. Harris, Senior Legal Editor, Practical Law Labor & Employment.

Topics will include:

• The Defend Trade Secrets (DTSA), including the new federal remedies available to employers and the steps they need to take to fully benefit from them.
• Newly passed state statutes addressing restrictive covenants, including who can enter into them, industry restrictions, and temporal restrictions.
• Recent decisions regarding what constitutes adequate consideration for a non-compete.
• Interesting developments determining choice of law issues, including a new California statute restricting choice of law provisions.
• Administrative agency developments, including agency enforcement actions cracking down on non-competes.

A short Q&A session will follow.

Register for the webinar.

SpringCM has published an on-demand webinar titled “Get Control of Your Contracts!” that explains how Contract Lifecycle Management (CLM) provides end-to-end visibility into contractual risks and obligations.

“To ensure your business is well-positioned for success in the 21st century, transforming critical business processes like contract management is pivotal,” the company says on its website. “Contracts are at the center of business success since they are directly tied to revenue generation.”

Guest speaker Andrew Bartels, Vice President and Analyst at Forrester Research Inc., discusses the benefits of:

• A central repository for contracts
• Contract reporting and analysis
• Automating the contract process
• And so much more!

Watch the on-demand webinar.

When parties enter into a domestic commercial contract, they may not think critically enough about what will happen if the relationship goes south and how the contract provisions that they chose to include—or did not choose to include or accepted without negotiation—will affect how and where they resolve a dispute and shape the remedies to which they may be entitled, according to an article on the website of K&L Gates.

“Contractual provisions that parties choose to include in their agreement depend on a number of factors including, among others, the identity of and relationship between the parties and the size and nature of the transaction,” write Lauren Garraux, Jacquelyn S. Celender.

In their article, they identify and discuss four types of provisions commonly included in commercial contracts that can have significant ramifications for contracting parties if a dispute between them arises.

Those types include alternative dispute resolution provisions, choice of forum and law provisions and jury trial waivers, damages clauses, and insurance provisions.

Read the K&L Gates article.

It seems easy to just cut and paste and/or use prior agreements and roll them over into a new situation when drafting a contract … but it may cost you more in the long run if and when something goes wrong, cautions Anette Beebe of Beebe Law, PLLC.

In her article, she discusses some of the boilerplate clauses that are typically at issue in a contract, including: choice of law and/or choice of forum clauses, arbitration clauses, jury trial waivers, severability clauses, cooperation clauses, integration/merger clauses, warranties, damages clauses, and indemnification clauses.

Read the Beebe Law article.

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While consumers may not have many choices when signing agreements that contain arbitration clauses, commercial parties often negotiate every last term of their agreements, according to a post on Shutts & Bowen LLP‘s website.

“This includes whether to require the parties to arbitrate their disputes or take them to court. There are advantages to each, so here are five things to consider when deciding whether to include an arbitration clause in a real estate contract, such as a purchase and sale agreement or lease,” write Al LaSorte, Matthew R. Chait and Matthew S. Sackel.

Those considerations include time, money, convenience, discovery and rules. The authors discuss the finer points of each one.

Read the Shutts & Bowen article.

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When it comes to arbitration provisions in employment agreements, one size does not fit all. Arbitration has significant advantages and disadvantages. Deciding whether to include an arbitration provision in an employment agreement requires thorough consideration based upon an employer’s individual circumstances, according to a post in Trenam Law’s Employment Law Update.

The article discusses some of the pros and cons of adding such provisions.

Among the pros are class-action waivers, potential time savings and privacy. On the other hand, there’s the consideration of costs, because some employment arbitration regimes allocate many of the costs to the employer.

Read the article.

The doctrine of void contracts arose recently in an employment case in Florida, Griffin v. ARX Holding Corporation, writes Jason M. Knott for Zuckerman Spaeder LLP.

In that case, the plaintiff, Nicholas Griffin, had a prior conviction for extortion. ARX Holding hired him as its chief financial officer in 2009. But under federal law, an individual commits a crime if he has been convicted of a felony involving dishonesty and then willfully participates in the insurance business. Knott explains that Griffin could have obtained a waiver from insurance regulators, but he was unable to do so.

ARX fired Griffin, who sued, seeking an unpaid $215,000 bonus. But a court ruled that his employment contract was void from the outset.

Read the article.

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It’s common to see SaaS (software as a service) startups initially price their products on a monthly basis, then add an enterprise “Call Me” plan which hides behind it an annual contract. As the business increases its price point, it may eventually book contracts spanning two, three or even five years, explains Tomasz Tunguz, a venture capitalist at Redpoint.

“This pricing pattern has a certain rationale to it. It enables an early-stage software company to rapidly gather feedback,” he writes in the article. “At the outset, when the business prices on a monthly basis, the startup is looking for as much information about the strength of their product market fit as possible.”

“Annual contracts bring predictability to a SaaS startup. Revenues committed for 12 months, and the cash flow characteristics of annual prepay contracts are an enormous boon for the business, reducing the total amount of financing the might have to raise.”

Read the article.

A well-drafted arbitration provision can save companies from expensive and time-consuming class litigation, two defense attorneys say in a report published by Bloomberg BNA.

Mayer Brown LLP partners Kevin S. Ranlett and Archis A. Parasharami of Washington say advise that companies and their lawyers should draft service and employment contracts with recent U.S. Supreme Court rulings on arbitration.

The two helped client AT&T Mobility draft an arbitration provision that was ultimately upheld by the U.S. Supreme Court in one of those landmark cases, AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).

