Syllabus: Contract Drafting Spring 2021

By D. C. Toedt III, email: dc@toedt.com
Attorney & arbitrator — tech contracts & IP
Adjunct professor, University of Houston Law Center

Updated Wednesday April 21, 2021 17:56 Houston time

Course materials: Notes on Contract Drafting (a work-in-progress of mine). (PDF) Update 2021-01-22: I've uploaded the first part only (due to size limitations) to Amazon for print-on-demand; it's in review by Amazon; I'll keep you posted.

Reading assignments       |       Homework assignments      
and the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

1 Class plans

1.1 Class 23: Wed. Apr. 21

1.1.1 In the news: H-E-B v. Maverick on disinfecting wipes

Article: H-E-B wipes deal gets messier (ExpressNews.com) (paywalled); earlier article w/ background. Summary:

  • During the initial pandemic supply shortages, H-E-B bought disinfecting wipes from Maverick Int'l, L.P. of Beaumont.
  • H-E-B sued for breach of contract: Maverick allegedly failed to deliver the quantities ordered.
  • H-E-B is now claiming fraud: Maverick allegedly told H-E-B that the wipes didn't need EPA approval — but EPA has said that's not correct and has ordered H-E-B to pull the wipes from the shelves.

1.1.2 In the news: Unilateral amendments can't go too far

Apropos of unilateral amendments and arbitration clauses: In March, the Sixth Circuit held that a bank's unilateral amendment to its depositor agreement was ineffective to impose an arbitration agreement because:

  • the original agreement said nothing about alternative dispute resolution;
  • the addition of an arbitration provision was too different; and
  • customers' silence in response to the unilateral amendment was not enough to signify assent.

See Sevier Cty. Schools Fed. Credit Union v. Branch Banking & Trust, No. 20-5174 (6th Cir. Mar. 5, 2021) (reversing order compelling arbitration).

1.1.3 Exercise: Selling a house

TEXT: Alice will sell the house at 1234 Main Street to Bob. … [and later in the document:] Alice will not alter the house at 1234 Main Street before the Closing.

EXERCISE: Rewrite.

1.1.4 Ambiguity: Professor Goodenough's prospects

From the Houston Chronicle:

Feeling behind in school wasn't new for Goodenough when he started his physics Ph.D. at the University of Chicago. As a child, his dyslexia went undiagnosed. But it still stung when, after serving in World War II, an administrator told him he wouldn't make it as a physicist because he had started too late. He was in his 20s.

QUESTION: What's wrong with the italicized portion? (Hint: Who served in WWII?)

1.1.5 Subcontracting clause exercise - strategic thinking

1.1.6 Ambiguity: Separate interviews

From an arbitration award I was writing (and caught myself): "Ms. Doe and her coworker Jane Roe were separately interviewed by Human Resources manager John Doe and Becky Bow."

QUESTION: How many people were interviewed, by how many people?

1.1.7 Exercise: Widgets warranty

1.1.8 Ambiguity: Long hours in BigLaw

From Erin Johnston, Not All at Once, And Not All Alone, ABA Journal, Nov. 2018, at 14:

My success [as a Kirkland & Ellis litigation partner] has not been the result of a perfectly-executed master plan. But I can say that I have unapologetically asked for what I needed and was pleasantly surprised by the responses I received. No one above me assumed they knew what I wanted, or that what I wanted would always be the same.

At times I turned down opportunities to avoid travel or to focus on my family; other times I chose to take that trip or work long hours. …

(Emphasis and extra paragraphing added.)

QUESTIONS:

  1. What are two possible meanings of the italicized portion?
  2. How could the italicized portion be clarified?

1.1.9 Exercise: NDA "sunset" provisions

1.1.10 Ambiguity: Ivanka Trump in South Korea

From President Trump: "My daughter, Ivanka, just arrived in South Korea. We cannot have a better, or smarter, person representing our country." From Jonathan Chait: "That second sentence can really be read a couple ways." [DCT comment: It'd be better to say "a couple of ways."] From Gary Schroeder: "Also, the use of commas implies that she is his only daughter."

1.1.11 Exercise: Price adjustments

1.1.12 Ambiguity: Will HRC run again?

From Bradley Honan and Arick Wierson, Please, Hillary, don't do it (CNN.com Nov. 15, 2018):

In 2018, we saw the progressive, Bernie Sanders wing of the Democratic party and the more centrist factions, previously marshaled by Hillary Clinton, temporarily band-aid over their differences that were on full display in 2016 for the common good.

QUESTION: What, exactly, was it that was supposedly "for the common good" —

  • differences on full display; or
  • band-aiding over those differences?

QUESTION: How could the above sentence be rewritten to make it clear which one the writer intended?

1.2 Class 22: Mon. Apr. 19

1.2.1 All-caps annoys SCOTX?

In what might have been a subtle rebuke to the drafter(s) of a contract in suit, the Supreme Court of Texas reproduced an indemnification clause from the contract and added a footnote: "This text appeared in all capital letters in the original, but we have normalized the capitalization for readability." Wagner v. Apache Corp., No. 19-0244, slip op. at 2 n.1 (Tex. Apr. 9, 2021) (affirming reversal of refusal to compel arbitration; emphasis added).

1.2.2 ABA Journal tips for 4Ls (cont'd)

From Dustin M. Paul and Jennifer L. Eaton, 11 tips to survive your freshman year as an associate:

Usually, the best thing to do in a difficult situation—whether with a client, attorney or colleague—is document, document, document. Make sure your position on difficult issues is known. You want to be on record if something goes sideways.

1.2.3 Attorney fees - negotiation strategy

1.2.4 In the news: Parties sign different versions — so no arbitration

The Fourth Circuit agreed that an arbitration agreement was unenforceable when the parties signed (via DocuSign) two versions of their contract with significantly-different details that did not relate to arbitration; thus, said the court, there was no meeting of the minds and consequently arbitration had not been agreed to. See Rowland v. Sandy Morris Financial & Estate Planning Services, LLC, No. 20-1187, slip op. (4th Cir. Apr. 7, 2021) (affirming denial of motion to compel arbitration).

(The Fourth Circuit did not address whether the parties could have been viewed as having agreed to arbitration even if there'd been no meeting of the minds about other matters.)

This is of a piece with a Delaware case mentioned in the reading: In that case, the parties had exchanged signed signature pages of a contract, but the pages were from two different drafts, only one of which included the crucial provision in the litigation (a noncompetition covenant). The chancery court held that there had been no meeting of the minds and thus there was not a valid contract. See Kotler v. Shipman Assoc., LLC, No. 2017-0457-JRS (Del. Ch. Aug. 27, 2019) (rendering judgment for company).

1.2.5 Case discussion: Jacobs Engineering v. ConAgra

1.2.6 In the news: "And" limits an arbitration carve-out

New case: Wagner v. Apache Corp., No. 19-0244, slip op. (Tex. Apr. 9, 2021) (affirming reversal of refusal to compel arbitration).

FACTS: Wagner Oil Company ("Buyer") bought various oil and gas wells and related assets from Apache Corporation ("Seller"). The Purchase and Sale Agreement (PSA) included an indemnification provision under which Buyer would:

defend, indemnify, release and hold harmless Seller against all losses, damages, claims, demands, suits, costs, expenses, liabilities and sanctions of every kind and character, including without limitation reasonable attorneys’ fees, court costs and costs of investigation, which arise from or in connection with (i) any of the claims, costs, expenses, liabilities and obligations assumed by Buyer . . . , or (ii) any breach by Buyer of this agreement.1

The PSA also contained an arbitration clause that — relevantly here — included a carve-out for claims between Buyer and Seller in the event of certain third-party claims:

Arbitration. Any disputes arising out of or in connection with this Agreement or the application, implementation, validity, breach or termination of this Agreement shall be finally and exclusively resolved by arbitration in Houston, Texas pursuant to the dispute resolution provisions contained in Exhibit B.

Notwithstanding the above, in the event a third party brings an action against Buyer or Seller concerning this Agreement or the Assets or transactions contemplated herein, Buyer and Seller shall not be subject to mandatory arbitration under this section and Buyer or Seller shall each be entitled to assert their respective claims, if any, against each other in such third party action.

Id., slip op. at 2 (emphasis edited, extra paragraphing added).

The supreme court held that the last part of the just-quoted language (the text following the "and") would be meaningless if the parties could sue in any court in the event of a third-party claim, and so under standard construction rules,

… this option [to litigate instead of arbitrate] applies only if the claims are brought in a third-party action and does not also allow the claims to be brought in a separate suit.

Id., slip op. at 8 (emphasis added). (The court also cited the strong presumption in favor of arbitration as a separate reason for compelling arbitration. See id. at 9.)

QUESTION FOR DISCUSSION: How could the drafters here have specified that litigation under the arbitration carve-out could take place in any court (having jurisdiction, of course)? Consider:

  • What could replace the word "and" in the above quotation?
  • What could the drafters have added at the end of the above quotation?

1.3 Class 21: Wed. Apr. 14

1.3.1 Quiz available tomorrow, not tonight

This quiz and the one next week (the "review" quiz) will be posted tomorrow night, vice tonight.

1.3.2 ABA Journal tip for 4Ls (cont'd)

From Dustin M. Paul and Jennifer L. Eaton, 11 tips to survive your freshman year as an associate:

… if something goes wrong, you will likely bear at least some responsibility. Take the initiative to send reminder emails and offer your assistance to colleagues. Saying: “I thought you were handing that”—even when a partner told you they would handle it—will rarely absolve you of responsibility.

(Emphasis added.)

1.3.3 Exercise: A CarMax warranty limitation

TEXT: In California, an automobile sales contract disclaimed implied warranties beyond the remedies set forth in an express warranty, which stated: “The dealer will pay 100% of the labor and 100% of the parts for the covered systems that fail during the [30-day] warranty period." The contract also limited the customer's remedies to those stated in the contract.

(See Gutierrez v. CarMax Auto Superstores California LLC, 19 Cal. App. 5th 1234, 1240 (Cal. App. 2018).)

FACTS: Gutierrez bought the car on May 5, 2013. The car started having transmission problems, including making a grinding noise and having trouble accelerating in traffic. Gutierrez took the car to the dealer for warranty work on June 7.

IN BREAKOUT ROOMS, discuss the following:

QUESTION 1: Was car's the transmission trouble covered by the 30-day warranty?

QUESTION 2: If CarMax engaged you to review the warranty provision above, what if any advice might you give about its wording? (Hint: Consider the problems of proof.)

1.3.4 Exercise: Nickname for a "this is acceptable" provision

A lease states that

1.  Tenant must pay the rent by a means reasonably acceptable to Landlord, and

2.  Venmo is to be conclusively deemed an acceptable means of payment.

QUESTION: Subdivision (2) is an example of a [WORD 1] [WORD 2] provision.

1.3.5 Exercise: CPI

QUESTION: If a contract refers to "CPI" (Consumer Price Index), which CPI is likely meant if not specified otherwise? (Hint: See the reading material.)

1.3.6 Exercise: Assignment of Mickey-Dee franchise agreement

1.3.7 Exercises: Services - general questions

1.3.8 Exercise: NDA "sunset" provisions

1.3.9 Exercise: Price adjustments

1.3.10 Exercise: Widgets warranty

1.4 Class 20: Mon. Apr. 12

1.4.1 In the news: ERCOT insurer tries to bail

See Paul Takahashi, Faulting ERCOT, insurer says it shouldn't have to cover storm damages (HoustonChronicle Apr. 8, 2021). EXCERPT:

ERCOT’s insurance company is seeking a court ruling excusing it from defending Texas’ electric grid manager from lawsuits or covering damages stemming from the catastrophic power failure in February.

The Cincinnati Insurance Co. on Tuesday sought relief from the U.S. district court in Austin, arguing it does not have to defend the Electric Reliability Council of Texas because it does not view the power outages as an accident, defined by the insurer as a “fortuitous, unexpected, and unintended event.” As a result, the company said it has no obligation under its insurance policy to cover ERCOT, which faces a flood of lawsuits after the winter storm.

“The allegations in the Underlying Lawsuits allege ERCOT either knew, should have known, expected, and/or intended, that Winter Storm Uri would cause the same power outages which occurred as a result of previous storms in Texas, including storms in 1989 and 2011,” the insurer said in court documents. “The Underlying Lawsuits allege the power outages caused by Winter Storm Uri were a result of the exact same failures including failures of the same generators which failed in the previous winter storms, and therefore, the power outages were foreseeable, expected, and/or intended.”

1.4.2 In the news: Why rushed contract reviews are bad for the business

Optional reading: See this article at the Contract Nerds blog. Excerpt:

What we wish we could say: “Stop submitting last-minute contracts for legal review!”

What we actually say: “No problem, I’ll get right on that.”

This happens ALL the time and is one of the greatest challenges for in-house attorneys to overcome.

* * * 

[T]his issue should be equally frustrating to the entire organization because it is bad for business, too. A rushed contract review negatively impacts the entire deal, including commercial terms, and can cost the business thousands, if not millions, of dollars in economic loss.

* * * 

If you’re brought in to “review” a contract that has already been negotiated (or worse, already been agreed to by both parties), then you’ve already lost. And, arguably, so has your business client, even if they can’t see the repercussions just yet because they’re too distracted by the short-term glory of signing the contract. …

1.4.3 ABA Journal tips for 4Ls

From Dustin M. Paul and Jennifer L. Eaton, 11 tips to survive your freshman year as an associate:

Doing good work means not only creating a strong work product but anticipating the next step.

  • If you are drafting a responsive pleading, you should be thinking about the discovery you will soon serve to support the claims or defenses.
  • If you are researching whether a particular contractual provision is permissible in a business contract, consider drafting your own clause.

You will stay busy if partners can trust you and your work product. If you do a good job on an assignment, they will come back to you again and again. …

Don’t just come with problems — come with proposed solutions. In your first year, don’t always expect your solutions to be the right ones. But a proposed solution demonstrates that you are striving for excellence and independence.

(Emphasis and bullets added.)

1.4.4 Homework review: Gross-up provision

  1. Many students edited the entire gross-up provision — the instructions said to edit just the italicized portion.
  2. TEXT: "The obligations of the Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty." COMMENT: For clarity, consider "The obligations of the Guarantor under this section 2 shall survive" (and I'd say "will survive," not "shall survive").
  3. TEXT: "1) The Guarantor shall make all payments below without a) setoff, counterclaim, restrictions or condition, and b) free and clear of and without deduction for …." COMMENT: Remember the rule that any list item should make sense if all other list items are deleted — in this case, item b doesn't make sense if item a is deleted ("The Guarantor shall make all payments below without free and clear …."). WARNING: I WILL BE DEDUCTING POINTS FOR THIS in the final, non-pass-fail assignment.
  4. Be consistent: Use "Guarantor" or "the Guarantor" but not both. (Ditto with "Lender" and "the Lender.")
  5. TEXT:

2.  No Setoff or Deductions; Taxes; Payments.

2.1 The Guarantor shall make all payments hereunder without setoff, counterclaim, restrictions or condition, and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions or withholdings of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Guarantor is compelled by law to make such deduction or withholding

2.2 If any such [DCT addition: deduction or withholding] obligation is imposed upon the Guarantor, [DCT addition: then except as provided in § 2.3,] the Guarantor will pay to Lender any additional amount necessary to enable the Lender to receive the same net amount the Lender would have received but for the imposed obligation on the Guarantor.

[DCT addition:] 2.3 The additional-payment requirement of § 2.2 does not extend:

(1) to any obligation of Lender to pay income tax on Lender's net income; nor

(2) to any obligation to pay withholding tax required by the laws in effect at the time Lender first became party to this agreement or otherwise became entitled to any rights under this agreement.

2.3 2.4 The Guarantor will deliver promptly to the Lender certificates or other valid vouchers (to the extent available) for all taxes or other charges deducted from or paid with respect to payments made by the Guarantor hereunder.

2.5 The obligations of the Guarantor under this paragraph shall section 2 [What exactly does 2.5 apply to?] will survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

1.4.5 Optional additional reading: Noncompete nuances (in Texas)

For your future reference: In the course of starting a new client project, I ran across what seems to be a very-useful long CLE paper summarizing some nuances of Texas case law about noncompetition covenants. See Zach Wolfe, Wolfe on Texas Non-Compete Litigation, or, My Big Fat Texas Non-Compete Paper (2021). The author reviews:

  • the current Texas non-compete statute, starting at page 14 of the paper;
  • what he refers to as the Five Year Rule about what constitutes a reasonable time period;
  • case law concerning reasonable geographic- and operating scope.

1.4.6 Ambiguity: Who was going to be killed?

Here's an ambiguity about a tragic story:

This weekend, police identified the victim as Sandra J. Feuerstein — a longtime federal judge in the Eastern District of New York, the Palm Beach Post reported, who was most recently presiding over a headline-making case against a former New York police officer accused of orchestrating a hit on her husband.

Katie Shepherd, Federal judge killed by hit-and-run driver found with drugs after claiming to be ‘Harry Potter,’ police said (WashingtonPost.com Apr. 12, 2021).

QUESTION: Wasn't it a conflict of interest for the judge to preside over a trial where her own husband was the intended victim?

QUESTION: Who was "found with drugs after claiming to be 'Harry Potter'" — the judge, or the hit-and-run driver? EXERCISE: How could this headline be rewritten to clarify?

1.4.7 Disputes exercise

1.4.8 Forum selection update:

… Because we conclude that the parties' venue-selection agreement unambiguously precludes litigation of this case in federal court, we affirm the district court's remand order.

The contracts at issue contain identical venue-selection clauses that provide: "Venue for litigation shall be in Linn County, Oregon." Notwithstanding this provision, CH2M removed the case under 28 U.S.C. § 1441 to the United States District Court for the District of Oregon. Linn County lies within the district court's Eugene Division, but there is no federal courthouse located in Linn County.

