Hopefully you have read our blog titled “A Summary of Essential Contract Terms – Part 1.” This blog is a continuation of the questions that should be asked while negotiating and drafting every contract: How will notices be given? It is important to require all notices to be given in writing and set forth how […]

Every industry and type of business requires its own unique contracts. However, there are certain essential terms that should be included in most every contract. Below is a simple summary of several questions you should ask in determining what types of clauses you need in your agreements. Should the contract be assignable? Most parties do […]

If you’re going to enter into a contract, you want to make sure it is a strong one. Every transaction is unique, but below are a few general tips for ensuring your agreements are solid: Get it in writing Although some verbal agreements can be binding, they can be extremely tough to enforce. You should […]

It is a common mistake for users to enter into an outsourcing contract with the assumption that they will automatically be given new or updated technology during the life of the agreement. Unfortunately, unless this is specifically stated in the outsourcing contract, the supplier is not obligated to provide you with upgraded equipment. This can […]

Having strong contracts is one of the most crucial steps to ensuring you have a successful business. Your written agreements govern not only daily operations and deadlines, but also all of the terms and conditions governing your relationship with the other party. When you have numerous contracts, keeping track of all the different duties and […]

One of the most important goals in drafting a contract is to lessen the risk of your business being sued or having to sue another party. Another important goal is to safeguard your position if litigation should become necessary. Below are a few things to consider: Investigate the other party It is always a good […]

Buyers and sellers often use a letter of intent (LOI) to memorialize their agreement on the key terms of a transaction. Some of the material terms that are included in the LOI are the price, closing date, due diligence terms and other important deal points. Many parties find a sense of comfort once the LOI […]

For many business owners and managers, selecting the right legal counsel can be intimidating. Many businesses, especially smaller ones, worry that the cost of working with an attorney will not be worth the benefit gained. It is important for business owners to understand that having an experienced lawyer on your side can help ensure the […]

Depending on the industry, a certain percentage of business is conducted vis-à-vis signed contracts. However, my observation is that much of commerce is conducted by the seller submitting its quotation (with its terms of sale), the buyer submitting its purchase order (with its terms of purchase) and neither signing the other’s form. This is an […]

While every contract is unique, a typical business contract contains some basic or “boilerplate” provisions. These clauses usually follow a standard format and they are carefully worded to ensure they will hold-up in court. Because so many contracts contain similar boilerplate provisions, many people do not read them or do not understand what they are […]

As a seasoned business attorney, I can tell you that a significant number of contract disputes can be prevented with strategic pre-planning during negotiations and drafting of the document. Regardless of the size of your business or your level of expertise, it is common for the same underlying issues to lead to litigation over contracts. […]

The Securities Exchange Commission (SEC) has been ramping up its review of confidentiality provisions that affect its enforcement efforts and on the rights of whistleblowers. In fact, the agency has even requested copies of several companies’ employment contracts, non-disclosure agreements, and other documents that have been signed by employees over the past several years. The […]

You have probably heard that is it important to thoroughly read a contract before you sign it. However, reading it is only half of it – you must also make sure you understand your rights and obligations under it. Whether this means you confer with an attorney or read the contract five times over, it […]

Hopefully you have read our previous blog titled “Contracts for the Sale of Goods & the CISG.” This blog will focus on some of the key differences between the United Nations Convention on the International Sale of Goods (CISG) and the Uniform Commercial Code (UCC). When the CISG is applied, the parties often make inaccurate […]

If you have not heard of the United Nations Convention on the International Sale of Goods (CISG) and you conduct business in different countries, you need to read this blog! Many American businesses are shocked when they learn that the CISG and not the UCC may be the applicable law to their contracts when dealing […]

You have often heard that you should read a contract before you sign it. While this is true, the better advice is to make sure you understand the contract before you sign it. Many attorneys love to use fanciful legal jargon that can make it difficult to fully understand the terms and conditions in the […]