The sections on the three tips are headed: “Don’t Create Uncertainty,” “Include Consumer/Employee-Friendly Terms,” and “Avoid Potentially Unconscionable Terms.”

Read the article.

In a new online audio discussion, Bloomberg takes a look at “all the stuff you sign when you sign on for a job.”

Citing nondisclosure agreements required for staff and volunteers in the Trump campaign, the turmoil at Fox News after Roger Ailes stepped down from the top post, and a poll that showed that up to 90 percent of respondents did not read their employment contracts, Bloomberg calls on labor and employment lawyer Brett Gallaway to break down the standard terms of a boilerplate contract and what signing that dotted line really means.

Listen to the discussion.

The sixth installment in Bryan Cave LLP’s series about banks’ third-party vendor service contracts covers two subjects: first, ownership of trademarks, copyrights, patents and other trade secrets, source code escrow agreements; and second, confidentialty.

Jerry Blanchard wrote the article for the firm’s Bank Bryan Cave blog.

“The contract should include intellectual property provisions that clearly define each party’s intellectual property rights for their pre-existing materials and materials developed as part of the contract,” he explains.

And: “The bank will want the vendor to maintain the confidentiality of all information provided by the bank. This includes preventing the vendor or its subcontractors from using the information in a manner that is not anticipated by the contract.”

Read the article.

The risk of a data breach cuts across industries and affects businesses large and small, causing some companies to migrate mission-critical data, including sensitive customer information, to third-party cloud providers, according to an article written by Sidley Austin lawyers Scott Nonaka and Kevin Rubino for Bloomberg Law.

“As data breaches have increased, so have the number of companies migrating mission-critical data to the cloud, including sensitive customer information,” they write. “These companies often turn to third-party cloud service providers to provide data hosting, software or infrastructure services. This trend is driven, in part, by the growing perception that cloud services are more secure than traditional information technology environments.”

They point out that data stored in the cloud faces many of the same threats as locally-stored data and, due to the growing amount of information in the cloud, it can be an attractive target for hackers.

Read the article.

Laura Bartlow of Zelle LLP writes in a post on JDSupra that the very first item on her list of rules for employers is this: Don’t make promises to your employees that you can’t or won’t keep.

“Employers’ promises include those set out in employment contracts, of course, but there are others promises made by employers that can create legal liability and that are worth regular attention,” she explains. “And it works both ways – employees, related businesses, and vendors may also be obligated by the agreements that they have made with you.”

She discusses some of the most important points to consider, including: obligations in written employment contracts’ obligations in written policies and handbooks; obligations of employees, related organizations, and vendors; and obligations created by government contracts.

Read the article.

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Ed Sohn writes at Above the Law about the the 2016 Nobel Prize for Economics being awarded to Oliver Hart and Bengt Holmström for their research in contract theory, saying the two return to basic principles of contract and are well-reflected in our policy-making and contract negotiation today.

“At minimum, efficient contracts are complicated business, and the financial burden of well-negotiated contracts is high,” Sohn writes. “Whether we’re talking about hidden covenants sneakily obscured in bond indentures or whether we’re looking at bad commercial leases that cripple a small business’s ability to grow, a fair and efficient economy requires fair and efficient contracts. To get there, we need more visibility and fairer incentives.”

The article discusses managed services solutions and technology solutions.

Read the article.

Investors wanting to sue Chinese companies in U.S. courts for corporate governance violations — using contractual provisions requiring litigation in their home country to replace what they see as “unfair” Chinese laws — may be disappointed in their options, writes Dan Harris in the China Law Blog.

“What will actually happen is that the parties will be required to prove Chinese law in a U.S. court, a difficult, time consuming and expensive process. This is usually exactly the opposite of what the U.S. party assumed would happen in this situation,” he explains.

“A contract provision calling for disputes to be resolved in one country’s court has little to no influence on the law that court will apply to the case. Most importantly, it is difficult to imagine a thoughtful American judge applying U.S. corporate governance law to a transaction that took place wholly in Mainland China and that involves Chinese entities,” Harris adds.

Read the article.

Many contracts contain no provisions regarding renewal, and the term simply ends after a specified period of time, write Peter M. Watt-Morse and Cindy L. Dole for the Sourcing @ Morgan Lewis blog.

They explain that sometimes this is appropriate:

“For example, contracts will end when a specific project has been completed or by a specified date for reasons related to intellectual property, third-party agreements, or specific business requirements. On the other hand, renewal should not be overlooked. The parties may have incurred significant start-up costs (including negotiating efforts) and want to avoid repeating those costs. For customers, the goods or services (or the price or quality of such deliveries) may not be available from other vendors. For vendors, the customer may be an important client that competitors prize. Therefore, before finalizing the term of any contract, potential renewal provisions should be reviewed.”

The article covers practical considerations of renewal, automatic renewal, and other renewal options.

Read the article.

The latest installment of Construction Dive’s “The Dotted Line” series discusses a problem many construction contractors see in their business: misinterpretation of terms in their contracts.

Writer Kim Slowey covers five of the most common sources of this misinterpretation, with input for experts.

“Most construction contractors follow custom and standard practice in the industry, or what they’ve always done in the past,” said Chicago attorney Matthew Horn, a long-time construction law attorney and founder of Legal Services Link.

The article discusses incorporation clauses, pay-if-pay versus pay-when-paid, Change orders and extras must be in writing to obtain payment, indemnify versus defend, and mechanics’ liens.

Read the article.