* * * 

… An agreement limiting venue for litigation to a particular county unambiguously prohibits litigation in federal court when there is no federal courthouse located in the designated county. The clear import of the venue-selection clause at issue in this case was to ensure that any litigation arising out of the contracts would take place within the geographic boundaries of Linn County. If the case proceeded in federal court, litigation would instead occur in Lane County. Thus, permitting CH2M to remove the case to federal court would violate the plain terms of the parties' agreement.

City of Albany v. CH2M Hill, Inc., 924 F.3d 1306, 1307, 1308 (9th Cir. 2019) (affirming remand to state court after defendant's removal to federal court) (emphasis added).

Drafting lesson: If you want your client (and the other side, of course) to be able to remove to federal court, be sure that your forum-selection clause refers to "the state- and federal courts having jurisdiction in" the specified place, versus "in" the specified place.

1.5 Class 19: Wed. Apr. 07

1.5.1 PSA: Bluebonnets could be deadly ….

[DCT to show an 18-second video on Facebook]

1.5.2 In the news: Consequential-damages carve-out triggered

1.5.3 Self-editing tip from LawProse

From Bryan Garner's Website: To help you cast a fresh eye on your own first draft, print out the draft in a different and bigger font, with two-inch margins.

1.5.4 Small-group discussion: Assignment consent

1.5.5 Exercise: Termination clause rewrite

1.5.6 Small-group discussion: Letters of intent

QUESTIONS — feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 to make notes:

  1. What are some reasons business people often like letters of intent?
  2. What could go wrong with signing a letter of intent, and how could a drafter try to put up guard rails?
  3. What happened in the Pennzoil v. Texaco case?

1.5.7 Exercise: Assignment-consent rewrite

1.6 Class 18: Mon. Apr. 05

1.6.1 In the news: Brooks Brothers bankruptcy

1.6.2 Exercise: Termination - twenty questions

Do in a Google doc:

6:00 p.m. class

7:30 p.m. class

1.6.3 In the news: McDonald's sues its former CEO to recoup severance

McDonald's Corp. v. Easterbrook, No. 2020-0658, slip op. at text accompanying n.45 (Del. Ch. Feb. 2, 2021):

  • The fast-food restaurant chain's CEO left the company after being accused of an inappropriate relationship with a subordinate. The CEO and the company entered into a "termination without cause" separation agreement that gave the CEO substantial severance benefits.
  • But then allegations surfaced that the CEO had engaged in other inappropriate relationships with subordinates.
  • The company filed suit against the CEO, claiming that he had fraudulently induced the company into entering into the separation agreement and paying him severance benefits, when it could have simply terminated his employment with cause and therefore with no severance benefits.

The court denied the former CEO's motion to dismiss, on grounds that the entire-agreement / no-outside-representations clause in the separation agreement was not enough, in itself, to defeat the fraudulent-inducement claim.

1.6.4 Sheryl Sandberg's employment agreement - termination provisions

Do in a Google Doc:

6:00 p.m. class

7:30 p.m. class

1.6.5 Exercise: Survival- & termination wrap-up clauses

Do in a Google Doc:

6:00 p.m. class

7:30 p.m. class

1.7 Class 17: Wed. Mar. 31

1.7.1 In the news: Rice sues former coach

See Ryan Herrera, Rice sues a former coach for $87,500 in [sic] breach of contract, Houston Chronicle, Mar. 26, 2021, p. c5, col. 1:

  • A Rice assistant women's basketball coach signs a one-year contract running April 1, 2020 through March 31, 2021.
  • The contract says that if the coach leaves to take another coaching job before the contract is up, he must repay a buy-out amount equal to one-half of his annual salary, or $87.5K — and that buy-out amount is the regardless whether he leaves on Day 1 or Day 364.
  • The coach resigns on July 21, 2020 to take a job at Duke.
  • The coach doesn't pay any part of the buy-out amount; neither does Duke.
  • Rice sues.

Questions likely to be raised:

  1. Is this an unenforceable penalty?
  2. Why didn't Duke pay the buy-out?
  3. Why did things get this far?

1.7.2 Drafting fail: "Each male grandson …."

From this article:

… when I was 13 I was bequeathed a shotgun after my grandfather died. Each male grandson was given one.

QUESTION: What are two possible ways of improving this passage?

1.7.3 Most favored customer: A $69 million problem

See this blog posting (which I'd forgotten about but someone recently tweeted a link to it), which recounts how DataTreasury Corporation (DTC) had to refund $69 million to JPMorganChase (JPMC) because:

  • DTC granted a patent license to to JPMC for $70 million with a most-favored-licensee clause on a going-forward basis; and
  • more than seven years later, DTC granted a much-smaller bank a license on terms that would have required JPMC to pay just $1 million.

See JP Morgan Chase Bank, NA v. DataTreasury Corp., 823 F.3d 1006 (5th Cir. 2016) (affirming district court).

Here’s the text of the relevant part of the most-favored-licensee (“MFL”) provision, which is also known as a most-favored-nation (“MFN”) or most-favored-customer (“MFC”) provision:

9. Most Favored Licensee

If DTC grants to any other Person a license to any of the Licensed Patents, it will so notify JPMC, and JPMC will be entitled to the benefit of any and all more favorable terms with respect to such Licensed Patents. …

Id. at 1009 (emphasis added).

Drafting tips: What could DTC have done differently? The Fifth Circuit had some suggestions — DTC could have, among other things:

  • set specific “apples to apples” requirements for the MFL provision to kick in — for example, the new licensee would have to be of at least a specified size, or a specified revenue level, or a specified volume of licensed products or services. DTC argued that such requirements should be implied in its license to JPMC, but neither the district court nor the Fifth Circuit agreed; and/or
  • put a “sunset” on the MFL provision, so that after (let’s say) two years, or four years, or whatever, DTC would have been free to grant licenses on whatever terms it wanted without having to give the same terms to JPMC; and/or
  • tied the amount of the paid-up fee to the remaining life of the patent.

See id. at 1018-19.

Operationally, DTC could also have put in place an internal process to cross-check each proposed post-JPMC license agreement against the JPMC license agreement itself — and also against all other license agreements with MFL provisions, to verify that those MFL provisions weren’t about to be breached. That, of course, might have been an expensive operational burden.

1.7.4 Ambiguity and the Easter service booklet

FACTS: This is adapted from my church's Easter Sunday service booklet of a few years ago (with the family's name changed):

Easter flowers and decorations are given
to the glory of God
and in memory of their grandmother Jane Doe
In honor of all Christians,
Especially those persecuted
By the Doe family

QUESTION: How could this be fixed with just one additional character?

1.7.5 Earn-outs

In anticipation of an upcoming homework assignment, see this video and article

1.7.6 Gross-ups

In anticipation of an upcoming homework assignment, see Investopedia (it has an example).

And here's another example.

1.7.7 (Re)Drafting project: Indemnity

See the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

1.7.8 Preview of reading

1.7.9 Business Associate Agreement

FACTS:

  • For its own internal use, MathWhiz has developed some specialized software that hospitals could also use to help manage their internal operations.
  • As a pilot project, MathWhiz wants to license the software to a hospital in Houston.

QUESTIONS:

1.  What additional information do we need to assess whether MathWhiz and the hospital need to enter into a "business associate agreement"? (See generally this Holland & Hart memo.)

2.  From the facts given, does it appear that MathWhiz might not need to enter into a BAA?

1.8 Class 16: Mon. Mar. 29

1.8.1 Ambiguity: The artist and the art critic

From here (paraphrased):

A young artist is exhibiting his work for the first time.

Well-known art critic: Would you like my opinion about your work?

Young artist: Yes, please!

Art critic: It's worthless.

Young artist: I know, but tell me anyway.

1.8.2 Homework review (continued)

Who has the burden of proof?

One student's rewrite:

This Agreement may be terminated at any time prior to the Closing, whether before or after the Seller Stockholder Approval is obtained, as follows:

(b) by either Seller or Purchaser if …

(ii) a Governmental Order (“Order”) or action by a Governmental Authority (“Authority”) of competent jurisdiction becomes final or non-appealable AND the terminating party used reasonable best efforts to remove the Order or action. [Emphasis added.]

QUESTION: In a case covered by (b)(ii) above:

  • Must the terminating party first establish that it used reasonable best efforts before it can terminate?
  • Or is it the other way around: To avoid termination, the non-terminating party must establish that the terminating party did not use reasonable best efforts?

Drafting lesson: Sometimes it's good to think about what your client might have to do.

Obligation vs. prerequisite

Option 1: "A party seeking to terminate this Agreement under Section 6.01(b)(ii) must use its reasonable efforts to remove such Governmental Order or other action."

versus:

Option 2: "A party may not terminate this Agreement under Section 6.01(b)(ii) unless that party used its reasonable best efforts to remove such Governmental Order or other action."

1.8.3 Reading review

See the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

1.8.4 Ambiguity: Sex with any celebrity

See this tweet:

h-diagram

QUESTION: What one word could be changed in the underlying Johnny Morris tweet to eliminate — or at least reduce — the ambiguity?

Note: At this writing (Sunday night), the Johnny Morris tweet has 908 likes; the Benjamin Dreyer response has almost 186,000 likes.

1.8.5 Random review (1)

  1. Which is correct: A: "Class starts at ten o'clock." B: Class starts at 10:00 o'clock."
  2. Which is correct:
    • A: More than 74,000,000 people voted to re-elect President Trump.
    • B: More than seventy-four million people voted to re-elect President Trump.
    • C: More than 74 million people voted to re-elect President Trump.

1.8.6 Random review (2)

In your groups, see the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

1.9 Class 15: Wed. Mar. 24

1.9.1 In the news: Oops—contract mod wipes out $17 million due to contractor

See this article. FTA:

The Houston First Court of Appeals of Texas recently affirmed a trial court’s decision wiping out a whopping $17 million claim brought by a contractor against an owner for acceleration costs, holding that the claim was barred by release language contained in a signed contract modification of the type routinely executed by the parties over the course of the project to compensate the contractor for changes to its work.

* * * 

This case serves as a cautionary tale for contractors. If you are a contractor:

  • Pay careful attention to release language— not only in waiver and release forms, but also in contract modifications, amendments, and change orders.
  • Check if the release language exempts certain claims.
  • Make sure you have taken all necessary steps and complied with any applicable contract provisions to preserve any outstanding claims before signing any releases or modifications with release language.

Amanda Garza [of Porter & Hedges], A Cautionary Tale For Contractors: Releases In Contract Modifications And Preservation Of Claims (JDSupra 2021) (not verbatim).

1.9.2 Housekeeping: Quiz #3 coming up

It'll be on Canvas this evening, due as usual.

1.9.3 Ambiguity: Bubbie's kosher practice

TEXT (in honor of Passover, from Joshua Rothman in The New Yorker): "My grandmother is ninety-three and, to my knowledge, has never kept kosher." (Emphasis added.)

QUESTION: Is there any way the bold-faced part could be misinterpreted — perhaps intentionally?

QUESTION: How could this be rewritten to avoid reduce the chances of misinterpretation?

1.9.4 Wrap-up of indemnity exercise

See the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 — I'll go over the questions and answers. (There could be some repetition from Monday, that's OK.)

1.9.5 Ambiguity: President Trump and the pandemic

From the Houston Chronicle (print edition March 16, 2021, p.A5): "CDC: Trump policies minimized pandemic"

The Chronicle piece was reprinted from a Washington Post article, whose headline was more clear: "CDC identifies public-health guidance from the Trump administration that downplayed pandemic severity"

1.9.6 Referral agreement exercise

See the end of the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 — I've pre-loaded the questions and space for answers.

1.10 Class 14: Mon. Mar. 22

1.10.1 Ambiguity: You want me to do what to my pet?

From an L.A. Times article about combatting gobbletygook in laws comes this street sign: "PERSONS SHALL REMOVE ALL EXCREMENT FROM PETS PURSUANT [¶] BY [sic] LAW #122-87 MAX. PENALTY $2000.00 [¶] THANK YOU"

Or as the L.A. Times article put it: "In other words, clean up your dog’s mess."

1.10.2 Homework review: Termination clause (1)

I'll show my rewrite.

A student example (1)

This Agreement may be terminated at any time prior to the Closing, whether before or after the Seller Stockholder Approval is obtained, as follows:

(a) [omitted]

(b) By either Seller or Purchaser, if:

i. [omitted]

ii. any Governmental authority of competent jurisdiction issued any Governmental Order or other action under the following conditions:

i. The Governmental Order

   1. is final and non-appealable; and

   2. permanently restrains, enjoins, or otherwise prohibits or makes illegal the consummation of any of the Sale and the Reorganization Transactions.

ii.  The party seeking to terminate this Agreement pursuant to this Section 6.01(b)(ii):

   1. shall have used its reasonable best efforts to remove such Governmental Order or other action; and

  2. its failure to fulfill its obligations under this Agreement was not the primary cause of, or resulted in, the issuance of such Governmental Order or other action.

A student example (2)

(b) This Agreement may be terminated at any time prior to the Closing, whether before or after the Seller Stockholder Approval is obtained as follows:

(1) Omitted

(2) By either Seller or Purchaser if:

        (i) Any Governmental Authority of competent jurisdiction issues or enters any Governmental Order or any other action permanently restraining, enjoining, or otherwise prohibiting the consummation of any of the Sale and the Reorganization Transactions. Such Governmental Order or action must be final and non-appealable.

        (ii) Prior to termination under this provision, the terminating party must have used reasonable efforts to remove such Governmental Order or other action.

        (iii) Termination under this provision is not available to a party whose failure to fulfill its obligations under this Agreement is the primary cause of, or results in, the issuance of such Governmental Order or other action.

1.10.3 From the practice: A general-advice referral call

This past Friday, at the request of a client's general counsel, I had a Zoom call with two young entrepreneurs who are friends of the GC's now-adult children; the GC asked me to give them "general advice."

  • The entrepreneurs needed more work than I have time to undertake, so I referred them to a couple of different sole practitioners (who don't charge BigLaw rates) whom I know to be experienced and cautious.
  • After we ended the Zoom call, I immediately sent a follow-up email: "XXX, it was very nice to meet you and YYY on Zoom just now. Confirming a couple of points: I won't be undertaking any kind of representation for you or your new company; I provided contact information for [lawyers] AAA (here in town) and BBB (in California), who might be able to help you out. I hope you find my Web page, http://www.oncontracts.com/startup-law, to be useful. Best of luck!" (Emphasis added.)

1.10.4 Reading review: Indemnity & defense obligations (1)

For each question below, write a group answer in the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

  1. FACTS:
    • Alpha Corporation and Bravo LLC are parties to a contract.
    • Under the contract, Alpha must indemnify Bravo if certain specified events occur.
    • Such an event occurs, and Bravo itself suffers harm from the event
    • Bravo demands that Alpha reimburse it (Bravo) for the harm that Bravo suffered.
    • Note that this is not a case where Bravo is successfully sued by a third party, Charlie Inc., and Bravo is demanding that Alpha to reimburse it (Bravo) for what Bravo must pay to defend against the suit and/or to pay any resulting damage award.
    • TRUE OR FALSE: Under Texas law, on these facts, Alpha must comply with Bravo's demand for reimbursement. Explain your answer.
  2. TRUE OR FALSE: Indemnify means to reimburse, while hold harmless means to release from liability.

1.10.5 Homework review: Termination clause (2)

I'll share screen shots of other student efforts.

1.10.6 Reading review: Indemnity & defense obligations (2)

For each question below, write a group answer in the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

FACTS:

  • Paints 'R Us, Inc. ("Paints") is a small Houston painting contractor that you represent.
  • Paints has won a bidding process established by MegaCare Hospital Corporation, based in Nebraska, which is looking for a painting contractor to paint one of MegaCare's Houston hospitals, inside and out. You are helping Paints in negotiating the contract's terms and conditions.
  • MegaCare's contract form — drafted by MegaCare's lawyers in Omaha — states that the painting contractor must defend and indemnify MegaCare against any and all claims arising from the contractor's activities under the contract.
  • On a Zoom call, a MegaCare lawyer explains that MegaCare's main concern about the indemnity clause is that if a contractor employee gets hurt while "on the job" at the MegaCare hospital, MegaCare doesn't want to have to deal with the employee's personal-injury claim — "even if it's totally our fault, you guys need to take care of it; we can't be bothered."

QUESTIONS:

  1. If a Paints employee were to sue MegaCare because of such an on-the-job injury, where would the relevant litigation likely take place, and why? (Do we even know?)
  2. In such a lawsuit, what jurisdiction's law would likely apply in relevant respects, and why?
  3. What kind of protective provisions could Paints ask MegaCare to add to the draft contract? (If those provisions are not there already — which seems unlikely ….)
  4. Independent of the MegaCare contract, what kind of backup business protection might Paints try to put in place for this indemnity obligation? How might that help Paints's business, independent of the MegaCare deal?

PROJECT: Draft a short email to Paints's CEO, Pat Patterson, laying out your advice in bullet points

1.11 Class 13: Wed. Mar. 10

1.11.1 Homework #6 (earnout) now due March 29 April 12

The assignment is here.

1.11.2 Drafting fail: Word order can matter

From a CBSNews.com headline: "Group of bipartisan senators pushes for permanent Daylight Saving Time." Facebook commenters had this to say: "In the headline I would have gone with 'bipartisan group of senators,' not 'group of bipartisan senators.' As written it sounds like each senator belongs to both parties." A responder: "So, like, Manchin and Sinema?"

1.11.3 Reading review: Reseller agreements

For each question below, write a group answer in the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

FACTS: MathWhiz has developed a software package, "GeeWhiz," that will let customers do a lot of the data-analytics that MathWhiz does in its consulting business.