If your entity has a wide variety of contracts, it can be a difficult task to manage them all. There are a variety of comprehensive contract management programs that can make the process easier for you. Consider the following tips: Identify the Contracts Before you can decide what type of contract management program will work […]

If you have decided to close your business, it is important to understand that it involves more than hanging out a “closed” sign and selling off your inventory. Business owners have a legal duty to pay the entity’s creditors before any of the business assets can be distributed to the owners. Failure to follow the […]

Employers and employees often have confusion regarding overtime pay, which can ultimately lead to costly disputes. One of the most important steps an employer can take is determining whether the employee is exempt or non-exempt. Employers are required by law to pay all employees at least minimum wage for every hour worked and a non-exempt […]

If you have entered into a contract that is no longer meeting your needs and you call to cancel the agreement, you may be surprised to learn that you are bound by the contract to continue paying the other party for the same amount of time as the original term of the contract. How does […]

If you are bound by a contract that is no longer working for you, it is important to review the term and termination clauses in the agreement. The term of a contract is the amount of time it remains effective. The termination clauses outline the various ways the contract can end. Term of the Contract […]

Hopefully you have read our first blog on this topic titled “Contract Tips for Avoiding Data Breaches – Part 1.” Below are more contractual provisions you should consider implementing into your vendor agreements to help ensure your confidential data is protected. Notification Requirements If there is a breach in security or any impermissible uses of […]

There has been widespread concern throughout every industry about how to safeguard and protect confidential information from data breaches. Cybercrime is becoming one of the top concerns for the Federal Bureau of Investigation (FBI). Robert Mueller, FBI director, has stated that “[t]here are only two types of companies: those that have been hacked, and those […]

Have you ever read through all the terms and conditions of an online contract before clicking the “I agree” button? For most people, the answer is no and they would likely be surprised to find out what they are agreeing to. In fact, there are reports of various websites sticking in clauses where the user […]

When you have a written contract and a dispute arises, often one party will claim that the contract meaning is different than what it says. In an effort to prove their claim, the party typically attempts to submit external evidence to alter or add to the agreement. However, Article 2 of the Uniform Commercial Code […]

It is likely that your business contract contains a provision that grants the customer the ability to terminate the agreement without payment of penalties in the event of a “material breach.” Unfortunately, many contracts fail to identify what constitutes a material breach. Without this clarification in the contract, the determination must typically be made by […]

When you are negotiating and drafting a contract with a supplier, it is imperative to include a well thought-out provision regarding how changes will be handled. The types of things you should address in the changes provision depends upon the product or service you are buying. Below are a few examples of the different issues […]

It is common for many licensing agreements to grant a license to a particular entity and its “affiliates.” The contact may even define what the term “affiliates” means, but this doesn’t always mean that the definition includes all of the parties that were intended to be included. For example, does a license that is granted […]

Licensor’s Perspective If you are the owner of software and you want to allow other parties the right to use the software while maintaining ownership and control over it, you need a software licensing agreement. As a licensor, you can limit the scope of the license by defining how and for what purpose the licensee […]

Have you heard the story of how the supplier relationship between Apple and GT Advanced Technologies (GTAT) went south? GTAT was the company selected by Apple to supply sapphire for use in the iPhone 6 screens and there are some significant lessons to be learned from them. Prior to Apple’s relationship with GTAT, the iPhone […]

It is a common misconception that oral contracts are not enforceable. When you think about it, individually and on behalf of our business, we frequently engage in transactions where both parties don’t negotiate all the terms, sign the same document or even exchange forms. This morning, the pipe under my bathroom sink burst and flooded […]

If you have read a contract that is filled with fanciful legal jargon, you were probably left wondering what it all meant. One of the favorite terms used by many attorneys when drafting contracts is “notwithstanding.” This one word can create significant confusion because it is used to create exceptions to the rules set forth […]

