In a post on the Business Law Prof Blog, Joan MacLeod Heminway, professor law at the University of Tennessee, discusses the question: Is an LLC operating agreement a contract?

She writes that “with judicial and legislative attention on freedom of contract in the LLC, the status of the LLC as a matter of contract law may shed light on the extent to which contract law can or should be important or imported to legal issues involving LLC operating agreements.”

The writer discusses some recent court rulings that address the issue, and says there are some other LLC questions that may be impacted by the determination that an LLC operating agreement is or is not a contract.

Read the article.

CobbleStone Systems, a provider of contract lifecycle management software, announced it has launched an enhanced Microsoft Word App for Contract Insight Enterprise Edition. The latest version of Contract Insight Enterprise offers an Install Pak with an innovative MS Word Application for seamless contract revisions and version control.

“CobbleStone has been providing industry-leading contract management software which allows legal resourced to more easily track, manage, negotiate and approve organizational contracts for over 20 years,” the company said in a release. “We understand the need for a seamless connection with MS Word and our web-based CLM to effortlessly track all versions of each contractual document. Our new features save our clients’ time and effort during the contract redlining process.”

The release continues:

CobbleStone Systems Corp. is a leader in user-friendly, enterprise contract lifecycle management software solutions. CobbleStone has been a best-of-breed vendor since 1995, provides the benefit of years of experience, is a Federal GSA vendor, is rated by Gartner, Forrester and Dun & Bradstreet, and offers one of the most feature-rich products on the market.

When heading off to China, foreign companies all too often make the mistake of trying to protect their IP from China by using a U.S.-style non-disclosure agreement (NDA), writes Dan Harris of Harris Moure. In a new article on the website of Forbes, he explains how to protect intellectual property from China with a China appropriate NNN (non-use, non-disclosure, non-circumvention) agreement.

The article focuses on why U.S.-style NDA agreements do not work for China.

“The Chinese company that steals your idea does not do so to reveal it to the general public. It steals your idea to use for its own benefit. This means that your contract with Chinese companies must make clear that whether the information provided is a secret or not, the Chinese factory agrees not to use the information in competition with you.” he writes.

Read the article.

A China-centric written contract is an effective tool for doing businesses in or with China, explains Steve Dickinson of Harris Moure in an article published on the China Law Blog.

“A first step in creating this effective tool is to carefully follow the rules for execution,” the explains. “Chinese courts are bureaucratic and formalistic. Make use of that tendency so that you can prevail. Don’t blunt the edge of your instrument with sloppy execution procedures. A casual approach to execution is neither appropriate nor effective for China. A failure to follow China contract law formalities can lead to a Chinese court not enforcing your contract.”

“Chinese courts are hyper-technical when working with written documents. If there is any surface flaw, a party will object to the authenticity of the document and then force the party offering the document to prove its authenticity,” he writes in the article.

Read the article.

Chris Brown, founder of Kansas City law firm Venture Legal, offers seven quick factors to review in every contract to help you protect your interests.

In the article published on SiliconPrairieNews.com, he starts his discussion with the importance of properly naming the parties. “The first thing you need to do is make sure the parties are identified correctly. If you are a business, then make sure you are signing the contract on behalf of the business and not yourself individually.”

He continues the discussion with the issues of naming the parties, obligations, payment terms, termination rights, intellectual property, confidentiality, and miscellaneous terms.

Read the article.

In a new article on Lexology.com, Jonathan Reich of Womble Carlyle Sandridge & Rice LLP discusses the difference between an insurance policy with a deductible compared to one with a self insured retention (“SIR”) and how that impacts business contracts.

“Deductibles and SIRs are often conflated; the differences are poorly understood by those outside of the insurance industry as well as the practical implications,” he writes. “Two policies can have a $1 million limit, with the only difference between the two policies being that one has a $100,000 deductible and the other a $100,000 SIR.”

He explains the differences, but adds that these simple distinctions have stark real-world implications.

Read the article.

A contract manager’s role involves an enormous amount of relationship building as well as highly developed problem solving skills, ContractRoom says in an article on its website.

“Organizational skills are also required but advances in technology have meant that contract managers can relax a little as software can be programmed to guide them at each stage of the process. This means key deliverables can be met and all processes and procedures can be complied with without contract managers having to rely solely on their memories or manual organizational abilities,” according to the article.

The article outlines principles of relationship management, problem solving and organizational skills.

Read the article.

A contract between an executive and an employer does not always have to be in writing, writes Jason M. Knott of Zuckerman Spaeder in an article published on Lexology.com.