  • Because MathWhiz doesn't yet have much of an internal sales force, MathWhiz asks you to develop a form of reseller agreement.
  • Under the reseller agreement:
    • The reseller will buy licenses to use the new GeeWhiz software at a stated discount from MathWhiz's list price.
    • The reseller will try to resell the GeeWhiz licenses to customers identified by the reseller, at whatever price the reseller chooses.
  1. QUESTION: Mary Marvel asks you if MathWhiz can specify a minimum price at which the reseller may resell the GeeWhiz licenses. What do you tell her?
  2. MORE FACTS: The reseller wants MathWhiz to agree that the reseller will have exclusive rights to resell the GeeWhiz licenses. QUESTIONS:
    1. What if any issues does that raise in your mind?
    2. What business goals do you think the reseller is concerned about? How might you help the reseller accommodate the reseller's concern(s)?
  3. PROJECT: Draft a short email to Mary, laying out your advice in bullet points

1.11.4 Smart-aleck ambiguity: A bagel and cream cheese

From someone tweeting — I had to think about this one for a minute:

customer: I'd like to buy a bagel with cream cheese

me: sorry, we only take cash

manager: can I talk to you

1.11.5 Employment agreement homework review (one more time …)

Paragraph numbering continues that of last time.

  1. Several students did conventional-looking employment agreements but with no preamble; if you're going to go that route, you'll want to include a conventional preamble — because Dave Doright might have a lawyer look at the contract, and in that situation, you want Dave's lawyer not to wonder, "WT[x] is this?"
  2. TEXT: "While your employment agreement with Mr. Doright is binding, I’ve spotted a few omissions that I believe to be prudent to address at this time." COMMENT: I'd avoid making any pronouncements about "legally binding" — that likely would be construed as a legal opinion, and you don't want to be doing that with a client unless you're being very explicit about it, and going into a lot more detail about what it takes to be legally binding, and noting any assumptions and exceptions.

1.11.6 In the news: Glaxo, Delaware law, and "good faith"

Facts:

  1. A Glaxo company owned a patent covering a drug for treating lupus.
  2. For reasons not important here, Glaxo entered into an agreement with another company, Biogen, to pay Biogen royalties on Glaxo's sales of the drug. (Biogen owned a competing patent and voluntarily gave up its patent in return for the royalty right.)
  3. The royalty agreement called for royalties to be paid on products covered by "Valid [patent] Claims."
  4. Biogen assigned the royalty agreement to DRIT LP, which the court described as "an entity that purchases intellectual property royalty streams," presumably to get cash up front for the anticipated royalty stream from Glaxo.
  5. The definition of "Valid Claim excluded patent claims that were "disclaimed," i.e., voluntarily surrendered by Glaxo.
  6. When

… Under Delaware law, sophisticated parties are bound by the terms of their agreement. Even if the bargain they strike ends up a bad deal for one or both parties, the court’s role is to enforce the agreement as written. As we have explained, “[p]arties have a right to enter into good and bad contracts, the law enforces both.” Holding sophisticated contracting parties to their agreement promotes certainty and predictability in commercial transactions.

There are, however, instances when parties fail to foresee events not covered by their agreement or defer decisions to later. “No contract, regardless of how tightly or precisely drafted it may be, can wholly account for every possible contingency.”

Subject to the express terms of the agreement, when gaps in an agreement lead to controversy, the court has in its toolbox the implied covenant of good faith and fair dealing to fill in the spaces between the written words. The implied covenant, inherent in all agreements, ensures that the parties deal honestly and fairly with each other when addressing gaps in their agreement. The court’s goal is to preserve the economic expectations of the parties.

The implied covenant, however, is a “cautious enterprise.” As we have reinforced on many occasions, it is “a limited and extraordinary legal remedy” and “not an equitable remedy for rebalancing economic interests that could have been anticipated.” It cannot be invoked “when the contract addresses the conduct at issue.”

The implied covenant should not have been deployed in this case. There was no gap to fill in the Agreement. …

Glaxo Group Ltd. v. DRIT LP, No. 25, 2020, slip op at 14-15 (Del. Mar. 3, 2021) (reversing, in part, trial-court judgment) (footnotes omitted, emphasis and extra paragraphing added).

1.11.7 Review exercise: Expense reimbursement

FACTS:

  1. You represent MathWhiz and are negotiating the services agreement with Gigunda.
  2. The "economics" of the deal involve Gigunda's reimbursing MathWhiz for various out-of-pocket expenses (e.g., travel and lodging to the Mongolian oil fields).
  3. Gigunda wants the services agreement to state that MathWhiz is to comply with Gigunda's standard travel-expense policies.

QUESTION: As MathWhiz's lawyer —

  • What do you recommend to MathWhiz?
  • If MathWhiz decides to agree to this Gigunda request, is there anything you'd want the contract to be sure to say, to help protect MathWhiz?

1.11.8 Review exercise: Interest clauses

QUESTIONS for small groups:

  1. What sort of things might not count as "interest"?
  2. Will a usury savings clause do any good?

1.11.9 Ambiguity: Refuse to be put in black plastic bags

See this tweet.

1.11.10 Preview: Getting to signature sooner

DCT to preview the upcoming reading

1.12 Class 12: Mon. Mar. 08

1.12.1 In the news: When a buyer disappears

From the WSJ this afternoon: "Billionaire Vincent Viola’s New York Mansion to Sell for Roughly $60 Million - The townhouse, previously in contract to sell to Chinese oilman who disappeared, has a new suitor"

Excerpt:

In 2017, the home was in contract for roughly $80 million to a company linked to Ye Jianming, a Chinese oil entrepreneur with ties to China’s military who disappeared before closing on the deal, according to a different person familiar with the situation. Though that deal fell through, the sellers were able to keep the roughly $8 million deposit, according to the person with knowledge of the situation.

Lesson: In every contract, consider including termination contingency plans in case the other side doesn't perform.

1.12.2 Quiz 2 review

Any questions? Comments?

1.12.3 In the news: Business planning and the Paper Source bankruptcy

This goes into my SPP file, a.k.a. S**t People Pull:

A store chain, Paper Source:

  • ordered unusually-large quantities of merchandise from its small-business suppliers; and
  • shortly afterwards, filed for bankruptcy protection — which lets the chain (mostly) stiff the suppliers, likely paying them pennies on the dollar.

FTA: "Paper Source ordered more from The Card Bureau in a 60-day period than it had in all of 2020, according to Velencia." Jeremy Hill, Paper Source Bankruptcy Squeezes Small Greeting Card Sellers (WashingtonPost.com March 5, 2021).

Lesson: When drafting a contract for a supplier, consider recommending that the client:

1.12.4 Employment agreement homework review (continued)

Here are more comments from my homework review; numbering continues that of last time:

  1. TEXT: "Salary will be reviewed each year …." COMMENT: This language triggers the question: Reviewed by whom?
  2. TEXT: "Benefits: You will be entitled to participate in any group medical, dental, disability, and life insurance plans, 401(k) plans, pension or profit-sharing plans, stock option plans, and similar benefits that may be offered by MathWhiz." COMMENT: Definitely add, "… to similarly-situated employees" — a director-level employee like Dave might not get the same benefits as the CEO or other C-level executives.

    (For those who don't know: In American companies, a typical organizational-chart hierarchy is, starting at the "bottom": A) individual contributor or "IC"; B) manager; C) director, which is different from a member of the board of directors; D) vice president, or VP; E) senior vice president, or SVP; F) executive vice president, or EVP, who will often have a "chief" title of some kind, e.g., chief financial officer (CFO), chief marketing officer (CMO), chief operating officer (COO), chief executive officer (CEO) — these are known as "C-level" or "C-suite" employees.

  3. TEXT: "Non-solicitation: You will not solicit for employment, directly or indirectly, on behalf of yourself or any other person, any employee of MathWhiz." COMMENT: How long does this nonsolicitation covenant last? If there's no defined expiration date, it might be invalid.
  4. One student created a formal employment agreement and used the defined term "You" for Dave Doright. I'd use "Executive" instead of "You" or "Employee" — the former title is a bit more formal, and likely would raise judge- and jury expectations about the standards that Dave was required to meet.
  5. If using the term "You" (capitalized), be consistent about capitalization — inconsistency on that score has caused problems, as discussed in § 4.6 of the Notes on Contract Drafting.

1.12.5 Ambiguity: Who invented urinals?

From a Hacker News thread about the death of Allan McDonald, a Morton Thiokol engineering manager who refused to approve the fatal Challenger launch and took heat for blowing the whistle to the presidential commission investigating the disaster:

[cushychicken:] I got the privilege of having lunch with Mr. McDonald when I was an IEEE officer during college. He gave a lecture at my university on ethics, and the IEEE council got to take him for lunch afterwards. …

He also didn't give a single f**k about getting a lunch beer at a student gathering. I wish I'd joined him in drinking beer at noon on a Tuesday on IEEE dime.

[pertymcpert:] Why would anyone care about having a beer at lunch? Is that unusual?

[gspr:] Gotta remember, the Americans are extremely prudish.

[jegs:] For a country that introduced the concept of talking in elevators and urinals? I'd say drinking in the afternoon is a lesser evil, if at all.

[gspr:] I guess we're digressing, but I don't think the US introduced urinals. And I fail to see how talking in elevators is incompatible with being a prude (or is there some subtle sexual innuendo that's flying over my head here?)

[namdnay:] I think they meant “talking in urinals”

[gspr:] Ah, I'm an idiot – thanks :-)

(Emphasis added.)

QUESTION: Even as revised by namdnay, is "talking in urinals" likely to be an accurate statement?

1.12.6 "Survey": Tango Terms positioning

The main target audience for the Tango Terms is small businesses that can't afford a lot of legal help, and might even try to enter into everyday contracts without using a lawyer at all.

QUESTION (using the Zoom chat): Given this intended audience, should the Tango Terms (and commentary) be positioned as:

  1. an "operations manual for successful business collaborations"?
  2. a "manual of rules for successful business collaborations" (à la Robert's Rules of Order)?
  3. "model contracts for successful business collaborations"?
  4. a "handbook for contract drafters"?
  5. a "dictionary of contract terms" (in alphabetical order)?

1.12.7 Reading review: People

  1. QUESTION: What happened in the Oregon v. Oracle lawsuit that's of interest to us in this context?
  2. QUESTION: What's a Himalaya clause?
  3. QUESTION: What does it mean if an employee is "put on plan"?

1.12.8 In the news: Reference to "deliberate fraud" has consequences

Case: Express Scripts, Inc. v. Bracket Holdings Corp., No. 62, 2020 (Del. Feb. 23, 2021).

… The SPA [Securities Purchase Agreement] provides unambiguously that, except in the case of deliberate fraud and certain fundamental representations, [buyer and plaintiff] Bracket could only recover up to the R&W [representations and warranties insurance] Policy’s limits for breaches of the representations and warranties.

Over [seller and defendant] ESI’s objection, however, the Superior Court instructed the jury that it could find for Bracket not only for deliberate fraud, but also for recklessness. A deliberate state of mind is a different kettle of fish than a reckless one.

The court’s erroneous jury instruction was not harmless—it violated a key provision of the SPA and how the parties allocated risk in the transaction. We therefore reverse the Superior Court’s judgment and remand for a new trial.

(Emphasis in original, extra paragraphing added.)

1.12.9 Reading review: Sales

  1. QUESTION: What are two examples of "Hollywood accounting"?
  2. FACTS: MathWhiz is ordering some expensive, high-powered computer gear from a supplier in another country. QUESTION: Would MathWhiz prefer that delivery be: A) INCOTERMS DDP; or B) INCOTERMS EXW? Why?
  3. FACTS: MathWhiz and Gigunda are negotiating a master services agreement under which MathWhiz might undertake any number of projects for Gigunda — some of which will be high-dollar. QUESTION: What are some pros and cons of:
    • having each project's "statement of work" become an addition to the master services agreement, versus
    • having each statement of work be a separate agreement that incorporates the master agreement by reference?
  4. QUESTION: Why might a supplier want a quotation to have an expiration date?
  5. FACTS: You represent a supplier, ABC Corporation, whose customer, XYZ Inc., wants XYZ's "affiliates" to be listed in the preamble as parties to a master purchasing agreement with the following language: "This Master Purchasing Agreement is between ABC Corporation. ('Supplier') and XYZ Inc. and its affiliates ('Customer')." QUESTION:
    • As ABC's lawyer, what do you think of this — what do you think XYZ really wants?
    • How might you structure the contract to accommodate Customer's likely desires — and to protect Supplier?
  6. FACTS: MathWhiz is negotiating a referral agreement with MegaLeads, Inc.; under the referral agreement — drafted by MegaLeads — MathWhiz will pay MegaLeads a commission on all MathWhiz sales to a new customer that are "consummated" within one year after MegaLeads introduces MathWhiz to the new customer. QUESTION: What do you think of the word "consummated" in this context?

1.13 Class 11: Wed. Mar. 03

1.13.1 In the news: Texas AG sues Griddy

From the original petition (in Harris County):

11.  Griddy, unlike traditional electric retail providers, did not own power generation capability nor did it enter into long-term pricing contracts with power generators. Instead[:]

  • Griddy purchased electricity on the open, spot market.
  • Griddy charged customers a flat monthly rate, and then passed the price at which it purchased electricity directly on to the consumer.

During times of stability and low demand on the grid, Griddy was able to purchase electricity cheaply and pass those savings to consumers. But instability in the market can expose its customers to enormous risk, resulting in massive losses to consumers. Despite that very real risk, Griddy’s marketing persistently misled its customers about the nature and extent of this risk and the costs consumers could expect when utilizing Griddy’s services. * * * 

17.  One reason consumers have been surprised by the recent price spike to $9 per kWh is because Griddy’s advertising was misleading and failed to adequately disclose the risks of its pricing model to its customers.

The Griddy.com website offered: “For only $9.99 a month, get access to the wholesale price of electricity.” However, there is no officially indexed wholesale price of electricity in Texas. Instead, Griddy passed the price it pays on to the consumer along with its monthly $9.99 fee.

The Better Business Bureau issued a consumer alert in 2019 about Griddy’s advertising claims, writing that this usage of “wholesale” should not be used unless a business “actually owns and operates or directly and completely controls a wholesale or distribution facility which primarily sells products to retailers for resale,” which is not the case here. Their repeated representation of their prices as being the “wholesale” price was thus misleading.

18.  Griddy’s representations emphasized potential savings and downplayed the effects of fluctuations in the electricity market. . . .

(Emphasis and extra paragraphing added, footnotes omitted.)

This lawsuit illustrates the role of both "interveners" and "nature" in the T O P S P I N diagram in section 19.3 of the Notes on Contract Drafting:

h-diagram

It's of course far too early to know whether Griddy might actually be held liable. But it's certain that Griddy will have to spend a lot of money — and management bandwidth — on defending against the lawsuit, including:

  • litigation holds for emails and other documents;
  • searching for, screening, and producing documents;
  • depositions of many, many Griddy people; and
  • motion practice.

1.13.2 Ambiguity in a force-majeure clause

From a contract discussed in a Ken Adams blog post: "If the Force Majeure Event prevents a Party from performing any of its obligations under this Agreement for two hundred seventy (270) days or more, then the other Party may terminate this Agreement immediately upon written notice to the non-performing Party." (Emphasis added.)

Ken rightly asks: "May the other party terminate if the nonperforming party is prevented from performing one or more of its obligations? Or does it apply only if the nonperforming party is unable to perform all of its obligations? (Emphasis added.)

1.13.3 Employment agreement homework review

I'm still working my way through the employment agreements that you drafted; here are some comments that I've harvested.

  1. TEXT: "This employment agreement is between you and MathWhiz regarding your position of Director of Business Development." COMMENT: For a new hire, the letter would typically start as something like: "MathWhiz is pleased to offer you the position of Director of Business Development on the terms and conditions stated in this letter."
  2. TEXT: "For the term of your employment, MathWhiz agrees to employ you in the position of Director of Business Development." COMMENT: The italicized part of this sentence could be argued to imply that there's a fixed term of employment (although the later "at will" language seemingly negates any such argument).
  3. TEXT: "MathWhiz agrees to employ you in the position of Director of Business Developer." COMMENT: If this were a purchase-and-sale agreement, you'd want to say (in effect) BOTH that Seller agrees to sell AND Buyer agrees to buy - otherwise it'd be an option.
  4. TEXT: "You will report to Mary Marvel (the “CEO”)." COMMENT: If Mary is the one who will be signing the letter, this will look a little funny.
  5. TEXT: "Your employment shall be “at will,” …." COMMENT: I'm not fond of "shall be," especially in letter agreements — use "is" or "will be" or (if imperative) "must be."
  6. TEXT: "Your position will be full-time. You agree to work onsite at Company’s facility or on Company directed travel for at least 50% of your total working hours. For the first year of your employment, you may work remotely for up to 50% of your total working hours. After the first year, Company may, upon reasonable consultation with you, adjust your remote working hours at Company’s discretion." COMMENT: Maybe a separate paragraph for this currently-significant topic (remote work)?
  7. TEXT: "Your annual salary will be [ADD: at an annual rate of] $[INSERT SALARY AMOUNT] …." COMMENT: We want to rule out the employee claiming that s/he was entitled to a full year's pay no matter how long she worked during the year.
  8. TEXT: "With management approval, you may telecommute from your alternative worksite of your home in Boise, Idaho." COMMENT: A) This still leaves it up to MathWhiz management to approve or disapprove. B) You might consider adding some kind of "fence," e.g., gotta be reasonably available during working hours in MathWhiz's time zone.
  9. TEXT: "The Company intends to provide you, during the Employment Relationship, with access to pre-existing and new Confidential Information on an as-needed basis commensurate with your duties, including but not limited to access to appropriate portions of MathWhiz‘s computer network." COMMENT: If you're not going to spell out the confidentiality obligations, I don't know that I'd bother with this — the confidentiality obligations would very likely apply as a matter of law anyway.
  10. TEXT: "If the Company exercises this right to termination, you shall be entitled to a severance package equal to the severance package of other MathWhiz directors as outlined in the Employee Handbook. " COMMENT: (A) A severance package is something that would typically be negotiated — if it's mentioned at all. (B) If the Company were to terminate for cause, there'd typically be NO severance.
  11. TEXT: "Following termination, whether exercised by you or the Company, you may not be employed by any of MathWhiz’s competitors for a period of __ months." COMMENT: A noncompetition covenant would need considerably more than this; as written, it might not be enforceable even in Texas — let alone California (where it'd be per se unenforceable and actionable to require an employee to agree to it) or one of the other U.S. jurisdictions that restricts noncompetes.
  12. TEXT: "The Company shall pay you as compensation for your services a base salary at a gross annual rate $175,000. Such salary shall be payable in accordance with the Company’s standard payroll procedures. " COMMENT: Nice work on the "gross annual rate."
  13. TEXT: "MathWhiz may terminate your employment for any reason or no reason, and you may terminate the employment for any reason or no reason; provided that the terminating party gives the other at least thirty days' written notice." COMMENT: A) It's not a bad idea to include the phrase "at will": It's a term of art that employment lawyers — and judges — are well familiar with. B) For "optics" purposes, I'd lead off with the employee's right to terminate at will, not with the employer's right to do so.