It is common practice for parties entering outsourcing contracts to limit their liability to each other. However, one of the most common exclusions of the limitation on liability are damages caused by gross negligence or willful misconduct. What constitutes gross negligence and willful misconduct? The definitions vary from state to state. Many times the determination […]

Contrary to the reputation lawyers have, we really do want to help you in a manner that is effective and efficient. Unfortunately, many people get frustrated with the time it takes to get the answer they need. What they fail to realize is that if their attorney had been informed earlier and kept in the […]

Hopefully you have read our blog titled “State of Indiana v. IBM: Test for Determining the Materiality of a Breach of Contract.” Below are a few tips for how to define what constitutes a material breach in your contract and help ensure the court will support your termination when a material breach occurs: Clearly identify […]

There is not a significant amount of case law on the topic of how to determine whether a party’s breach of a contract rises to the level of a “material breach.” However, an Indiana court recently provided some direction with its decision in State of Indiana v. IBM. Facts of the case The State of […]

Many companies have their “terms of use” posted on their websites, but are they binding? The Ninth Circuit Court of Appeals recently decided a case addressing this specific issue and providing guidance to businesses that use websites and/or mobile applications in transacting with customers. Facts of the case In Nguyen v. Barnes & Noble Inc., […]

The term “prompt” is commonly used in contracts, but what does it mean? According to Judge James T. Vaughn Jr. of the Delaware Supreme Court, it depends. Facts of the case In Avaya, Inc. v. Charter Communications Holding Company, LLC, C.A. No. N14C-03-052, Plaintiff Avaya, Inc. (“Avaya”) moved for summary judgment. The parties entered a […]

Assistant general counsel at IBM, Neil Abrams, believes that he can better serve clients and customers by simplifying matters. With this strategy in mind, Abrams has led a team in reducing complex and lengthy contracts for cloud services to a straightforward, two-page document. Abrams explained to CorpCounsel.com that the contracts for a large number of […]

Hopefully you have read our blog titled “Shipping Terms in Your Commerce Contracts.” This blog will provide a brief summary of some of the terms defined in Incoterms 2010. Remember, these are summaries of the terms and you should confer with legal counsel before using an Incoterm in your transaction. Below are Incoterms that apply […]

If you are entering a partnership, shareholder or Limited Liability Company (LLC) Operating Agreement with another party, it is important to draft a solid contract. Although you may not think it is necessary because the other party is somebody you trust, having an agreement in writing can help avoid legal disputes in the future as […]

Shipping terms used in domestic commerce in the United States are defined by the Uniform Commercial Code (UCC), as adopted by each individual state. However, the UCC terms (as they currently stand) are inadequate for international transactions because they do not deal with responsibility for exporting and importing as well as who loads and unloads […]

0Hopefully you have read our blog titled “Indemnification Clauses,” because indemnification is commonly confused with “hold harmless” provisions, and rightfully so. In fact, many argue that the two are one in the same. A hold harmless provision provides that a party is not liable for certain damages under a contract and shifts the responsibility for […]

Whether you are an employer or an employee, it is important to have your sales commission agreements in writing. In fact, several states (including California) require any employer that pays commissions to employees providing services in the state to have a written agreement with the employee. The contract must outline how the commissions are computed […]

When a buyer and seller are negotiating the issue of limitation of liabilities, it can get messy. The goal of your attorney is to eliminate or at least reduce the amount of risk, while a business person’s goal is to get the deal done ( and, of course, all deals have inherent risk). It is […]

If you are the owner of intellectual property (IP), it is imperative that you protect your rights by properly registering it and using a licensing agreement that safeguards your rights. For more general information, please read our blog titled “Understanding Licensing Agreements.” When creating a licensing agreement, you first need to determine the scope of […]

If you are an independent contractor or freelancer, you may be working for others without having a contract in place. Unfortunately, working without a written agreement makes you vulnerable to being taken advantage of. A contract is beneficial in many ways because it not only protects you legally, it also assists with scheduling issues and […]

