The Second Circuit struck down an arbitration provision in an American Express Card Acceptance Agreement, which contained a class action waiver, for the third time Wednesday. I found the case yesterday via a post on Howard Ullman’s My Distribution Law blog.
Probably no case has been more affected by the Supreme Court’s recent arbitration decisions, as the case was sent back down to the appeals court after the Supreme Court’s April 2010 decision in Stolt-Nielsen v. AnimalFeeds and it was revisited again after the Supreme Court’s April 2011 decision in AT&T Mobility v. Concepcion.
Legal triage is an everyday part of business. It’s rarely anything so dramatic as the action you see on TV hospital dramas, but businesses constantly have to decide which legal issues are critical, which are important, and which can be put off for a while — or even ignored altogether.
I’ve often advised people to give important contracts special attention. That might mean a full-blown negotiation with rooms full of lawyers and business negotiators, bland pastries, and tubs of Red Bull. But sometimes it’s sufficient to have an executive higher on the corporate org chart read the contract closely and consider the pros and cons of its terms.
I sometimes give a presentation on simple contracting practices that businesses can adopt to reduce their risk. I’ve posted a cliff notes version in Contract Hygiene: Five Healthy Contracting Habits (Part 1) and (Part 2). Without spending a dime on lawyers, a lot of businesses can significantly reduce the number and size of the time bombs that are sitting in their file cabinets cleverly disguised as contracts.
Habit #2 is Give important contracts special attention.
Whack-A-Mole. Cockroaches. Electronic confidential information. What’s the common thread? They’re all difficult to destroy. The moles of the carnival game relentlessly pop up in new places. Cockroaches could survive a nuclear attack. And it would be difficult — potentially impossible — to completely destroy electronic confidential information as is required under many confidentiality agreements.
The Typical Return or Destroy Requirement
Confidentiality agreements often require the party that has an obligation to protect the confidential information (the receiving party) to either return or destroy the information at the end of the agreement. Here’s a typical provision, which I borrowed from the Iowa State University Extension website:
In my first roundup post of 2011 Eighth Circuit contracts cases, I discussed Weitz v. MH Washington, a breach of contract case that was decided by the Eighth Circuit a year ago. I focused in the post on the role of sloppy contract drafting and sloppy contract performance in the court’s piercing the corporate veil analysis. The court considered other contract law issues, however, including the principle that a party to a contract can’t hinder the other party’s performance and then sue for its failure to perform.
In Weitz, a developer refused to pay its contractor although the contractor had substantially performed its duties under the contract. [click to continue…]
I recently stumbled upon a couple of contracts products. One is TOSAmend, which allows you to mark up online terms of service before agreeing to them in the hope that you’ll be able to form a contract on more favorable terms. The other is PocketNDA, a small notebook of form non-disclosure agreements for those times when lunch conversation gets serious. What do you think, are these useful contracts tools or mere novelties?
Liquidated damages provisions can be a useful way to ensure that you have a remedy if the other party to a contract fails to live up to its end of the bargain. When things go south in a commercial relationship, proving that a breach of the contract has occurred is only half the battle; the other half is proving damages, which can often be difficult. (The third half is executing on the judgment, but that’s a subject for a different blog.) A liquidated damages clause can help solve that problem.
I don’t often link to content located in the nether regions of a law firm’s website, but this piece about indirect damages is worth an exception. It was written by Stephen Brett of the UK intellectual property law firm Anderson Law LLP. Not coincidentally, one of the best contract law blogs I follow is the firm’s IP Draughts blog, which covers intellectual property issues with a heavy emphasis on contract issues.
You sign two identical contracts with two different suppliers, one to buy stuff and the other to buy services. If both of your suppliers default in the exact same way, your rights will be the same under each contract, right?
Probably not, because the law that applies to the sale of goods is not the same as the law that applies to the sale of services. There’s a lot of overlap, and most contract law principles apply to both, but the law isn’t the same. [click to continue…]
If a travel website erroneously lists a low price for air fare and you book a trip, can you hold the airlines to the low fare? As the ContractsProf Blog recently explained, it depends, but you might be able to. The ContractsProf’s post discusses a situation where the published fare was a fraction of the going rate for a round trip from San Francisco to Palau. Was it a case of a unilateral mistake? It depends on whether the customer should have known that the fare was in fact too good to be true.