1.13.4 Exercise: Authority to expand warranties

TEXT: "No person except an officer of Client at the vice-president level or higher is authorized to agree to any other Implied Warranty on behalf of Client."

QUESTION: Does this make any sense? (Read it carefully!)

1.13.5 Exercise: Indemnity provision - rewrite and discuss

FACTS: 1) You represent Seller, which is selling equipment to Buyer, which in turn is engaging Contractor to do some work (think: drilling an oil well) that is being financed by multiple Lenders. ¶ 2) Buyer wants Seller to sign a sales contract that contains the following indemnity language:

10.1. General Indemnity. Seller shall INDEMNIFY, DEFEND, RELEASE AND HOLD HARMLESS Buyer (and its affiliates, co-owners, co-venturers, and partners), its respective shareholders, officers, directors, administrators, managers, employees, servants and agents, successors and assigns, Contractor and Lenders (each, a “Buyer Indemnified Party”) from and against any and all damages (whether ordinary, direct, indirect, incidental, special, consequential, or exemplary), judgments, liabilities, fines, penalties, losses, obligations, settlements, claims, actions, demands, suits, costs and expenses (including, without limitation, reasonable attorneys’ fees, court, mediation and arbitration costs, and other costs of investigation or defense) (collectively, “Losses”) directly or indirectly arising from or relating to this Agreement (or any breach hereof by Seller), the Services (if any), or any Equipment or other personal property (whether rented, sold or incorporated) delivered or made available by Seller hereunder, including, without limitation, any such Losses arising from or relating to (a) the breach or violation of any applicable laws by Seller (or any of Seller’s subcontractors of any tier, or any of its or their employees, agents, consultants or representatives (“Seller’s Contractor Group”)), (b) any alleged infringement or violation of a third party’s patent, trade secret, copyright, trademark or intellectual property right, or (c) the negligence, willful misconduct or other breach or violation of this Agreement by Seller or any of Seller’s Contractor Group, REGARDLESS OF WHETHER ANY SUCH LOSSES ARE ATTRIBUTABLE (IN WHOLE OR IN PART) TO THE SOLE, JOINT OR CONCURRENT NEGLIGENCE (WHETHER ACTIVE, PASSIVE, SIMPLE OR GROSS NEGLIGENCE), STRICT LIABILITY OR ANY OTHER LEGAL FAULT OR RESPONSIBILITY OF BUYER, SELLER OR ANY OTHER PERSON, OR IMPERFECTION OF ANY MATERIALS; PROVIDED, HOWEVER, THAT SELLER SHALL NOT BE LIABLE FOR THE INDEMINFICATION OBLIGATIONS SET FORTH HEREIN FOR CLAIMS CAUSED BY THE SOLE NEGLIGENCE OR WILLFUL MISCONDUCT OF THE BUYER INDEMNIFIED PARTY.

EXERCISE:

  1. Break up this provision; use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.
  2. In your groups, discuss:
    1. what you might advise Seller about the possible risks of agreeing to this provision;
    2. what if any changes you might ask Buyer to agree to; and
    3. how Seller might arrange its business affairs to support this provision if "forced" to agree to it.

QUESTION 1: What do you think about the term "release" — what effect could that have on Seller's insurance carrier? (Hint: Look up "waiver of subrogation.")

1.13.6 Ambiguity: No infringement?

TEXT, from the Sheryl Sandberg employment agreement in the Supplement, starting at page 101, lines 72-73: "[Y]our Employment will not infringe the rights of any other person."

QUESTION: From a drafting-technique perspective, what's wrong with this provision?

1.13.7 Reading review

  1. QUESTION: What's Professor Toedt's preferred way of having notices be effective — and why?

1.13.8 Exercise: Interest rate

FACTS: A partner in your firm asks you to review a contract for one of her clients. The contract contains the following language:

Past-due amounts will bear interest at 5% per month, compounded monthly, beginning on the day after the due date until paid.

QUESTION (for breakout rooms): What are you going to recommend to the partner about this provision?

1.13.9 Exercise: Notices

The following have been harvested from various notices clauses.

  1. Keep in mind that for simpler contracts the notices provision can be succinct.
  2. Remember that a notice might be undeliverable — or might be refused.
  3. "A copy of any notice required under this Agreement shall also be sent to the law firm representing the party to be noticed." COMMENT: This is a good idea in general, but the specific implementation assumes facts not in evidence. QUESTION: How else could this be approached?
  4. "Notice will be effective … after two reasonable attempts at serving notice." COMMENTS: (A) Good idea to put a number on it. (B) I wouldn't call it "serving" notice, because that creates an impression of litigation and thus of hostility. Try instead "after two reasonable attempts at delivery"; this would be softer-sounding.
  5. "An email notice under this Agreement will be deemed received when sent." DISCUSS.
  6. "Notices are effective when (a) sent via certified mail and (b) upon receipt, refusal, or reasonable efforts at delivery." QUESTION: Would notice by FedEx, with confirmed receipt, be effective under this provision?
  7. "12.02. Mechanics. To be effective, notice must be: (i) in writing; (ii) addressed to the attention of the receiving party; (iii) accompanied by a copy to the legal department; and (iv) sent by Certified Mail." DISCUSS.
  8. "Notices may be sent to either party's registered agent." QUESTION: Is this a good balancing of the risk of nondelivery versus the time it takes for notice to reach the right person? (Remember: By law in essentially all states, any corporation that does business in a state must have a registered agent in that state so that a plaintiff in that state will have a definite person or organization upon whom to effect service of process, e.g., a summons and complaint.)
  9. "If either party changes their address during the duration of this Agreement, they shall promptly notify the other party of the address change via certified mail." COMMENT: Should be "it shall promptly notify the other party …." (Pronoun choice hasn't made its way to the business-contract-drafting world yet.)
  10. "If a Notice regards a possible dispute, the notifying party must provide a copy of the Notice to the notified party’s legal counsel." (Emphasis added.) DISCUSS.
  11. A notice will be effective "five business days after the date it is sent by domestic registered or certified mail, with postage and charges prepaid, …." QUESTION: I'm really not a fan of saying that notices are effective X days after transmission, even if it's by registered- or certified mail.
  12. "All notices required under this Agreement must be in writing and sent by any method with written verification of receipt. [¶] To reduce the chances of Notices going astray, any Notice to an organization must be addressed to the attention of the position of responsibility in the organization." COMMENT: This is commendably succinct — although it would help to state what happens in case of an undeliverable notice.
  13. "If a party changes its address for Notice, then such party/ must provide written notice to the other party of its new address /within 15 calendar days." (Emphasis added.) QUESTION 1: So what would happen if this requirement were not met? QUESTION 2: Is there a better way to approach this?
  14. Notices by FAX / email are effective upon confirmation of receipt — but what if the confirmation is automatic from the addressee's email system or FAX machine? Does that mean that a responsible human actually received the notice?
  15. What do you think about having notices be effective three business days after mailing?
  16. What do you think about allowing notices by email?
  17. Consider the email address specified for notices: Does what email address is used make any difference?
  18. Should a change of address for notice require a formal notice?
  19. Should formal notice be used for all communications?

1.13.10 Exercise: Payment - late payment

From a contract clause: "(4) Penalty for late payments: Late payments are subject to a penalty of 5%."

QUESTION: Any issues here?

1.13.11 Exercise: Payments - currency

MORE FACTS:

  • In a contract you're reviewing, your client is located in Vancouver, Canada and The Other Side (which drafted the contract) is located in Houston.
  • The contract states that the amount your client must pay is $1 million; it doesn't specify the currency.

QUESTION: Is this an issue? If so, is it worth burning up negotiation time by asking The Other Side to fix it? Discuss your reasoning.

MORE FACTS: In the above situation, your client really wants to get the contract to signature as soon as possible, like yesterday. You've tentatively concluded that it's not worth raising either of the above points (time of day and amount due) with The Other Side.

QUESTION: To be on the safe side — and keep your malpractice insurance carrier happy — what might you want to do about these points before sending your markup to The Other Side?

1.14 Class 10: Mon. Mar. 01

1.14.1 In the news: A misplaced parenthetical in a force-majeure clause

See this article, discussing a recent Florida bankruptcy-court decision, In re Cinemex U.S. Real Estate Holdings, concerning a COVID-19-related default.

The force-majeure contract language was as follows:

If either party to this Lease, as a result of any . . . (iv) acts of God, governmental action, or (v) other conditions similar to those enumerated in this Section beyond the reasonable control of the party obligated to perform (other than failure to timely pay monies required to be paid under this Lease), fails punctually to perform any obligation on its part to be performed under this Lease, then such failure shall be excused.

The court held that the "other than failure …" language did not apply to subdivision (iv) — so in effect the language would read as follows if more white space had been used:

If either party to this Lease, as a result of any . . .

  • (iv) acts of God, governmental action, or
  • (v) other conditions similar to those enumerated in this Section beyond the reasonable control of the party obligated to perform (other than failure to timely pay monies required to be paid under this Lease),

fails punctually to perform any obligation on its part to be performed under this Lease,

then such failure shall be excused.

The article's author suggests that a "tighter" force-majeure clause could have read as follows:

If either party to this Lease, as a result of any . . .

  • (iv) acts of God, governmental action, or
  • (v) other conditions similar to those enumerated in this Section beyond the reasonable control of the party obligated to perform,

fails punctually to perform any obligation on its part to be performed under this Lease (other than failure to timely pay monies required to be paid under this Lease),

then such failure shall be excused.

I might have written it as follows:

If either party to this Lease, as a result of any . . .

  • (iv) acts of God, governmental action, or
  • (v) other conditions similar to those enumerated in this Section beyond the reasonable control of the party obligated to perform,

fails punctually to perform any obligation on its part to be performed under this Lease — other than an obligation to timely pay monies required to be paid under this Lease,

then such failure shall be excused.

1.14.2 Reading review (1)

  1. QUESTION: From a litigator's perspective, what's an advantage of litigating (or arbitrating) a contract that includes illustrative examples, charts, diagrams, etc.?
  2. QUESTION: For background checks, what if any consent requirements exist everywhere in the U.S.?
  3. QUESTION: When a customer and a services provider enter into an agreement, what actual- or potential advantage(s) does the customer get from having explicit requirements for the qualifications of the individuals who perform the services?
  4. QUESTION: What are some common scenarios in which a customer might want a supplier's people to be background-checked?

1.14.3 Redrafting an ambiguity from President Trump

From a presidential tweet of April 3, 2017: "Such amazing reporting on unmasking and the crooked scheme against us by @foxandfriends. …" (Hat tip: Chris Richardson.)

QUESTION – use Zoom chat: How could this be rewritten to clarify?

1.14.4 Reading review (2)

  1. QUESTION: What happened to Chuck E Cheese concerning its background checks?
  2. QUESTION: Why did the chief spokesman for Walmart resign in 2014?
  3. FACTS:
    • Gigunda's lawyer asks to include a clause in the MathWhiz services contract that would be pretty onerous for MathWhiz to comply with.
    • Mary Marvel asks you whether it'd be safe for the contract to state instead that MathWhiz would act in good faith in trying to comply with Gigunda's requested clause.
    • QUESTION: What might you want to tell Mary?
    • QUESTION: How might you document that you told this to Mary?
  4. FACTS: Gigunda's lawyer proposes an entire-agreement clause that states (paraphrasing), "There are no representations other than those stated in this Agreement." Assume Texas law applies. QUESTION: If MathWhiz were to have trouble complying with its services obligation, to what extent would this entire-agreement clause preclude Gigunda from suing MathWhiz for fraudulent misrepresentation about MathWhiz's capabilities?

1.14.5 Ambiguity: Short-term trading

TEXT, from a Hacker News discussion: "You should only short term trade with your 401k." QUESTION: How can this sentence be clarified by simply moving words around? (There are two possible meanings.)

1.14.6 Exercise: Independent-contractor status

FACTS:

  1. Matthew — a California resident — goes to work for MathWhiz as a data analyst who is to work on a project-by-project hasis.
  2. The contract between MathWhiz and Matthew — drafted without your input — explicitly states:
    • that Matthew is a "gig" worker who is an independent contractor;
    • that Texas law applies;
    • that any dispute between Matthew and MathWhiz must be arbitrated in Texas;
    • that any non-arbitrable dispute between the two must be litigated in Houston; and
    • that MathWhiz has the right to modify the contract at any time.
  3. Matthew becomes disillusioned with MathWhiz and files a lawsuit against MathWhiz in California state court, claiming that he is entitled to the protection of California law relating to employees.
  4. Mary (MathWhiz's CEO) wants your advice.

QUESTION: What would likely result if, in the California state-court lawsuit, you filed a motion to dismiss Matthew's lawsuit because of the arbitration- and forum-selection provisions? Why?

1.14.7 Exercise: Representations and warranties redrafting

Consider the following in the breakout rooms:

FACTS: You represent MathWhiz — for each of the following, vote YES or NO as to whether it makes sense to include the text in the MathWhiz / Gigunda contract. CONSIDER ALSO how the language might be rephrased if necessary.

1.  TEXT: "Service Provider represents and warrants that Service Provider’s business includes analyzing seismic data."

2.  TEXT: "Service Provider warrants that Service Provider is headed by Mary."

3.  TEXT: "So far as Service Provider is aware, some individuals have called Mary an 'expert in analyzing seismic data to determine where oil and gas natural deposits may be."

4.  TEXT: "Client represents and warrants that all seismic data from the Mongolian Field was lawfully obtained and that Client has the legal power to share the data with Contractor."

1.15 Class 09: Wed. Feb. 24

In the news:

1.15.2 Yes/no voting exercises

Discuss the following in your groups; when we return, use Zoom's Yes and No voting buttons for the following:

  1. FACTS: Gigunda wants its contract with MathWhiz to include a representation that MathWhiz isn't being sued by any of MathWhiz's other clients. QUESTION: From MathWhiz's perspective, which would be the better phrasing?
    • Yes: "To MathWhiz's knowledge, there are no lawsuits or other claims pending or threatened by any MathWhiz client against MathWhiz."
    • No: "So far as MathWhiz's officers at the vice-president level or higher are aware, there are no lawsuits or other claims pending or threatened by any MathWhiz client against MathWhiz."
  2. FACTS:
    • (A) MathWhiz and Gigunda sign their contract for MathWhiz to perform services.
    • (B) The contract includes a MathWhiz warranty that MathWhiz will render the services in a "professional" manner.
    • (C) Later, Gigunda demands that MathWhiz reimburse Gigunda for damages allegedly arising out of MathWhiz's professional malpractice.
    • QUESTION: If Gigunda were to sue MathWhiz for breach of warranty, would Gigunda be required to prove that Gigunda reasonably relied on MathWhiz's warranty? (Yes or No)
  3. QUESTION: Under English law, is it enough for a supplier to disclaim implied warranties? (Yes or No)

1.15.3 Homework prep: Employment agreement

DCT note: Based on the class discussion last night, I've updated the fact scenario and homework instructions.

FACTS (updated):

• Mary Marvel (MathWhiz's CEO) has told you that MathWhiz has agreed to hire a new director of business development, "Dave Doright," who splits his time between his home in Houston and his second home in Boise, Idaho.

• Dave is someone whom Mary really wants to "get"; he has several other companies interested in him.

• Mary has known Dave for a few years; she believes he is smart, ambitious, and driven, but also an honorable guy who — out of concern for his professional reputation, if nothing else — would not try to take undue advantage of MathWhiz.

• Mary would like for you to put together a simple, letter-style employment agreement that covers just the absolute bare minimum of issues, to increase the chances that Dave will sign the letter without getting a lawyer involved, because that could delay things and possibly jeopardize her "closing the deal" to get Dave on board at MathWhiz.

• BUT: Mary still wants the letter to be enough that she could take Dave to court if necessary. (See also my Tom Arnold story from earlier in the semester).

HOMEWORK ASSIGNMENT:

1. In a Word document, draft such a letter agreement — feel free to look for issue ideas in the model employment agreement provisions and in Sheryl Sandberg's employment agreement, BUT: Remember Mary's concerns about having the letter agreement cover just the absolute bare minimum of issues.

(The letter agreement should refer to "you" for Dave and to "MathWhiz" as the company.)

2. At the end of the Word document, draft the text of an email to Mary: In the email, provide a list of no more than three omitted issues that:

(i) you think are sufficiently important that you would normally want such a letter agreement to address — and why that's the case, i.e., what could go wrong if the issues aren't addressed in the letter agreement, BUT:

(ii) given the circumstances and Mary's expressed concerns, you think that in Dave's case it's likely an acceptable risk to omit those issues from the letter agreement.

Your draft email text should explain the above to Mary in matter-of-fact, nonjudgmental terms — DON'T write it in an accusatory tone implying that you don't support Mary's decision to proceed in this way.