Understanding what constitutes “intellectual property” (IP) and the importance of protecting it is important to any business owner. IP is anything that is created in an individual’s mind, including art, music, computer software, inventions, designs and trademarks. You can protect IP with a license, which is a type of contract that allows you to maintain […]

When you are negotiating a contract with another party, it can be a complex and lengthy process. Below are a few tips to help expedite the legal review process before you even involve your attorney: Before you give the other side a copy of the contract, talk over the major issues. Create a checklist of […]

A “defense clause” is a provision that establishes the duty to defend the other party to a contract in certain circumstances, such as preparing for and defending a lawsuit. It is commonly found in an agreement in conjunction with indemnification clauses and hold harmless provisions. The party that has undertaken the obligation to defend is […]

Most contracts contain indemnification clauses, but few parties take the time to read them or fully understand what they mean. Although the language used may appear to be “boiler plate” or standard contract language, an indemnity clause can be a significant part of the agreement that you want to negotiate for your benefit. An indemnification […]

When your business is ready to hire employees, it is essential to get legal help. An employment contract can be used to outline the legal relationship between your entity and your employees so there is no confusion regarding the rights and duties of the parties. Having an agreement in writing can help your business avoid […]

It is becoming a common practice for parties to use email to negotiate, review and revise contracts. While the internet makes it convenient and quicker, it can also inadvertently lead to liability. Courtrooms across the country are seeing an increase in the use of “electronic evidence.” You don’t want an opposing party to use your […]

There are several industries that require valuable intellectual property to be shared with third parties. In order to protect intellectual property, most businesses use confidentiality agreements or non-disclosure agreements (NDA). However, there are certain circumstances where having a NDA may not be enough. In the case of nClosures, Inc. v. Block & Co., the Seventh […]

All business owners look for ways to cut costs and save money. You may think that handling legal issues on your own will save your entity money, but working with a business lawyer to safeguard your business’s best interests will save you in the long-run. For example: Legal structure. Having an attorney help you pick […]

Whether you are the owner of a start-up business or one that has been operating for a while, it is important to ensure that your company’s intellectual property is protected. Intellectual property can include items such as your business name, inventions, logo or trade secret. Ideally, you should register your business’s trademarks as soon as […]

Employers should be aware that wage and hour issues are often the basis of employee lawsuits. As a result, it is important for employers to ensure that their employee handbooks are updated, including policies regarding vacation time and sick leave. Vacation Time An employee is typically not entitled to paid vacation unless the employer has […]

Does your business have an intangible asset that you need to protect from competitors? It could be an idea, customer list, computer code or other comparable assets. It is essential that you take steps to safeguard the aspects of your business that sets it apart from others. If you don’t do it now, it could […]

When you are starting a new business, it is easy to feel overwhelmed by all of the decisions you have to make. The decisions you make now can have lasting consequences, so it is important to get them right. Below are five important tips to help ensure that your new business gets off to a […]

Employers are required to pay workers a minimum wage set by law for all hours worked. If an employee is non-exempt, they must be paid suitable overtime pay right for any additional time worked. Overtime pay may seem like a simple topic, but it can get more complex when applying it in real-life situations. Initially, […]

BRIEF REVIEW Indemnify is defined in Black’s Law Dictionary as follows:  “To make good; to compensate; to make reimbursement to one of a loss….” In an indemnity clause, one party (the “indemnitor”) agrees to defend, pay all costs of the lawsuit and pay any judgment resulting from the lawsuit if the other (the “indemnitee”) is […]

Ask any experienced contracting professional to name one of the most contentious clauses in a negotiation and the answer usually includes the warranty provision. (The other contentious clauses are Limitation of Liabilities and Indemnity, followed closely by who owns the IP). Many business people assume these clauses are strictly “legal” issues. If you’ve ever attended […]

If you own or manage a business, you should be concerned regarding your entity’s cybersecurity. With all the recent news regarding hackers obtaining confidential information, you can bet that your customers and clients are worried about how you are protecting their private information. Protecting digital data became a “hot topic” when the Target breach occurred. […]

