Last week I posted a sample contract and asked for feedback. I’ve made a few changes, most of which are in response to reader comments. You can see the changes in this redline, and here’s a quick recap:
1. Simplified price clause. Section 1 provided that “the Buyer shall pay any manufacturer’s tax, retailer’s occupation tax, use tax, sales tax, excise tax, value-added tax, duty, customs agent or broker fees, inspection or testing fees, freight costs, insurance, or any other tax, fee, or charge of any nature imposed on, in connection with, or measured by the transaction contemplated by this agreement in addition to the prices set forth on Exhibit A.” It bothered me to include such a list in simplified “Minimum Effective Legal Protection” contract. Ultimately, I decided that the list covered three areas: taxes, export expenses, and third-party expenses. Since the form is only meant for domestic transactions, export expenses don’t apply. I revised the sentence to read: “the Buyer shall pay all taxes and third-party expenses imposed on, in connection with, or measured by the transaction contemplated by this agreement in addition to the prices set forth on Exhibit A.” It doubtless needs more work, but I think it’s an improvement.
2. Fraud protection. An anonymous commenter suggested that even a MELP contract should try to ward off fraud claims by including acknowledgements by the Buyer that it has inspected the goods and that the Seller hasn’t made any representations about the goods. My initial thought — as reflected in my response to the anonymous comment — was that it wasn’t necessary to address the potential for fraud claims in a simple agreement. But after reading Glenn West’s 2009 Business Lawyer article Contracting to Avoid Extra-Contractual Liability—Can Your Contractual Deal Ever Really Be the “Entire” Deal? I changed my mind. This clause is also a work in process, but it’ll do for now as I further research the issues.
3. Minor tweaks. Per Ken Adams’s comment, I replaced “In no event will the Seller be liable for” with “The Seller will not be liable for” in the limitation of liability clause in section 5 and made a similar revision in the contractual limitations clause in section 6.
4. Successors and assigns. Also per Ken’s comment, I deleted the successors and assigns clause. Ken addressed his thoughts on the topic anew on his blog this morning in The “Successors and Assigns Provision and Successor Liability.