(Remember: Our job as lawyers is to point out (i) possible what-if events; (ii) potential consequences if those events occur; and (iii) opportunities for avoiding or at least mitigating those risks. As long as we don't veer into unethical- or illegal territory, it's always the client's decision what risks to take or not take.)

THEN: At the end of the email, invite Mary to contact you if there's anything she'd like to discuss further.

[From last night's in-class exercise:]

TASK 1: In your groups, using the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, brainstorm the "duties" and "compensation" sections and come up with at least rough language, which we'll look at when we come back to the main room. Feel free to look for ideas in the model employment agreement provisions and in Sheryl Sandberg's employment agreement.

TASK 2: In your groups (again using the virtual whiteboards), brainstorm a list of bare-minimum issues to cover in the homework due next week.

1.15.4 Reading review

  1. FACTS: Same facts as on Monday — you suggest that the 1L add a notices clause. The 1L's draft reads as follows: "Notices are effective three (3) days after being deposited in the U.S. Mail in a sealed envelope having first-class postage affixed and addressed as follows:" followed by specific addresses for notice. QUESTION: Any thoughts?
  2. QUESTION: From a litigator's perspective, what's an advantage of litigating (or arbitrating) a contract that includes illustrative examples, charts, diagrams, etc.?
  3. QUESTION: What's (likely to be) the difference between best efforts and reasonable efforts?
  4. FACTS: MathWhiz's CFO asks you to include, in the contract between MathWhiz and Gigunda, the following statement: "Gigunda acknowledges that it will pay MathWhiz's invoices net 10 days from date of invoice.
    • Yes | No: This is an acceptable way to phrase this MathWhiz obligation.
    • Yes | No: If phrased this way, Gigunda would have to have its contract signature notarized.
    • Yes | No: Gigunda is likely to go along with "date of invoice" terms.
  5. FACTS: MathWhiz's marketing director asks you to include, in the Background section of the Gigunda contract, the following: "Gigunda acknowledges that Gigunda desires to engage MathWhiz because Gigunda's in-house personnel do not have the skills needed for the services that MathWhiz will perform."
    • Yes | No: This is an appropriate thing to include in the Background section to help future readers understand the business context.

1.15.5 Exercise

  1. EXERCISE: We'll discuss Exercise 13.11.1 (selling Uncle Ed's car) from the reading materials.

1.16 Class 08: Mon. Feb. 22

1.16.1 Post-storm housekeeping

I've updated the schedule for the mid-term quizzes, reading assignments, and homework assignments.

[Note the use of the serial comma, a.k.a. Oxford comma, in the sentence above.]

Quoting the emails I sent to the class:

Friday Feb. 19, 5:44 p.m.:

All: I hope you've survived the freeze and its consequences without major personal inconvenience (we have). I've not received any guidance from the Law Center administration about what happens to the semester in view of missing a week of class. For the time being, let's assume that the remaining quizzes and homework-assignment due dates will be pushed back by one week. I don't know what that will mean as far as the end-date of the semester but will endeavor to keep you updated. I'll change the online class plan accordingly.

Monday Feb. 22, 5:44 a.m.:

I'm hearing from some students that they're still dealing with pipe-bursting damage and other consequences of the Great Texas Freeze and Blackout. Under the circumstances:

  1. I'm not going to count off points for late homework submission (by anyone) of the following assignments:
  2. Addams Family signature block (originally due Feb. 15, now due today [Feb. 22])
  3. Short employment agreement (originally due today, now due March 1)

For clarity, you still have to submit these assignments to get the associated points, but you won't be -docked- points for -late- submission.

  1. If you need to miss class tonight or this Wednesday because of other things you have on your plate due to these circumstances, please let me know and I'll not count it as a point-deducting absence. (Please -do- come to class if you can; as you've probably seen, your participation the in-class small-group discussion is an important part of the course and benefits your classmates as well as yourself.)
  2. Starting next week the usual points clawback for missing class and for late homework submission will resume per the syllabus.

See you tonight (as many of you as can make it).

1.16.2 Dilbert: A "Combat Barbie" distractor illustration

Apropos of "Combat Barbie" distractors — i.e., giving The Other Side's contract reviewer something to object to in an otherwise-balanced draft — see the Dilbert strip for Monday, Feb. 15, 2021.

1.16.3 Incentives & business planning: The Texas electrical grid

Last week's Great Texas Blackout serves as a large-scale example of the importance of incentives. Recall the observation of Warren Buffett's business partner Charlie Munger (section 11.7.3 in the readings): "Never a year passes but I get some surprise that pushes a little further my appreciation of incentive superpower. * * * Never, ever, think about something else when you should be thinking about the power of incentives." (Emphasis added.)

The incentives available to Texas power generators appear to have played a major role in the blackout:

When it gets really cold, it can be hard to produce electricity, as customers in Texas and neighboring states are finding out. But it’s not impossible. Operators in Alaska, Canada, Maine, Norway and Siberia do it all the time.

What has sent Texas reeling is not an engineering problem, nor is it the frozen wind turbines blamed by prominent Republicans. It is a financial structure for power generation that offers no incentives to power plant operators to prepare for winter.

Will Englund, The Texas grid got crushed because its operators didn’t see the need to prepare for cold weather (WashingtonPost.com Feb. 16, 2021) (extra paragraphing added).

And from the NY Times:

One example of how Texas has gone it alone is its refusal to enforce a “reserve margin” of extra power available above expected demand, unlike all other power systems around North America. With no mandate, there is little incentive to invest in precautions for events, such as a Southern snowstorm, that are rare. Any company that took such precautions would put itself at a competitive disadvantage.

Clifford Krauss, Manny Fernandez, Ivan Penn and Rick Rojas, How Texas’ Drive for Energy Independence Set It Up for Disaster (NYTimes.com Feb. 21, 2021) (emphasis added).

1.16.4 Addams Family homework assignment review

DCT to talk about the following from the homework assignment:

  1. Why might the Widgets sales rep be so eager to get the contract signed on March 31? (Hint: It has to do with the fact that Widgets, Inc. is a newly-public company.) A: To make his quarterly quota? To help Widgets "make the number" for what analysts are expecting?
  2. What about just signing it on April 1 when the family gets back to Houston? A: That wouldn't fly with Widgets' accountants, which want "ink on the signature line" by March 31 or they won't let Widgets book the revenue in Q1. (AND: An oral contract by March 31 won't work either.) (AND: Don't backdate the date-signed date on the contract; that could amount to securities fraud.)
  3. Is it physically possible for you to "make it happen" for the contract to be signed and delivered to Widgets, Inc. today, March 31? If so, how might you go about it? A: Try an electronic signature by email or text message — the Honolulu hotel probably has a business center with computers that could be used.
  4. If Wednesday Addams asks you to sign it as the company's lawyer, how should you respond? A: If it's a good and longstanding client relationship, I might do it, but otherwise I'd be reluctant. If I did sign it, my handwritten signature would be something like the following: "D.C. Toedt III, attorney for Addams Investments LP, by permission"

1.16.5 Reading review (1)

We'll discuss these in small groups.

  1. QUESTION: Can you think of some examples of a safe harbor clause?
  2. FACTS:
    • MathWhiz asks you to develop a form of services agreement for where MathWhiz is the service provider. The agreement form will be posted on MathWhiz's Web site so that MathWhiz's customers can easily review the agreement form.
    • MathWhiz's business-development VP wants you to make the form as tough as you can, to give MathWhiz maximum legal advantage over its customers.
    • You happen to know that MathWhiz also needs to engage another company to provide certain specialized services — that is, MathWhiz will itself be the customer.
    • QUESTION: Any thoughts?
  3. FACTS:
    • You're a new associate in a law firm.
    • A partner in the firm assigns a 1L law clerk to draft a guaranty agreement, under which the firm's client ABC Corporation ("ABC") will guarantee the payment obligations of one of ABC's subsidiary companies to another company, XYZ. The partner asks you to look it over.
    • The 1L law clerk's draft states (among other things, of course,) the following: "ABC represents and warrants that the ABC financial statements attached as Schedule 1 are true and correct."
    • QUESTION: Any thoughts?
  4. FACTS: Same as above, plus the following:
    • The 1L's draft says the following: "ABC may withdraw its guaranty if XYZ does not object within five business days after ABC gives XYZ notice of ABC's intent to do so."
    • The draft does not include a notices clause.
    • QUESTION: Any thoughts?

1.16.6 Reading preview: Methodical business planning

[DCT to talk through chapter 19 in the readings, which is newly-salient in view of the Great Texas Blackout of 2021.]

1.17 Class 07: Wed. Feb. 10

1.17.1 Quiz 1 review

Any questions? Comments? Could I have written any of the questions more clearly?

1.17.2 DCT rewrite of Monday's redrafting exercise

BEFORE:

  1. TERMINATION

If the royalties due hereunder have not been paid within the time allowed by this Licence Agreement or if either party shall breach of any of the representations, warranties, covenants, promises or undertakings herein contained and on its part to be performed or observed and shall not have remedied such breach within thirty (30) days after notice is given to the breaching party by the non-breaching party requiring such remedy or if either party shall have an Examiner appointed over the whole or any part of its assets or an order is made or a resolution passed for winding up of such party unless such order is part of a scheme for reconstruction or amalgamation of such party then the other party may forthwith terminate this Licence Agreement without being required to give any or any further notice in advance of such termination but such termination shall be without prejudice to the remedy of such party to sue for and recover any royalties then due and to pursue any remedy in respect of any previous breach of any of the covenants or agreements contained in this Licence Agreement.

Here's one possible BLUF, "no Wall of Words" rewrite — which still has problems:

12.  TERMINATION

12.1 Licensor may terminate this Agreement if the royalties due hereunder have not been paid within the time allowed by this Licence Agreement. [DCT QUESTION: is there a notice-and-cure provision for this failure?]

12.2 Either party may terminate this Agreement by notice IF:

(1) (i) the other party breaches any of its promises, and/or (ii) any representation by the other party in this Agreement proves materially untrue; AND

(2) the other party does not remedy the breach or material untruth within 30 days after notice of breach from the terminating party.

12.3 Either party may terminate this Agreement if any of the following occurs:

(1) the other party has an examiner appointed over the whole or any part of its assets in accordance with law;

(2) a court of competent jurisdiction issues an order — or the other party's board of directors adopts a resolution — for the winding up of the other party's business, unless the order or resolution is part of an arrangement [NOT: scheme] for reconstruction or amalgamation of the other party.

12.4 Termination will be effective immediately upon notice of termination by the terminating party.

12.5 The terminating party need not give any other advance notice of termination except as set forth above.

12.5 Termination will be without prejudice to any other remedy available to the terminating party, at law or in equity.

1.17.3 Exercise: Late payment

From a contract clause: "(4) Penalty for late payments: Late payments are subject to a penalty of 5%."

EXERCISE: Spot the issues — each student should "text" them TO ME ONLY in the Zoom chat feature.

(Be careful — as stated, the facts give rise to some hidden issues!)

1.17.4 Small-group session

  1. FACTS: You have graduated and are working as an associate for the law firm representing MathWhiz; you've just taken the bar exam. You've been asked to review a MathWhiz contract draft that has been prepared by a rising-2L summer associate. The draft says: "Gigunda represents that it shall arrange to pay MathWhiz a deposit in the sum-total amount of $10 thousand dollars ($10,000.00) no later than 10 days after this Agreement has been executed." QUESTION: Could the wording of this provision be improved?

1.17.5 Guaranties: A wall-of-words example

See this guaranty:

1. Guaranty. The Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all existing and future indebtedness and liabilities of every kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or involuntary and whether for principal, interest, premiums, fees indemnities, damages, costs, expenses or otherwise, of the Borrower to the Lender, which arise from or are in connection with that certain Credit Agreement dated as of March 24, 2009, among the Borrower, Heald Capital, LLC and the Lender (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein and not defined herein shall have the meanings ascribed such terms in the Credit Agreement) and/or the other Loans Documents (including, without limitation, any Secured Hedge Agreement), whether associated with any credit or other financial accommodation made to or for the benefit of the Borrower by the Lender or otherwise and whenever created, arising, evidenced or acquired (including all renewals, extensions, amendments, refinancings and other modifications thereof and all out-of-pocket costs, reasonable attorneys’ fees and expenses incurred by the Lender in connection with the collection or enforcement thereof), and whether recovery upon such indebtedness and liabilities under the Credit Agreement and the other Loan Documents may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against the Guarantor or the Borrower under the Bankruptcy Code (Title 11, United States Code), any successor statute or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally (collectively, “Debtor Relief Laws”), and including interest that accrues after the commencement by or against the Borrower of any proceeding under any Debtor Relief Laws (collectively, the “Guaranteed Obligations”). The Lender’s books and records showing the amount of the Guaranteed Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantor and conclusive, absent manifest error, for the purpose of establishing the amount of the Guaranteed Obligations. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense to the obligations of the Guarantor under this Guaranty, and the Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing (other than the defense of final payment in full in cash and performance in full of the Guaranteed Obligations, except for contingent indemnification obligations for which no claim has been asserted). Anything contained herein to the contrary notwithstanding, the obligations of the Guarantor hereunder at any time shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code (Title 11, United States Code) or any comparable provisions of any similar federal or state law

1.17.6 Ambiguity: Bingo

Spotted in a Facebook group: "My eight year old just asked me if Bingo is the name of the farmer or the dog. And now I am questioning everything I thought I knew about life." (Credit: @whitneyhemsath.)

1.17.7 Rewriting exercise: "Gross up"

TEXT: From this guaranty:

2. No Setoff or Deductions; Taxes; Payments. The Guarantor represents and warrants that it is organized in the United States of America. The Guarantor shall make all payments hereunder without setoff, counterclaim, restrictions or condition, and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions or withholdings of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Guarantor is compelled by law to make such deduction or withholding. If any such obligation (other than one arising (i) with respect to taxes based on or measured by the net income or profits of the Lender, or (ii) with respect to any withholding tax to the extent that such withholding tax would have been imposed on the relevant payment to the Lender under the laws and treaties in effect at the time such Lender first became a party to this Agreement or otherwise became entitled to any rights hereunder) is imposed upon the Guarantor with respect to any amount payable by it hereunder, the Guarantor will pay to the Lender, on the date on which such amount is due and payable hereunder, such additional amount in U.S. dollars as shall be necessary to enable the Lender to receive the same net amount which the Lender would have received on such due date had no such obligation been imposed upon the Guarantor. The Guarantor will deliver promptly to the Lender certificates or other valid vouchers (to the extent available) for all taxes or other charges deducted from or paid with respect to payments made by the Guarantor hereunder. The obligations of the Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

EXERCISE: In the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, rewrite the italicized portion to be much more reader-friendly — as though you were talking to a lay jury.

QUESTION: Does the first sentence really belong in this provision?

When finished, come back to the main Zoom meeting (no need to wait for me to close the breakout rooms.)

[ADDED:] DCT Rewrite:

(a) It might be the case that taxes must be withheld from what you pay us. If so, then — except as stated in subdivision (b) — you will pay us enough extra so that, after taxes, we receive the same net amount as if the taxes had not been required to be withheld.

(b) You need not pay us extra under subdivision (a) for amounts withheld for:

        (1) withholding taxes on our net income or profits, or

        (2)  withholding taxes that would have been imposed on the relevant payment to us under the laws and treaties in effect at the time we first became a party to this Agreement or otherwise became entitled to any rights hereunder.

1.17.8 Ambiguity in an obituary: Going to heaven

From an obituary: "Pamela went to heaven surrounded by family whom she loved …." QUESTION: What possibilities does this line evoke in your minds?

1.17.9 Preview: Reps and warranties reading

1.18 Class 06: Mon. Feb. 08

1.18.1 Ambiguity exercise: Nestlé and Starbucks

From this BBC.com article: "Nestlé has announced that it will pay Starbucks $7.1bn (£5.2bn) to sell the company's coffee products."

QUESTION: Which company will sell the other company's coffee —

  • Will Nestlé sell Starbucks coffee? or
  • Will Starbucks sell Nestlé coffee?

(Which do you think is more likely?)

(Is it possible that Nestlé might pay Starbucks $7.1bn for the privilege of Nestlé selling Nestlé's own coffee?)

EXERCISE: In the Zoom chat window (TO ME ONLY), rewrite the above-quoted sentence twice — once for each possible interpretation.

1.18.2 Quickie writing exercise

TEXT 1: "The team held a meeting to give consideration to the issue." (Shortened) TEXT 2: "The team considered the issue." QUESTION: In the Zoom chat window TO ME ONLY: Is this "streamlining" safe? If not, why not?

1.18.3 Small-group session 1

INSTRUCTIONS: For each of the questions below, each group is to draft a written response that one group member — the "scrivener," an assignment to be rotated for different questions — can copy and paste into the Zoom chat window (TO EVERYONE) when we return to the main Zoom room. Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 and/or to pull up Microsoft Word (or whatever) and share screens in Zoom.

  1. FACTS: Continuing the usury discussion with Mary from last week: Mary wants to know whether California law allows usury savings clauses for interest charges (given that California is where Gigunda is located). QUESTION: What do you tell her? (Hint: Do a quick online search about California law.)
  2. FACTS: "Alice" claims that a contract term means one thing, "Bob" claims that the term means something else. TRUE OR FALSE: The fact that the parties are arguing for different interpretations means that a jury will have to decide the winner of their "he said, she said" dispute. EXPLAIN.
  3. QUESTION: In the context of contract drafting, what does BLUF stand for — and why might it be significant to a client?
  4. QUESTION: Of the rules for note-taking during contract negotiations — and during other meetings as well — what does your group think are the TWO most-important rules — and why?

1.18.4 Ambiguity exercise: A black hole … in Chile?

See the following from Nsikan Akpan, Here is the first photo of a black hole (PBS.org):

Scientists at eight radio telescopes observatories … captured images of one black hole in our Milky Way — known as Sagittarius A* — and one in a nearby galaxy called M87, over the course of a week in April 2017. (The PBS NewsHour visited one in Chile when the project was still under discussion).