When you are starting a new business, it is normal to be eager to get the doors open and see your ideas put into action. However, don’t skip over one of the most crucial steps in ensuring the success of your entity, which is choosing the most advantageous legal structure for your business. Each type […]

Many times the most valuable asset a business has is its “idea.” That idea is the basis upon which your product/ service is successful. Whether that is an innovative product or a specialized service, it can be worth a substantial amount of money, especially if it meets needs that are not being met by others. […]

Every business is unique and has its own legal needs. However, in my experience, four important contracts which are needed to safeguard an entity’s interests include: Non-Disclosure Agreement A non-disclosure agreement (also called a “confidentiality agreement”) is important to every company in every industry. This type of contract obligates third-parties to keep your private information […]

When your company is entering into a contractual relationship with another party, it is important to set forth what will happen if there is a breach of the agreement. A “breach” is the failure of a party to perform its duties or obligations under the contract. When a breach occurs, the contract should provide the […]

If your business is working with an attorney on an important transaction, there are a few important tips that can help ensure you obtain a successful outcome. Consider the following suggestions: Choose the “Right” Attorney Your business lawyer will play a very significant role in the success of your company. It is important to choose […]

Most business people assume that the Indemnity clause is a legal issue to be resolved only by their lawyer. Black’s Law Dictionary (the Webster’s dictionary for lawyers) defines Indemnify – in part- as follows:  “To make good; to compensate; to make reimbursement to one of a loss already incurred by him.” Read that carefully. Doesn’t […]

Too frequently, contract drafters (both lawyers and business people) regurgitate phrases and clauses in their contracts because that’s what they’ve always read and that’s what they’ve always done. The problem with using “standard” phrases is that while the courts have conferred upon them certain import, their overuse sometimes renders them meaningless.  If you use a “standard” clause understand its […]

I consistently receive questions from my clients and seminar attendees relating to the Battle of the Forms. In this age of e-contracting, one might assume that this issue is no longer relevant. However, unless both the buyer and seller sign (or click their assent to) a single agreement under which they agree to do business, […]

We’re all familiar with the automatic renewal (evergreen) clause that appears in many supplier proposed agreements. The following is a typical example: This Agreement shall be for a term of one year beginning on January 1, 2013 and expiring in December 31, 2013 and shall automatically renew for one year periods unless terminated by either […]

A frequent source of contract disputes revolves around this simple statement. Business people often think that once they’ve discussed and agreed upon the deal, the written contract is mere formality. Many people tell me that the contract is for worst case scenarios and the relationship is key. I don’t disagree with the importance of the […]

I recently went on safari to the Serengeti in Tanzania. It was an amazing adventure and quite remarkable being 10 feet from giraffes, elephants, lions and wildebeests!  During our trip we stayed at lodges which were (truly) in the middle of the bush (actually, Africa).  In some places, Masai warrior guides armed with guns or […]

As I discussed in a previous blog, under copyright law, the author who creates an “original work of authorship” owns the copyright to that work.  An “original work of authorship” includes designs, specifications, software, documentation, photographs, website development, artwork, or multimedia work. This means that when your company outsources the design or development of any […]

Reading business contracts when you’re not a lawyer can be daunting.  It is often tempting to pass the heavy lifting off to the corporate legal department, and take what your in house counsel says at face value without actually reading the contracts.  However, anyone involved in business contracting, including salespeople, corporate purchasing agents, contract managers, […]

Negotiating business contracts is as much an art as it is a science.  It requires thinking strategically, figuratively putting yourself into the shoes of the other party, and even keeping your human emotions in check.  But what happens when you hit a brick wall with the other side and the deal goes sideways?  Here are […]

Whether you have been negotiating contracts for years, or this is your first go around, it is helpful from time to time to go back to the basics.  As a professional negotiator and trainer, here are a few of my basic contract negotiation tips: Prioritize what is most important to you. Not all parts of […]