“Sometimes, employees can enforce oral promises,” he writes. “Agreements can also be implied based on the parties’ conduct, even when no one made a promise, either in writing or orally.”

He discusses a ruling in a Third U.S. Court of Appeals case, Steudtner v. Duane Reade, Inc., to shows that contracts that aren’t in writing can be much harder to enforce.

Read the article.

When conditions are encountered on a construction project that are contrary to the information provided to bidders, the parties’ contract should provide a roadmap for how the parties ought to proceed, writes Timothy W. Gordon, a partner in Holland & Hart, in an article published on Lexology.com. When the parties’ contract is silent on the issue, the price of contracting increases, uncertainty arises, and the likelihood of disputes increases.

His article includes sections titled:

• Why Have A Differing Site Conditions Clause?
• What If There Is No Differing Site Conditions Clause?
• What About Public Projects?
• What About Exculpatory Clauses?

Read the article.

Contract terms and purchaser assent to those terms, conditions, intended use and warning information provided with a purchased product are known fertile ground for defending product claims, write Amy Alderfer and Sara Poster in Cozen O’Connor’s Products Liability Prevention & Defense blog.

The authors point out that consumers often turn to the internet to purchase products, particularly during the holiday season. The paper examines the enforceability of online contracts and corresponding reliance upon virtually provided product documentation.

By following the guidelines in the article, the authors write, “manufacturers and sellers can place themselves in a stronger position to successfully enforce the terms and conditions on their websites in court, and hold consumers accountable for having received, reviewed and accepted the warnings and product related information so diligently provided.”

Read the paper.

Employers generally embrace a policy of utilizing at-will employment as often as possible, where employers and employees can end their relationship with each other at any time and for any (legal) reason, writes F. Kytle Frye III of Fisher & Phillips LLP in an article posted on JDSupra.com. Written employment contracts are usually reserved for select executives and a few professionals.

“Numerous states, often through judicial pronouncements, have recognized varying exceptions to the at-will employment concept, such as allowing employees to challenge their termination as a violation of public policy,” he writes.

“The 8th Circuit Court of Appeals recently published a decision which sharply limits the application of the public policy exception. Interestingly, this limitation does not apply to at-will employees, but to employees with employment contracts. Somewhat ominously, the decision does not extend to all such contracts, creating an air of uncertainty for any healthcare business with employment contractual situations.”

Read the article.

As the market shifts from on-premises to cloud deployment, the risk of getting locked into a disadvantageous cloud contract increases for three main reasons, according to a report by  R. “Ray” Wang with Constellation Research.

“Cloud apps have dominated new license sales in the enterprise applications market in recent years.” he writes. “Constellation estimates that 93 percent of all new enterprise software license sales offer a cloud deployment option.  In the cloud model, buyers do not own the software license. Instead, the software is leased and accessed, while the purchaser owns the data.”

He discusses the three main reasons behind the risk of getting locked into a vendor.

Read the article.

There are many ways to measure the success of a contracting cycle, according to an article published by ContractRoom. “For example, the time the contract took to negotiate, the timeliness of the delivery of services and the accuracy and quality of the services delivered are all things that could be measured and considered. But how many of these factors can be used to measure the performance of your internal contract managers? Is it the case that some factors lie outside of their control and should not be considered in managing their overall performance?”

The article says that many of these factors can and should still be considered. It discusses nine factors that should be reviewed.

Read the article.

A recent case from the 7th Circuit Court of Appeals discussed an interesting issue of contract interpretation of termination provisions, denying summary judgment and requiring further proceedings, writes Stephen M. Proctor, Vice Chair of the Business Group at Masuda Funai. But the decision also provoked a vigorous dissent that was probably more consistent with the freedom of contract principles (including freedom to make a bad contract) frequently espoused by circuit judges, he added.

The case is Life Plans, Incorporated v. Security Life of Denver Insurance Company, 7^th Circuit Court of Appeals, No. 14-1437, August 31, 2015.

Read the article.

A recent decision by the Patent Trial and Appeal Board (PTAB) has reduced a “covenant not to challenge” clause to mere words on paper, and fails to deter licensees from seeking a review of the licensed patent under the America Invents Act (AIA), write   Lillian Safran Shaked & Asaf Naymark in IPWatchdog.

“Covenant Not to Challenge” clauses are common in patent licenses, they write. “The clause provides that a licensee may not challenge the license in court or an administrative proceeding, and can also provide that the licensee cannot assist others in doing so.”