QUESTION: What are the two possibilities for the "one" that PBS visited?

EXERCISE: Using the Zoom chat window TO ME ONLY, rewrite just the italicized sentence to clarify the likely intended meaning.

1.18.5 (Re)writing exercise: A termination clause

Consider the following provision (from a real contract):

12. TERMINATION

If the royalties due hereunder have not been paid within the time allowed by this Licence Agreement or if either party shall breach of any of the representations, warranties, covenants, promises or undertakings herein contained and on its part to be performed or observed and shall not have remedied such breach within thirty (30) days after notice is given to the breaching party by the non-breaching party requiring such remedy or if either party shall have an Examiner appointed over the whole or any part of its assets or an order is made or a resolution passed for winding up of such party unless such order is part of a scheme for reconstruction or amalgamation of such party then the other party may forthwith terminate this Licence Agreement without being required to give any or any further notice in advance of such termination but such termination shall be without prejudice to the remedy of such party to sue for and recover any royalties then due and to pursue any remedy in respect of any previous breach of any of the covenants or agreements contained in this Licence Agreement.

In the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, take a stab at rewriting this provision to make it more readable and conform to the drafting style rules we've been reading about and discussing.

(Don't try to "retrade the deal" by altering the substantive terms.)

(I'll show my rewrite on Wednesday night.)

1.18.6 Small-group session 2

  1. FACTS: An apartment lease states (in part): "The apartment shall be regularly serviced by a professional pest-control service." QUESTION: This is an example of what? (Two words — and the words are not "passive voice.") QUESTION: Is this an example of acceptable drafting? Why or why not?
  2. FACTS: Same as the previous question. Are there any circumstances in which the above-quoted apartment lease provision might be sort-of acceptable, in the sense of "hold your nose and go along with it"? (Hint: Consider the role that context plays in interpreting contract language.)
  3. FACTS: [SAVED TILL WEDNESDAY] You have graduated and are working as an associate for the law firm representing MathWhiz; you've just taken the bar exam. You've been asked to review a MathWhiz contract draft that has been prepared by a rising-2L summer associate. The draft says: "Gigunda represents that it shall arrange to pay MathWhiz a deposit in the sum-total amount of $10 thousand dollars ($10,000.00) no later than 10 days after this Agreement has been executed." QUESTION: Could the wording of this provision be improved?
  4. FACTS: Mary Marvel asks you to add, in the background of the MathWhiz agreement with Gigunda, the following sentence: "Gigunda acknowledges that MathWhiz's data-processing algorithms are unique and MathWhiz's extremely-valuable trade secret." QUESTION: What's your response to Mary, and why?

1.19 Class 05: Wed. Feb. 03

1.19.1 From the practice

DCT to tell about a client call this morning:

  • Somewhat unfamiliar area
  • Research: Google, scholar.google.com
  • Zoom call
  • Risk discussion, business-risk assessment
  • Follow-up email

1.19.2 Ambiguity: Cutting homeless people in half

Sent to me by a student (Megan Sheena):

Homeless people cut in half

1.19.3 Reading discussion (A)

  1. FACTS: Gigunda's services agreement template says that MathWhiz must comply with Gigunda's expense reimbursement policy. Mary Marvel, the MathWhiz CEO, asks what you think. QUESTION: What advice do you have for her?
  2. FACTS: Gigunda's services agreement template also says that MathWhiz must submit its invoices no later than 15 days after the end of a calendar quarter. QUESTION: What do you think Gigunda's motivation is? QUESTION: Will MathWhiz even care? QUESTION: What do you advise Mary Marvel?
  3. FACTS: MathWhiz wants to include, in its services agreement template, a provision for charging interest. • Mary says that she's heard of something called a "usury-savings clause," and asks whether such a clause should be included in the MathWhiz template. QUESTION: What do we not know that we should find out before trying to advise Mary?
  4. FACTS: For particular MathWhiz obligations, Mary wants the MathWhiz services agreement template to require only that MathWhiz use its "best efforts" to perform its obligations. QUESTION: Is this a "safe" clause to include? Why or why not?

1.19.4 Quiz #1 - up at 9:00 p.m.

This is a reminder about Quiz 1 on Canvas — one student hasn't yet accepted the course invitation (I don't know which student).

1.19.5 Reading discussion (B)

  1. QUESTION: What are some possible dangers of including "good faith" requirements in a contract?
  2. QUESTION: Why include a redlining representation? How do you think the lawyers you know would react to being asked to approve it in their clients' contracts?
  3. QUESTION: Why include a status-conferences requirement?
  4. QUESTION: How useful is it to state in a contract that the parties are "independent contractors"? EXPLAIN.

1.19.6 Homework review, part 2

  1. STUDENT TEXT: "(e) Tenant must hold all information obtained during any inspection in confidence, except: (1) Tenant may disclose such information to its attorneys and advisors, provided; (A) Tenant informs such parties of the confidential nature of the information; and (B) uses good faith and diligence to cause such parties to maintain such information confidential."
    • QUESTION: What could be improved here?
  2. "(f) Any shortfall or excess revealed and verified by Tenant’s audit must be paid to the applicable party within: (1) 30 days after that party is notified of the shortfall or excess to the extent such overage or shortfall has not previously been adjusted pursuant to this lease."
    • QUESTION: What could be improved here?
  3. "Landlord shall keep reasonably detailed records of all Operating Expenses (“Expenses”) and Real Estate Taxes (“Taxes”) for at least two (2) years. Tenant and/or its representative shall be permitted to audit the above records by giving Landlord written notice not less than twenty (20) days’ prior to the audit date. Tenant shall exercise the audit right no more than once a year."
    • QUESTION: What D.R.Y. failures do we see here?
    • QUESTION: Would the reader be served any better by breaking this up any further? How far would you go in doing so?
  4. "Tenant, with any representative of tenant, shall be permitted to audit the records of the Operating Expenses and Real Estate Taxes if such audit is: • Not more than once every 12-month period; and • Prior written notice, of at least 20 days, is given to Landlord."
    • QUESTION: How could the bullet-point structure be improved?

1.20 Class 04: Mon. Feb. 01

1.20.1 Housekeeping: Quiz 1

Quiz 1, on Canvas, is coming up.

1.20.2 Ambiguity preview: Traffic signs

Ambiguous: See this sign.

More clear: This sign

1.20.3 Paperback of course materials

(DCT to show his copy.)

1.20.4 Homework comments, part 1

  1. STUDENT TEXT: "Tenant and Tenant’s representatives may audit OPEX and RE Taxes records: i. Once every 12 months and,  ii) After at least 20 days’ prior written notice to Landlord." (Revised.)
    • QUESTION: Does that mean an audit is OK, say, every three months as long as there's at least 20 days' prior written notice? And no notice requirement at all if every 12 months?
    • BETTER (from another student): "Tenant – or representatives of the Tenant – may audit the records once in a 12-month period. A written notice at least 20 days prior to the audit must be given to the Landlord."
  2. STUDENT TEXT: "Any inspection by Tenant shall be for the sole purpose of verifying the OPEX and/or RE Taxes."
    • COMMENT: I'd make this active voice, e.g., "Tenant may not conduct any inspection, nor use information obtained in an inspection, except for the sole purpose of verifying …." (Emphasis added.)
  3. STUDENT TEXT: "Tenant shall disclose information obtained during inspection solely to its attorneys and advisors, provided: (i) Tenant informs parties of the confidential nature of information. (ii) Tenant makes good faith effort to cause parties to maintain information as confidential."
    • COMMENT: I'd rewrite to say: "Tenant must not disclose information obtained during inspection except solely to its attorneys and advisors [DELETE: provided]. (i) Tenant must inform those parties of the confidential nature of the information. (ii) Tenant must make good faith efforts to cause parties …." (Emphasis added.)
  4. STUDENT TEXT: "a. Any shortfall or excess revealed by Tenant’s audit shall bepaid to the applicable party within 30 days after: (i) Notification of party. (ii) Overage or shortfall has not been previously adjusted pursuant to this Lease."
    • COMMENT: Item (i) is too terse; it doesn't make for a complete sentence if read together with the beginning of (a).
    • COMMENT: Item (ii) has the same problem: If you read the beginning of (a), and then go straight to (ii), it's not a coherent sentence, and it's supposed to be that.
  5. STUDENT TEXT: "(b) If Tenant’s inspection reveals that Tenant was: (i) Overcharged for OPEX or RE Taxes by an amount of greater than six percent, (ii) Tenant paid overage and, iii. Overage not adjusted pursuant to the terms of this Lease, (c) Then, Landlord shall reimburse Tenant for costs of the audit, up to an amount not to exceed $5,000." COMMENTS:
    • Same incomplete-sentence problems as above.
    • You wouldn't do a new subdivision c for the "THEN" part, because it's not a new sentence or thought.
    • Don't spell out "six percent."
    • REWRITE (by DCT): "IF: Tenant's inspection reveals that: (i) Tenant was overcharged for OPEX or RE Taxes by more than 6%; or (ii) Tenant paid Overage that was not adjusted as provided in this Lease; THEN: Landlord must reimburse Tenant …."
  6. STUDENT TEXT: "(III) If Tenant exercises its audit rights, as provided above, Tenant must conduct any inspection at a reasonable time and in a manner so as not to unduly disrupt the conduct of Landlord’s business. Any such inspection by Tenant must be for the sole purpose of verifying the Operating Expenses and/or Real Estate Taxes. Tenant must hold any information obtained during any such inspection in confidence, except that Tenant is permitted to disclose such information to its attorneys and advisors, provided Tenant: (1) informs such parties of the confidential nature of such information, and (2) uses good faith and diligent efforts to cause such parties to maintain such information as confidential."
    • COMMENT: This is good, but I'd break it up even further.
  7. STUDENT TEXT: "Tenant – or representatives of the Tenant – may audit the records once in a 12-month period. A written notice at least 20 days prior to the audit must be given to the Landlord. If Tenant exercises its audit rights, Tenant must conduct its inspection in a reasonable time and manner. Any audit conducted by Tenant may only be done for the sole purpose of verifying the records. Any information Tenant obtains through its audit is to remain confidential. Confidential information Tenant obtains may only be shared with Tenant’s attorneys and advisors."
    • COMMENT: Nice job pointing out that Tenant might want an outside auditor to do the audit. (That brings up its own set of issues.)
    • COMMENT: I'd break this up a bit more; confidentiality is enough of a separate issue that it's worth giving the reviewer some help by putting it in a separate paragraph.
  8. STUDENT TEXT: "If the audit reveals that Tenant paid an overcharge greater than 6% for Operating Expenses or Real Estate Taxes, Landlord may reimburse Tenant’s audit costs up to $5,000." (Emphasis added.)
    • COMMENT: That won't fly — Tenant will insist on being reimbursed in that situation; the discussion will be whether the threshold should be 6%, or something else.
  9. STUDENT TEXT w/ DCT notes:
    • "Landlord shall keep reasonably detailed records of all Operating Expenses and Real Estate Taxes for a period of at least two years. [BREAK HERE] Tenant, or a representative of Tenant, may audit the records of the Operating Expenses and Real Estate Taxes, but may not do so more frequently than once in every 12-month period. Tenant must also provide at least 20 days’ prior written notice to Landlord of such audit request."
    • "If Tenant exercises its audit rights as provided above, Tenant shall conduct any inspection at a reasonable time and in a manner that will not unduly disrupt the Landlord’s conducting of business. [BREAK HERE?] Tenant shall only conduct such an inspect[ION] for the purpose of verifying the Operating Expenses and/or Real Estate Taxes."
    • "If Tenant’s audit reveals any shortfall or excess of payment, the amount owed shall be paid to the applicable party within 30 days after that party is notified of the shortfall or excess, so long as such overage or shortfall has not previously been adjusted pursuant to this Lease. [BREAK HERE] If Tenant’s inspection of the records reveals that Tenant was overcharged for Operating Expenses or Real Estate Taxes by an amount of greater than 6%, and Tenant paid such overage and such overage was not otherwise adjusted pursuant to the terms of this Lease, then Landlord shall reimburse Tenant for its reasonable, third-party costs of the audit. However, reimbursement of expenses will not exceed $5,000.

1.20.5 Ambiguity exercise: Professor Lemley's pants

From a Facebook post by Stanford law professor Mark Lemley:

Things I appear to like more than my Facebook friends:

1. Pants

EXERCISE: What are the two possible meanings here?

1.20.6 In-class drafting exercise

FACTS (building on our earlier discussion):

  • Mary Marvel (CEO of MathWhiz) emails you to say that she wants to buy a barely-used, top-of-the-line laptop computer from Jane Jones, who lives in River Oaks (i.e., Harris County) and is "a friend of a friend" of Mary, but Mary doesn't know her.
  • Jane bought the laptop a few weeks ago but decided she didn't like the feel of the keyboard, so she wants to sell it and get a different one. (She's gone past the no-questions-asked return period from where she bought it.)
  • The purchase price will be $3,000.
  • Jane's address for notice is at 1600 River Oaks Blvd, Houston, TX 77019.

EXERCISE: In your groups — and you might want to divide up the work — in the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4:

  1. Put together a skeleton contract with a title, preamble, and signature blocks (don't worry about formatting the signature blocks, just put the necessary information in).
  2. Draft a background section.
  3. Put together a series of short, simple paragraphs with the "mechanics" of getting the sale done. For now, don't worry about representations or warranties or anything like that; just put in the bare-bones requirements to make a contract.

1.21 Class 03: Wed. Jan. 27

1.21.1 Paperback of (part of) course materials available

A paperback of the first part of the reading material (not including the Tango Terms because of size restrictions) is available from Amazon for $5.50 per copy plus tax and shipping (if any), which is basically printing cost, but I get a royalty of $0.05 per copy. I've ordered one for myself and will be curious to see what it looks like.

1.21.2 MathWhiz state of organization

I had thought that the facts stated that MathWhiz LLC is a Texas LLC — well, I just looked again, and that's not the case.

(DCT to tell the Janicke story.)

1.21.3 Homework review

Signature block sample:

Gigunda-MathWhiz signature blocks sample

Some examples by students (anonymous, of course); see the notes below each:

EXAMPLE 1:

Retainer [0] Agreement
for Analyzing Seismic Data

This “Agreement” is between (i) MathWiz, LLC, a limited liability company organized under the laws of the State of Texas (“Service Provider”), with its principal place of business and its initial address for notice at [FILL IN ADDRESS FOR NOTICE] and (ii) Gigunda Energy [1], a global oil-and-gas company [2] organized under the laws of the State of California (“Retainer” [0]), with its principal place of business [3] and its initial address for notice at [FILL IN ADDRESS FOR NOTICE]. This agreement [4] is effective the last date written on the signature page.

Notes: [0] "Retainer Agreement" is kind of an unconventional title for this type of agreement. [1] Need Gigunda's full legal name. [2] You wouldn't say "global oil and gas company" in the preamble — in the Background, yes, but not in the preamble. [3] The principal place of business is usually just the city and state — the initial address for notice might be different. [4] At this spot in the preamble, you'd say "This Agreement" (capitalized), not "This agreement." (Ken Adams thinks otherwise.)

EXAMPLE 2:

Services Agreement [0]

This "Agreement" is between (i) Gigunda Energy [INSERT FULL LEGAL NAME], a [ENTITY TYPE] organized under the laws of the State of [STATE] ("Buyer" [1]), with its principal place of business and its initial address for notice at [BUYER ADDRESS]; and (ii) MathWhiz, LLC, a limited liability company organized under the laws of the State of [STATE], with its principal place of business [2] and its initial address for notice at [SELLER ADDRESS] (“Seller” [1]). This Agreement is effective the last date written on the signature page.

Notes: [0] Good title. [1] "Buyer" and "Seller" should probably be "Customer" and "Service Provider" (or perhaps "Contractor"). [2] What's the comment here?

EXAMPLE 3:

Service Agreement [0] [1]

This “Agreement” is between (i) MathWhiz LLC, a limited liability company organized under the laws of the State of [INSERT STATE OF MATHWHIZ ORGANIZATION] (“Service Provider”), with its principal place of business and its initial address for notice at [INSERT MATHWHIZ STREET ADDRESS], Houston, Texas [INSERT MATHWHIZ ZIP CODE]; and (ii) Gigunda Energy [INSERT ABBREVIATION OF GIGUNDA ENTITY TYPE], a [INSERT GIGUNDA ENTITY TYPE] organized under the laws of the State of [INSERT STATE OF GIGUNDA ORGANIZATION] (“Client”), with its principal place of business [2] and its initial address for notice at [INSERT GIGUNDA STREET ADDRESS AND CITY], California [INSERT GIGUNDA ZIP CODE]. This Agreement is effective the last date written on the signature page.

Notes: [0] Good title. [1] This is just about perfect. [2] What's the comment here?

EXAMPLE 4:

SEISMIC DATA ANALYSIS AGREEMENT [0]

This “Agreement” is between (i) MathWhiz, a Limited Liability Company organized under the laws of the State of [Enter state] (“Vendor”), with its principal place of business and its initial address for notice at [Insert address here]; and (ii) Gigunda, a Corporation organized under the laws of the State of [Enter state] (“Recipient”), with its principal place of business and its initial address for notice at [Insert address here]. This Agreement is effective as of the last date written on the signature page.

Notes: [0] Good title.

QUESTION: What issues do we have here?

EXAMPLE 5:

Purchase and Sale of Seismic Exploration Services [0] [1]

This “Agreement” is between (i) MathWhiz LLC, a limited liability company organized under the laws of the State of [FILL IN LAWS OF INCORPORATION] (“Seller”), with its principal place of business and its initial address for notice at [FILL IN ADDRESS FOR NOTICE]; and (ii) Gigunda Energy, a global oil-and-gas company organized under the laws of the State of [FILL IN LAWS OF INCORPORATION] (“Buyer”), with it principal place of business in [FILL IN ADDRESS FOR NOTICE]. This agreement is effective the last date written on the signature page.