Are verbal agreements to buy/sell goods real agreements?  In other words, are they enforceable? If your company is involved with buying goods from suppliers or vendors, or selling goods to customers, you no doubt have many standard forms and agreements prepared by your corporate attorney, or at least standard operating procedures for contracting.  However, occasionally […]

If your company buys goods from suppliers or vendors with any regularity, you may be familiar with Master Agreements for the sale of goods.  The Master Agreement is the contract between the parties that is negotiated—how many units, what price, and other terms and conditions.  However, you may be less aware of what is known […]

If you work for a company and have any involvement in contracting for goods, you are familiar with the dreaded ‘Battle of the Forms.’  Both your company and the company you are contracting with have their own standard contracts, RFP terms, purchase orders, or conditions of sale.  Perhaps the advice you’ve received from your own […]

There are four major ways to reduce your risk and limit liability in contracts—disclaimers, limitation of liabilities, indemnification, and “Entire Agreement” clauses.  These are discussed in more detail below: Disclaimers. Shrewd contract negotiators live by the rule of disclaiming responsibility for anything beyond the specific commitments listed in the contract.  The only way a seller […]

Along with poor contract drafting, warranties are the most litigated issue in business contracts.  Typically the parties have different expectations, especially when the buyer claims that the goods or services did not meet the promised expectations.  Here are a few tips on warranties to protect your company from unnecessary disputes: The importance of the description […]

If you work with contracts, and are looking for a more in-depth understanding of terms and conditions, a contracting seminar with Leslie S. Marell can help you do your job better, and protect your company’s interests around the globe.  Leslie S. Marell is well-known as a highly entertaining, funny, and energetic speaker, and is ready […]

Understanding binding and non-binding provisions in a Letter of Intent (LOI) is important for anyone who works with business contracts.  Here, we will review some of important information on LOIs and what you should look for when you are negotiating, drafting, and otherwise working with LOIs. 1.  Ensure everyone is on the same page. The […]

As a contract manager, purchaser, sales manager, or department head, have you ever felt like your in-house attorney was ignoring you?  Do other departments seem to get priority treatment from the legal department, while your deals languish at the bottom of the pile waiting for the lawyers to sign off?  Here are a few tips […]

DEFINING USERS A Licensee (one who pays for the right to use, access and benefit from some type of technology) should ensure that the license grant is broad enough to allow all necessary members of the Licensee’s organization to use, access and benefit from (“Use”) the technology licensed. This group of users should be determined […]

A ROSE BY ANY OTHER NAME…….. Just because a company calls a worker an independent contractor does not make him or her so. For clarification purposes, I’m using “independent contractor” as a synonym for the terms “consultant”, “contractor” and any individual your company retains whom you don’t consider an employee. If your company classifies a […]

IMPORTING FROM A FOREIGN SUPPLIER You are buying a product from a foreign supplier and will be importing the product into the US. You learn that the US has a free trade agreement (FTA) with that country. Under the FTA you can import the article free of duty. Properly done, your company can save money. […]

INTELLECTUAL PROPERTY INDEMNIFICATION – A LICENSEE’S PERSPECTIVE One provision that a customer, or Licensee, should look for in technology agreements is the intellectual property indemnification clause.  This is true whether obtaining a license for software or hardware, or professional services to create a product or process. What is the purpose of IP Indemnity?  If a company […]

Many business people are frustrated by how long it takes their lawyer to review / finalize a contract. The typical complaint:  It took my lawyer (choose one: weeks/ months / years) to finally get the (choose one or several: indemnity, warranty, limitation of liability, IP) clause resolved.Sound familiar?  If so, I want to give you some […]

When you retain a supplier to design software, customize its standard product to meet your needs, create engineering specifications, or develop documentation, do you have the right to use it over and over?  Can you re-use it in another application? Does your supplier have the right to re-sell it to another customer? These questions have, […]