After discussing the case at length, the authors conclude that there is significant risk of damage to a patent licensor from a post-license IPR challenge, whether or not a “covenant no to challenge” is enforceable. “Given the costs involved and the possibility that unrelated license agreements may also be invalidated or terminated as a result of an IPR, there is need for clarification,” they write.

Read the article.

Many businesses have software licenses that are tailored to the business’ needs, and are for business operations on a day-to-day basis. But what happens if the software provider goes out of business or discontinues support for the software? In short, the business may not have meaningful access to necessary software after it is no longer offered or supported by the publisher. That is, unless the business negotiated a source code escrow agreement, writes Stephen Pinson in Scott & Scott‘s Software & Copyright Law Blog.

A source code escrow agreement is an agreement to deposit the source code of the software with a third party escrow agent. During the negotiation of the software license agreement, the licensee (the business seeking the software for its business needs) can request that the publisher place the source code into escrow and release the source code upon a defaulting event. A defaulting event is usually defined as insolvency, or the filing of bankruptcy by the software provider, or the inability of the software provider to maintain or update the software as promised under the software license agreement.

Normally, a software license agreement conveys access to the object code for the software. However, when there is a source code escrow agreement in place, the source code remains with the escrow agent, and when there is a subsequent defaulting event, the source code is released to the licensee by the escrow agent.

The agreement’s terms are heavily negotiated, because the events that trigger the release of the source code effect the licensor’s possession and control of the source code. Some important defaulting events that should be included in the agreement and negotiated by a licensee are the following:

1. Bankruptcy
2. Insolvency
2. Assignment to the software publisher’s creditors
4. Appointment of a receiver
5. Failure to provide maintenance and/or support agreed upon
6. Failure to correct any material malfunction, defect, or nonconformity of the software functionality
7. Change in control of the provider
8. Default by the licensor after ample opportunity to cure
9. Laying off a substantial number of employees who provide support for the software

Finally, the licensee should negotiate the software provider to escrow the names, phone numbers, and addresses of the software’s programmers so that the licensee can contact them and hire them if needed in case of a defaulting event.

It is important to seek advice from experienced counsel in order to understand all the risks involved when negotiating software licensing agreements.

Lawyers may argue that by nature the art of drafting contracts is so complex that it would be nearly impossible to use any form of analytics to assist in the process, writes ContractRoom on its website. But the new wave of contract drafting and management software is seeking to defy that argument.

The article says Kingsley Martin of KMStandards (publisher of ContractStandards) suggests there are three main metrics that define the success of a contract negotiation process: quality, cost and time.

“Newer technology is seeking to help optimize all three of these aspects of the contract management process by measuring metrics on contracts for various purposes.  An analysis of this data could lead a system to automatically produce contracts with optimized terms – i.e., the terms in the past that have required the least amount of time to negotiate.” the article says.

Read the article.

Technology companies can preserve both significant sums of money and valuable intellectual property rights if they take action when a customer or business partner files for bankruptcy protection, according to a report published on the Buchalter Nemer website.

Shawn Christianson, Valerie Bantner Peo and Ivo Keller wrote the article.

“Far less effort is usually required to preserve these rights than what may be involved in a major piece of litigation; but, in almost every case, the company must take timely steps to ensure that its interests are protected,” they write.

They discuss measures that technology companies can take, and the procedures they should be aware of, to protect their rights in this area of law.

Read the article.

The International Association for Contract & Commercial Management will present a free, three-week online course offering ideas and insights into the world of business and trading relationships. This course will be a repeat of an April event.

Starting on Nov. 9, “the three week course will help you to better understand what is involved in commercial business relationships, and the process of managing contractual agreements,” IACCM says on its website. “You will learn how a person’s or organization’s objectives – and those of their customers and suppliers – can be achieved in an effective way, without threat or failure.”

Three modules, 5-10 minutes each, are released each week. They are recorded so participants can listen at their convenience.

Topics include:

• Relationship fundamentals; the things that can go right or wrong in commercial relationships
• The rules that govern public and private sector procurement
• The complexities of supply chains and networks that are a feature of many contracts
• How to manage interdependencies and the needs of multiple stakeholders
• Judgment and the data needed to inform it

Register for the course.

Contract managers carry with them a lot of valuable knowledge, data and wisdom, so it is important that a business captures this information so that when an employee contract manager leaves the company, these gems do not exit with them and can be leveraged for future use, reports ContractRoom on its blog.

The post outlines a list of information and valuable data a contract manager holds and why it should be captured, such as “Knowledge about the terms or specific parts of contracts that caused the most amount of pain in specific transactions,” and “Knowledge of the personalities people have with whom you negotiate regularly,”

Read the article.