Notes: [0] In an agreement title, "Purchase and Sale" customarily refers to a purchase and sale of assets, not of services. (But it's not incorrect.) [1] Normally you'd want the word "Agreement" in the title — so, for this, it'd be perhaps "Purchase and Sale Agreement for Seismic Exploration Services."

QUESTION: What other issues do we have here?

EXAMPLE 6:

Independent Contractor Agreement
for MathWhiz’s seismic data analytic services

This "Agreement" is between (i) MathWhiz LLC ("Contractor"), a limited liability company organized under the laws of the State of Texas with its principal place of business in Houston, Texas; and (ii) Gigunda Energy ("Employer"), a corporation headquartered in California, with a significant campus located in Houston, Texas. This Agreement is effective the last date written on the signature page.

QUESTION: What issues do you see here?

EXAMPLE 7:

Independent Contractor Agreement
For MathWiz, LLC to analyze the seismic data for Gigunda [INSERT ENTITY] [0]

This “Agreement” [ADD: is] between (i) MathWiz, LLC, a limited liability company organized under the laws of the State of Texas ("Independent Contractor" [1]), with its principal place of business and its initial address for notice at [INSERT MATHWIZ ADDRESS] Houston, Texas [INSERT MATHWIZ ZIP]; and (ii) Gigunda [INSERT ENTITY], a [INSERT ENTITY] organized under the laws of the State of [INSERT STATE OF FORMATION] ("Hiring Firm"), with its principal place of business and its initial address for notice at [INSERT GIGUNDA ADDRESS]. This Agreement is effective as of the last date written on the below signature page.

Notes: [0] The subtitle is a bit wordy. [1] I'd use "Contractor" and "Client" (or perhaps "Customer") as the parties' nicknames.

EXAMPLE 8:

Service Provider Agreement
For seismic data analysis

This "Service Agreement" [0] is between (i) MathWhiz LLC, a limited liability company organized under the law of Texas ("Service Provider"), with its principal place of business and its initial address for notice [INSERT ADDRESS]; and (ii) Giguanda Energy ("Client"), with its principal place of business, and initial address for notice [INSERT ADDRESS]. This Service Agreement is effective the last date written on the signature page.

Notes: [0] It's customary to use the term "This Agreement" and not the (longer) "This Services Agreement."

See also my other comments above.

EXAMPLE 9:

Employment Agreement
for Analyzing Seismic Data

This "Agreement" is between (i) MathWhiz LLC, a limited liability company organized under the laws of the State of Texas ("Employee"), with its principal place of business and its initial address for notice at [FILL IN ADDRESS FOR NOTICE]; and (ii) Gigunda Energy, a company headquartered in [INSERT CITY, INSERT COUNTY] [0], California, whose initial address for notice is [FILL IN ADDRESS FOR NOTICE] ("Employer"). This Agreement is effective the last date written on the signature page.

Notes: [0] Any guesses about why it's not a bad idea to include the county?

See also my comments to the other examples above.

QUESTION: What other issues can you spot?

1.21.4 Ambiguity exercise: Masks and signs on cars

From a tweet encouraging attendance at an anti-lockdown protest in Maine: "[T]here will be a caravan around the Capitol … Monday. … Remain in your vehicles but masks, bandanas, flags and signs on cars are encouraged."

QUESTION: In your view, why are caravaners being encouraged to put masks and bandanas on cars?

QUESTION: How could this be clarified?

1.21.5 Ambiguity rewrite: Swearing to defend the Constitution 11 times

Here's a tweet I saw retweeted: "I’ve sworn to defend and uphold our Constitution 11 times."

QUESTION: What exactly does "11 times" refer to — defending and upholding the Constitution 11 times, or swearing to do so?

QUESTION: How could this be clarified?

1.21.6 Discussion questions

  1. Which is it: "Class starts at X o'clock": A) ten B) 10:00
  2. Which is it: "More than X people voted to re-elect President Trump": A) 74,000,000 B) seventy-four million C) 74 million.
  3. Which is used to indicate permission: May, or might?
  4. Which is used to indicate possibility: May, or might?
  5. True or false: An oral contract that might be completely performed in a year is invalid under the Statute of Frauds if it turns out that the contract isn't completely performed in a year.
  6. Explain if false: In the U.S., before parties can use electronic signatures, they must first sign a hard-copy preliminary agreement that they can use electronic signatures for subsequent agreements.
  7. Explain if false: Nowadays, most contracts get printed out in two copies, and each copy is signed by both parties, so that each party will have one, fully-signed original to keep.
  8. Explain if false: It's not a great idea to put signature blocks at the front of a contract. EXPLAIN.
  9. Explain if false: It's a good idea to include language such as the following just before the signature blocks: "To evidence the parties’ agreement to this Agreement, each party has executed and delivered it on the date indicated under that party’s signature."
  10. Explain if false: Signature blocks should have the "date signed" spaces pre-filled in so that the signers won't have to remember to write in the dates.
  11. Explain if false: Each individual signer's signature block should have a blank space for the signer to handwrite in the date signed.
  12. Explain if false: It's OK to let a signature block get split between two different hard-copy pages (that is, the first part of the signature block is at the bottom of one page and the remainder is at the top of the next page).
  13. What feature of Microsoft Word can you use to get two signature blocks side-by-side on the page? (Hint: It starts with "T.")
  14. (From Contracts 101 for 1Ls:) By law, what's the significance of the last date signed?
  15. Explain if false: The signature block for a corporation or LLC can just state the individual signer's name, e.g., "Jane Doe," without any other information.
  16. FACTS: ABC Corporation's marketing department is negotiating a contract with social-media giant Foogle for a $10 million online advertising campaign to promote ABC's products. At the request of ABC's director of marketing, ABC's vice president for human resources Allen Baker Cole signs the contract. BUT: ABC's CEO learns about the contract and immediately demands that it be set aside, because the CEO had planned to use that money for other things. ABC's internal policy manual states that all advertising contracts must be signed by the executive vice president for sale. QUESTION: Can ABC use Allen's lack of authority as a reason to cancel the advertising contract?
  17. DIFFERENT FACTS: Before the advertising contract was signed, ABC's vice president of marketing sent an email to his contact at Foogle, stating that only he (the VP of marketing) had authority to sign the advertising contract; the Foogle contact emailed back, saying "fine, that works for us." QUESTION: Does that change your answer in #16 above? If so, how?
  18. Explain if false: It's generally OK for an attorney to sign on behalf of a client as long as the signature (or signature block) indicates that the attorney is signing in that capacity and not as an officer of the client or as an individual party.
  19. Explain if false: It's generally OK for a company's vice president and general counsel to sign a contract with Thomson West for the legal department's Westlaw subscription.
  20. If exchanging signed signature pages only, how can you make sure each party's signed signature page is from the same version of the contract? (In one case, discussed in the reading, this was a problem — what happened there?)

1.22 Class 02: Mon. Jan. 25

1.22.1 Homework review

Points to note:

  1. "The following terms …": If the signature blocks are at the end of the contract (as is usually the case for conventional drafters), you wouldn't use the model paragraph about the terms that follow the signature blocks.
  2. Party nicknames: You want to be careful about how you pick the shorthand names for the parties; for example, in this context MathWhiz is not "Employer."
  3. LLC vs. corporation: The abbreviation LLC stands for "limited liability company," not corporation.
  4. Gigunda status? The facts don't indicate that Gigunda is a corporation; it's not unlikely, but we can't assume that — so leave a placeholder in ALL-CAPS, along the lines of, e.g., "[INSERT GIGUNDA ENTITY TYPE]." (We also don't know where Gigunda was incorporated; it could be California, it could be Delaware, it could be Nevada, or even elsewhere.)
  5. Nicknames alone in signature blocks? If the signature blocks are at the end of the contract, then it's fine to just use the nicknames, as long as the contract clearly indicates each party's full legal name and that party's nickname — "the needful" (as Brits might say) is that a new reader, looking at the contract, will be able to quickly confirm which party has or hasn't signed the contract.

1.22.2 Reading review (1)

Discuss in groups:

  1. Brexit agreement: QUESTION: What drafting "fail" happened in the Brexit agreement? QUESTION: What's one way the "fail" could have been avoided? QUESTION: More generally: In drafting a contract form that you expect to re-use for different parties, how could you make sure you didn't inadvertently leave in a former party's name?
  2. Ambiguity: QUESTION: When would a contract provision be ambiguous? QUESTION: Why would that be a bad thing?
  3. Quality of past contracts as go-by models: QUESTION: What's one reason that a contract that you found online might not be "Grade A" quality even if it came from a name-brand law firm? QUESTION: How might you ascertain that the contract came from a particular law firm?

1.22.3 Ambiguity: Plush carpets

From an article in The Guardian:

There will be plush lecture theatres with thick carpet, perhaps named after companies or personal donors.

Martin Parker, Why we should bulldoze the business school, The Guardian, Apr. 27, 2018 (https://perma.cc/F5N6-46RE).

QUESTION: What, exactly, is named after companies or personal donors?

QUESTION: How could this sentence be rewritten to clarify it?

1.22.4 Reading review (2)

  1. Mission: What's are the two ultimate missions of any contract drafter, vis à vis future readers?
  2. Course objectives: QUESTION: Name one thing that you won't get from this course. From the reading, please — I'm not looking for "creative" answers here :-)
  3. Spaced repetition: Why is spaced repetition important in this course?
  4. Curve: HYPOTHETICAL FACTS: At the end of the semester, the Canvas system shows that you've scored enough points to get an "A" grade. QUESTION: Will you get an "A" grade? If not, why?

1.22.5 Reading review (3)

Discuss in breakout rooms:

  1. D.R.Y.: QUESTION: What does the initialism D.R.Y. mean? EXPLAIN IF FALSE: D.R.Y. is a hard-and-fast rule that applies in essentially all contract-drafting situations.
  2. Party nicknames: What are some pros and cons of using functional nicknames for the parties, such as "Buyer" and "Seller," instead of (let's say) "Betty" and "Sam."
  3. Preamble information: Why might it be useful to include the parties' respective principal places of business in the preamble of a contract?
  4. Effective date: EXPLAIN IF FALSE: It's pretty much always OK to backdate a contract if the business people want to do so.
  5. Party affiliates: FACTS: Gigunda wants its affiliates to be able to use its contract with MathWhiz as a prenegotiated "master agreement," so that a Gigunda affiliate can hire MathWhiz for a separate project, at the same pricing, by entering into a short-form contract. EXPLAIN IF FALSE: The preferred way to draft this is to state in the MathWhiz-Gigunda preamble that the parties are (i) MathWhiz, and (ii) Gigunda and its affiliates.

1.22.6 When style preferences clash

Discuss in the main Zoom room:

FACTS:

• Your client MathWhiz asks you to review a draft contract sent by a potential customer of MathWhiz.

• You notice that the draft spells out all kinds of numbers, e.g., "twenty thousand dollars."

• The draft doesn't also include the corresponding numerals in parentheses, i.e., it doesn't say "twenty thousand dollars ($20,000.00)."

QUESTION: When reviewing and revising the draft contract, do you change "twenty thousand dollars" to "$20,000.00"?

1.22.7 Drafting fail: American Girl

A CNN headline: "American Girl releases its first doll with hearing loss"

QUESTION: What's wrong with this?

QUESTION: In this context, does the problem matter in any real sense?

1.22.8 Reading review (4)

  1. "Whereas" clauses: FACTS: Gigunda's lawyer sends over a draft contract that begins with "WITNESSETH" and includes a bunch of "WHEREAS" clauses. QUESTION: Should you delete the "WITNESSETH" and rewrite the "WHEREAS" clauses to be simple background recitals? Why or why not?
  2. Background details: EXPLAIN IF FALSE: The Background section of a contract should serve as an "executive summary" of the specific business details of the parties' transaction (quantity, pricing, delivery dates, etc.).
  3. Why use client signer's title: Name TWO reasons — one "legal," one focused on client relations — for including, in your client's signature block, the title of the individual who will sign for the client.
  4. Conflict of interest? EXPLAIN IF FALSE: Ethically, when MathWhiz — i.e., the company — is the client, it'd be a conflict of interest to keep an eye out for Mary Marvel's personal interests.
  5. Running headers: Why is it a good idea to include, on every page of each draft, a running header that uniquely identifies that draft — for example, the hand-typed date and time, e.g., 2021-01-25 16:41:54 CST?
  6. Consolidated PDFs: FACTS: Each party signs its own signature page of a contract, scans its signature page, and emails the PDF to you as an attachment. QUESTION: What is it a good idea for you to do, and why?
  7. Board resolutions: EXPLAIN IF FALSE: When your client and another party (a "counterparty") are ready to sign a contract, it's usually a good idea to ask the other side's lawyer to get the other side's client's board of directors (or similar governing body, if not a corporation) to adopt a resolution confirming that the other side's officers are authorized to sign the contract.
  8. Notary certificates: What is the difference between an acknowledgement (in a notary certificate) and a jurat?
  9. Redlining: QUESTION: Why use a redlining representation such as this one? QUESTION: To what extent is it OK not to redline your changes in The Other Side's draft? QUESTION: What would you think about a lawyer on The Other Side who wanted to delete the redlining representation?
  10. Notetaking: Why is it a good idea to include, on every page of handwritten notes, the date, time, subject, and page number?

Class 01: Wed. Jan. 20

Introduction

  • Introduction of each student via Zoom chat.

Course book - print on demand?

How many students would want to buy a print-on-demand version of the Tango Terms manual from Amazon? The price would be around $18 per copy for what I believe is a trade paperback; I'd get $0.01 royalty per copy (that is, one cent).

Use the Zoom "Yes" button to indicate that you'd want to buy a copy.

Set up email list and Canvas, etc.

• Provide emails for a Google Groups email list on the Group 1 virtual whiteboard at the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

• Canvas setup: Enroll at https://canvas.instructure.com/enroll/8H8BRH (be sure to use your name so I can track progress and watch out for possible issues)

Read-along lecture

DCT to talk through this syllabus and the introductory parts of the [UPDATED:] Notes on Contract Drafting (a work-in-progress of mine). BE SURE TO READ these materials.

Ambiguity drill (1)

(We'll be doing a lot of ambiguity drills; apropos of the end of President Trump's term in office, here's one about him:)

TEXT, from a Maureen Dowd column in the NY Times, March 5, 2016: "Like Bill Clinton, Trump talks and talks to crowds. … [H]e creates an intimacy even in an arena that leaves both sides awash in pleasure." (Emphasis added.) QUESTION: What, exactly, leaves both sides awash in pleasure? How could this be clarified?

Discussion: Selling a used computer

FACTS:

  1. Let's assume you have an elderly, childless Uncle Ed who has no legal background.
    • Uncle Ed wants to sell his used 2012 Macbook Air laptop computer — he has all his marbles and wants to "move up" to a more-powerful machine.
    • Uncle Ed wants to get $350 for his machine (which at this writing is actually close to the going rate) and to sell the computer "as is."
  2. After Uncle Ed mentioned on Facebook that he wants to sell his computer, one of his high-school acquaintances, "Dale," contacted him and said he wants to buy the computer.
  3. Uncle Ed and Dale were never close in high school, and he hasn't seen Dale since graduation 50 years ago.
  4. Uncle Ed has asked you what to do to make sure he's "protected."

In the breakout rooms, discuss the following; feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 for notes:

QUESTION 1: Is a written contract legally necessary? Practically necessary? Explain your thinking.

QUESTION 2: Would your answer to #1 be any different if Dale was Uncle Ed's closest friend, going all the way back to their high-school days?

QUESTION 3: Assuming Uncle Ed does want to have something in writing, what form could that writing take? (Be creative!)

QUESTION 4: Uncle Ed wants to be "protected" — from what, exactly?

(Part of your job is to try to think of what could go wrong, and, with your client, to decide whether it's worth trying to address those risks in your draft contract.)

Tales from the practice: Contract "signed" by email

Ambiguity drill (2)

TEXT, from The Kinks' famous song Lola (play the relevant clip on YouTube): "Well I'm not the world's most masculine man | But I know what I am and I'm glad I'm a man | And so is Lohhh-lahhh ….." QUESTION: When the artists sing, "And so is Lola," what exactly is Lola? EXERCISE: How that lyric line could be clarified? (Don't worry about rhyme or meter.)

2 Basic information

2.1 Course materials

Course materials: Notes on Contract Drafting (a work-in-progress of mine). (PDF) Update 2021-01-22: I've uploaded the first part only (due to size limitations) to Amazon for print-on-demand; I'll keep you posted.

For supplementary reading, some students like Professor Tina Stark's highly-regarded book, Drafting Contracts: Why Lawyers Do What They Do (2d ed. 2013), but whether to buy or rent it is entirely up to you; the online course materials contain everything on which you'll be tested. (The recently-published Kindle version is much less expensive than the trade paperback.) Disclosure: Tina is a longtime professional friend and mentor.

2.2 Zoom ground rules

This semester (spring 2021), the course will be done entirely by Zoom (and other online services) because of the global COVID-19 pandemic. Here are some ground rules you will be expected to follow.

  1. Be somewhere that your colleagues (and you) won't be overly distracted by noise and/or guest appearances by dogs, children, etc. (I'm pretty easygoing about these things, but be considerate of your classmates.)
  2. Your computer must have a working video camera and quality audio capability. (You might need an external microphone and/or a headset for decent audio quality.)
  3. You must join by video, not just by an audio-only phone connection.
  4. Leave your camera on, but it's fine if you need to step out for a minute, just as if we were meeting in person at the Law Center.
  5. Please be sure to speak up so that others can hear you. (Also, watch your mute button.)
  6. Be sure your name is shown in your Zoom profile, so that I'll know who's speaking.

