contract tips

document comparisonIt’s important not to lose control when you’re negotiating a contract. I’m not talking about losing your cool, but staying on top of contract versions. Here’s an example from my professional youth:

I was negotiating a contract for a large company during my first or second year of practice. There was a lot of back and forth between the lawyer on the other side and me with contract drafts being sent both ways over a period of weeks. Suddenly, I realized that I’d completely lost track of which draft was current and that I’d made revisions to the wrong draft some point along the way, creating a confusing mash-up of old, intermediate, and new contract language. I had to call opposing counsel for help — a bit embarrassing, to be sure.

Documents, documents, everywhere

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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.

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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.

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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:

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The China Law Blog is a must read for anyone doing business in China and it’s a good read for anyone doing business anywhere. It’s going into its seventh year of publication—that’s a long time in dog years and an eternity in blog years—yet it’s still fresh and interesting.

Dan Harris and Steve Dickinson co-author the blog, which is published by Seattle law firm Harris & Moure, where they both practice.

This description of the blog from its “about” page gives you a good feel for what to expect from the blog and the practical nature of the posts: [click to continue…]

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Sometimes the boring standard provisions in the back of a contract can really be brutal.

Take this scenario, for example: 

  • Your company books a trip on a cruise ship and signs a contract to charter the ship.
  • It’s the spring of 2001 and you have the foresight to obtain verbal assurances and a letter from the cruise company stating that in the event of war or an act of terrorism, it will work with you to reschedule the trip or refund your prepayment. [click to continue…]
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Bloomberg reported yesterday that Groupon has been accused in a lawsuit of altering emails containing agreements with merchants after both sides had accepted the terms. See the complaint here.

The plaintiff has accused Groupon of intentionally altering contracts after the fact (“Unbeknownst to Plaintiff and the other Class members … Groupon accesses its merchant-clients’ emails containing the Merchant Agreements while those emails are in post-transmission electronic storage and alters the content of those emails.”). [click to continue…]

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Kudos to Active.com for putting together an excellent browsewrap checkout screen. I had to navigate through the screen recently in order to sign up for the St. Louis Rock ‘n’ Roll half marathon.

When courts determine whether to enforce online terms and conditions, they tend to focus on whether users had notice of the online terms and whether they assented to them. To my mind, the perfect notice and assent procedure would require the terms to be loaded onto the user’s computer screen for long enough to ensure that the user had sufficient time to read them. [click to continue…]

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I’m an unabashed infinitive splitter, but dangling modifiers are a different story. If the aim of a contract drafter is to be clear, concise, and unambiguous, dangling modifiers are bad news. They can create unintentionally interesting sentences, but they also are a breeding ground for confusion. Thanks to a recent tweet by Marilyn Bush LeLeiko (aka @lawwriting), I found this excellent piece about dangling participles by Catherine Soanes on the OxfordWords blog.

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Be careful about informal communications with counterparties to your contracts. That’s the key lesson from a case decided by a federal court in Florida last month. In CX Digital Media, Inc. v. Smoking Everywhere, Inc., the court held that a short, informal instant message exchange between two parties to a contract modified the contract—to the tune of about $1.5 million. And the contract contained a provision that required changes to be made in writing.

The Written Contract

Smoking Solutions and CX Digital had entered into a written contract. [click to continue…]

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