2.3 Course objective: Exposure to the tools of the trade

Our primary course objectives and learning outcomes are to give each student an initial, survey-type exposure to the following tools of the contract drafter's and reviewer's trade:

  1. Techniques for drafting simple, understandable sentences and paragraphs to cover complex topics;
  2. Important legal doctrines, e.g., laws governing interest charges, indemnities, implied warranties, etc.;
  3. Crucial business issues that are commonly addressed in contracts;
  4. Practicing spotting and fixing language ambiguities that could cause problems down the road;
  5. The psychology of likely future readers such as business people, judges, and jurors;
  6. Finding and harvesting useful "precedents" (past contracts);
  7. Recognizing when to ask the partner or the client — and getting in the habit of documenting that you did so.

2.4 What this course won't do

First: Do NOT assume that we will "cover the material" in class.

We have a total of some 35 hours together in class. That's not nearly enough time to do justice to all the material you'll need to be aware of in order to be a competent contract drafter or reviewer. Possibly more than in your other courses, you'll need to be sure to do the reading if you want to get maximum benefit from the course.

As discussed below, the sage-on-a-stage lecture approach has been shown to be significantly less effective when it comes to comprehension and retention. For that reason, we will focus much of our class time on trying to make sure you understand and retain as many crucial points as possible.

Second: This course isn't like a driver's ed class, where completing the course will make you at least minimally competent to "go out on the road" by yourself. Becoming a competent contract drafter will take more time and practice than can be provided in a single three-semester-hour course.

Even after you finish this course, you likely will — and should — worry that you don't know what you don't know.

You could think of this course as being akin to a surgical-tools class in which medical students learn the basics of using scalpels, clamps, suture needles, and other surgical tools, and practice using those tools by doing a few simple procedures on an anatomical mannequin. Completing such a class, without more, should not make a student feel "comfortable" doing any kind of surgery on a live person. That's why newly-graduated doctors must still spend years in residencies to learn their trade. Much the same would be true if you were to try drafting a contract for a real client with no other training than this course.

2.5 Contract revising as well as drafting

In this course, we will practice good drafting skills — in part — by revising the work of others. This reflects what you're almost certain to see in practice: Contract drafters spend far less time drafting contracts than they do in reviewing and revising others' drafts, whether a given existing draft was prepared by "the other side" or was used in a previous deal.

Even when you're the one who must prepare the first draft, your supervising attorney will almost always tell you to find a previous form of agreement and modify it (and perhaps will suggest one), instead of starting from scratch with a blank screen.

2.6 Spaced repetition, with (some) jumping around

Some of the short exercises and quizzes that we do will seem repetitive; they also will seem to jump around from topic to topic. This is a feature, not a bug, because:

  • It mirrors what you'll almost certainly see in practice.
  • Pedagogically, spaced repetation been shown to be more effective at promoting long-term memory than lecture and repetitive reading; see generally the Wikipedia article at https://goo.gl/4PRZTy.

This approach will strike some students as disorganized. Over the years, though, most students seem to have come to appreciate the value of the approach, as mentioned in some of the student comments below.

2.7 Social proof: Past student comments (good and bad)

Following the sales-and-marketing principles of (i) using social proof, and (ii) "setting the hook," here are some student comments from UH Law Center course evaluations; from virtual-whiteboard feedback at the end of various past semesters; and from the occasional email from former students:

• "I saw what I learned in class be used at my job, so that was great to be able to use what I learned already as a student practicing."

• “I had the opportunity to redline a software agreement for the company I intern with and the Contracts Lawyer told me I did a very fine job. … The lawyer asked me how I was so well attuned to the various ways in which the software providers tried to undermine our company’s bargaining power. … I was amazed at how easily I could identify problematic language. …”

• "His course is different from the norm and his methods are refreshing. … Professor Toedt's approach allows students to figure out the issue on their own but provides students with the tools necessary to reach an answer (which he then explains/corrects)."

• "I like the in class exercises. Very helpful to lock in the concepts. I would recommend more of these types of exercises throughout the class. Amount of reading was reasonable."

• "One of the best classes of my time in law school. Great progressive approach to teaching. I can only hope that UH will adopt Toedt's methodology for other classes."

• "I liked the practical approach of the course – very effective teaching technique by using repetition and in class exercises."

• "You learn piece by piece the process throughout the semester to be able to effectively draft/redline contracts."

• "I really enjoyed your class. At every class, I felt like I were a summer associate studying under a law partner and the partner (you) would take us to nice, low-key lunches and shared with us a bunch of practice tips through the Tango Terms. I really appreciated all the guidance. I like the formal drafting assignment (employment letter) a lot."

• "The [Zoom] breakout rooms work very well."

• "The course was a good survey of practical issues, both business and legal, that arise during contract drafting and negotiations. The textbook was easily accessible online, with class time focused on discussing the reading. The discussion-based class format combined with spaced repitition and the homework quizzes helped make the material more concrete. I thought the short-answer questions were a good addition to the quizzes, but I think more practice drafting exercises such as the offer letter would be more effective in providing hands-on learning. Compared to other courses, the reading and homework were relatively light, so Prof. Toedt could cover more material if he wanted to without overloading students."

• "I love the breakout rooms, the Google white board, and Canvas for quizzes." (Capitalization corrected.)

• "The course translated well to a virtual format, with breakout rooms substituting for in-class group activities. Using Canvas for online homework/quizzes also worked well."

• "I love this course. I learned a lot of real-life contract drafting experiences."

• “Professor Toedt's class was fantastic. I thoroughly enjoyed the content/delivery, and I learned more real world applicable information in this class than I have in most others. Having this class over Zoom was not ideal, but he made the most of it and kept the collaborative elements of the course intact. He clearly has a wealth of knowledge and experience.”

• “The course is very practical and a good refresher for drafting rules and key negotiations tactics, applicable in any area of practice of law. Prof. Toedt’s approach in utilizing his own written terms form (Tango Terms) makes the learning easier as we learn practically ‘from the horse’s mouth.’ I enjoyed his repetition style that allowed internalizing concepts, and the periodic quizzes that helped foster needed reviews and flashback to further the learning process. Great class, remarkable style, and awesome instructor!”

• “I've taken many courses at UH Law School, and I must say that this course was taught in the most ‘real-world application’ style in comparison to my previous courses. My experience with courses in the past was shaded by the bombardment of textbook pages and black and white material. What this class did phenomenally was apply the concepts of contract drafting in such a way that if I was to go into practice tomorrow, the tools that I have acquired in this class have made me more than adequately prepared. In light of these comments, I stress that Professor Toedt's emphasis on group collaboration and constant engagement in ensuring that students were learning through mediums of real-world practically made this class an absolute pleasure. He had set up the class in such a way where students were learning through their engagement with each other and with the help of brainstorming and the professors guided assistance learning these concepts didn't simply become ‘study and dump’ but meaningful and engaging learning. So again, I must say thank you. Thank you for not only taking time to develop the extensive course material but to also genuinely care in the process of teaching and learning that each of the students go through. This has been truly an unforgettable learning experience.”

• "Great job! Loved the quizzes. Very helpful class."

• "… really enjoyed the approach to class and quizzes."

• "Love the quizzes! They are really helpful to learn things, and the spaced repetition was excellent. Also they were a good way to test what we knew and where we were in class so we had an idea of how things were going."

• "I liked both the class and instructor and would recommend this course."

• “This was a great class, Professor Toedt's approach to teaching is clear and concise.”

• “Professor Toedt is the ‘original gangster’ (hereafter ‘OG’) of contract drafting. I'm fortunate to have taken his class. He is incredible. Thanks for your public service.”

• “Professor Toedt is remarkable at contract drafting. It is a privilege to take this class with him. He does his job exceptionally well. Very respectful man.”

• “Professor Toedt is great at what he does! He really knows his stuff and makes sure you know it too. I really like the approach of having different sections of a contract due as homework every week. This helped me really learn about the different sections and helped me stay on track to writing an entire contract by the end of the semester. All in all, wonderful professor!”

• “Very insightful and practical class. The professor is very effective in conveying the information in a rememberable and engaging fashion. I truly enjoyed this course and will be using what I learned in practice next year. Thank you, Professor Toedt!”

* * * 

Not everyone was so enthused; here are some less-positive comments, along with my responses.

• "The classes felt a little haphazard on a weekly basis." (From a different student's review:) "[T]he course is extremely unorganized …." DCT RESPONSE: The topics covered in the course are arranged in very rough order of importance (in my experience). And, as noted above, spaced repetition can indeed feel like jumping around, but it's key to the approach of this course.

• "I thought some of the reading assignments were a little long. It just looks daunting and I am not motivated when one section has 20-50 subsections." DCT RESPONSE: Noted — I've redone the reading assignments to indicate more what must be read closely, versus what can be merely looked over or skimmed (so that you'll likely remember that it's there and can look it up if you ever need it in the future).

• "I felt like we spent a ton of time revising contracts and simplifying them, but I'm still not sure that I have a great grasp of all the sections of a contract." (From a different student's review:) "I liked that the class stressed practical knowledge and what to look out for when reviewing contracts but I do not feel like that this has translated into me feeling confident (or even semiconfident) writing or reviewing a contract in real life." DCT RESPONSE: It's normal not to feel confident until you've had a fair amount of real-world experience that didn't blow up on you. Think back to when you first drove a car by yourself: You probably were just a bit nervous, which was entirely appropriate.

• "To me, I think the stress of a contract for a law student is the idea of, if you're assigned to write up a contract from scratch, your thought is, where do I even begin?" DCT RESPONSE: Noted; I'm thinking about how to remedy this with some kind of step-by-step procedure — although as pointed out above, contract drafters almost never start with a clean sheet of paper or a blank computer screen.

• "I would appreciate a little bit more traditional lecturing as opposed to asking us to discuss what we thought was helpful or surprising about the reading. I always left class unsure of whether I learned material properly. I enjoyed the break out rooms and working with the other students in the class the most." DCT RESPONSE: Noted, but the desire for traditional lecturing seems to be a minority view — and pedagogical research has shown that lecturing is one of the least-effective ways of information transfer.

3 Administrative details

3.1 Email addresses

On the first day of class I will be asking for your email addresses so that I can include it in a class Google Group. Please provide an email address that you check regularly.

3.2 Computer use

Computer use in class is not just encouraged but required; you will need in-class Web access for many of the in-class exercises. If this will be a problem, be sure to contact me well in advance.

(You might, however, want to rethink the extent to which you use laptops in your other classes; see, e.g., this article by a professor at the University of Michigan about how classroom laptop users not only do worse than those who take notes by hand, they also interfere with the learning of non-laptop users around them.)

3.3 Extra class time each day (to avoid a Friday-night makeup class)

I'm a practicing attorney and arbitrator; I normally don't have to miss class, but it has been known to happen, e.g., when I've had out-of-town commitments. There have also been times when we’ve had to cancel class due to weather. (And on the evenings of Game 7 of the 2017 and 2019 World Series, we canceled the evening class.) [DCT NOTE for spring 2021: Given that just about everything is being done by Zoom nowadays, it seems unlikely that we'll have to cancel class either for weather or for my travel.]

The ABA requires 700 minutes of instruction for each credit hour; that means we need 2,100 minutes of instruction for our three-hour course. We will achieve the needed minutes of instruction by:

  1. meeting for 80 minutes per class for 26 class meetings, vice the normal 27 scheduled class meetings, to get 2,060 instruction minutes;
  2. making up the remaining 40 instruction minutes via “online” instruction in the form of emails and other discussions, as permitted by ABA rules;
  3. using the resulting “spare” class #27 as a makeup day if necessary, otherwise ending the course at #26;
  4. as a last resort, meeting on one of our scheduled Friday-evening makeup days (not the situation of choice).

3.4 Recording my lectures: Go ahead if you want

I don't make audio recordings of my in-class lectures, but I have no objection to students doing so and sharing the recordings with other UHLC students. [NEW for spring 2021: I'm exploring possibilities for prerecording audiobook-style narration of the readings, so that people can listen to them; I'll announce it if that happens.]

The following is a UH-required element for the syllabus as provided by the Associate Dean's office:

Students may not record all or part of class, livestream all or part of class, or make/distribute screen captures, without advanced written consent of the instructor. [DCT note: See above for my consent.]

If you have or think you may have a disability such that you need to record class-related activities, please contact the Center for Students with DisABILITIES.

If you have an accommodation to record class-related activities, those recordings may not be shared with any other student, whether in this course or not, or with any other person or on any other platform.

Classes may be recorded by the instructor.

  • Students may use instructor’s recordings for their own studying and notetaking.
  • Instructor’s recordings are not authorized to be shared with anyone without the prior written approval of the instructor.

Failure to comply with requirements regarding recordings will result in a disciplinary referral to the Dean of Students Office and may result in disciplinary action.

(Extra paragraphing and bullets added.)

And a strongly-recommended syllabus element from the Associate Dean's office:

Any recordings created will be deleted and destroyed shortly after the final exam for the class. [DCT revision: I will usually delete recordings around one week after the class — I use my own Zoom account, which has limited cloud recording space.]

There is a chance that your contributions to class discussion, whether voluntary or while on call, may be included in the recording. Your continued registration in this class indicates your acquiescence to any such incidental recording for the purposes described above.

3.5 Synchronous online course

The following paragraph is recommended by the Associate Dean's office:

This course is being offered in the Synchronous Online format. Synchronous online class meetings will take place according to the class schedule. There is no face‐to‐face component to this course.

In between synchronous class meetings, there may also be asynchronous activities to complete (e.g., discussion forums and assignments).

This course may have a final exam per the University schedule. [DCT COMMENT: Make that "WILL have a final exam."] The exam will be delivered in the synchronous online format, and the specified date and time will be announced during the course. /[DCT COMMENT: See

Prior to the exam, descriptive information, such as the number and types of exam questions, resources and collaborations that are allowed and disallowed in the process of completing the exam, and procedures to follow if connectivity or other resource obstacles are encountered during the exam period, may be provided.

3.6 Syllabus changes?

The following is a UH-required element for the syllabus as provided by the Associate Dean's office:

Due to the changing nature of the COVID-19 pandemic, please note that the instructor may need to make modifications to the course syllabus and may do so at any time. Such modifications may could include changes to the mode(s) of assessment for the course. Notice of such changes will be announced as quickly as possible through email.

3.7 Last-day agenda: Reviews, Jeopardy, pizza?

In the Tango Terms manual, see the model syllabus for the last class day.

4 General information

My contact information: I can be reached at email dc@toedt.com or (713) 364-6545 (which also forwards to my cell); see also my About page. I respond pretty quickly to email questions. If I think that a question might be of interest to other students, I’m likely to copy and paste it (possibly edited, and with identifying information redacted) into an email to one or both sections.

My office hours: As an adjunct professor, I generally don’t physically come to the school except to teach class (and not at all during the pandemic). I’m happy to meet with students (on Zoom) by appointment as follows:

HOW WHEN APPT. NEEDED?
In person (when class meets in person) M or W 5:30 p.m. Yes
In person (when class meets in person) M or W 7:20 p.m. (ten minutes) No
Skype or Zoom video; phone M-F 3:00 p.m. Yes

I strongly encourage each student to make at least one appointment during the semester to discuss any questions that they or I might have.

5 Counseling available

Counseling and Psychological Services (CAPS) can help students who are having difficulties managing stress, adjusting to the demands of a professional program, or feeling sad and hopeless. You can reach CAPS (http://www.uh.edu/caps) by calling 713-743-5454 during and after business hours for routine appointments or if you or someone you know is in crisis. No appointment is necessary for the “Let’s Talk” program, a drop-in consultation service at convenient locations and hours around campus. See http://www.uh.edu/caps/outreach/lets_talk.html for more information.

6 Sexual harassment policy

The University is committed to maintaining and strengthening an educational, working and living environment where students, faculty, staff, and visitors are free from discrimination and sexual misconduct. If you have experienced an incident of discrimination or sexual misconduct, there is a confidential reporting process available to you. For more information, please refer to the University system’s Anti-Discrimination Policy SAM 01.D.07 and Sexual Misconduct Policy SAM 01.D.08, available here:

Please be aware that under the sexual misconduct policy, SAM 01.D.08, faculty are required to report to the University any information received regarding sexual misconduct as defined in the policy.

Please note that the reporting obligations under the sexual misconduct policy reach to employees and students.

Also, as a required reporting party, Law Center employees and faculty members are not a confidential resource.

7 Grading: 750 points

The school’s required average: 3.20 to 3.40: As required by law school policy, raw grades will be adjusted proportionally to the extent necessary to make the average of the final class grades fall within that range.

(My usual practice — but not a guaranteed one — is to “move the curve” up or down as necessary so that the average is at or near the high end of the required range.)

Your final grade is based on the total possible points stated above: Your course grade will be based on how many of these points you earn AND ALSO how well others in your section do, as explained below. (Note how the total points is /not repeated here, to be sure they stay consistent.)/

Important note: You might get very-high raw scores on the homework assignments and final exam, but keep in mind that the average for each section MUST be no higher than a B-plus. This means that the Canvas system might show you as having an "A" grade based on your raw scores, but what matters is how you do relative to the other students in your section.

(Each section is curved separately.)

7.1 Attendance “signing bonus”: 100 points — with a claw-back

Every student starts out with the above “freebie” points for class attendance, but can lose points for missing class, as follows:

   
TOTAL CLASSES MISSED TOTAL POINTS LOST
1 0
2 10
3 30
4 60
5 or more all 100

This means, of course, that students who miss more than one class will have to do that much better on the final, the quizzes, and homework in order to keep up with their classmates on the school-required average.

Some absences won’t lose points, however:

• I don't count absences during the first week for newcomer students who join the class during adds and drops.

• I don’t count absences for “official” law school travel, e.g., for moot-court competitions, etc., as long as I’m informed in advance. (This seems of marginal relevance during the pandemic.)

• I also don’t count up to two absences for illness (yours or someone for whom you need to care, e.g., a child). If you’re ill and we’re meeting in person, please don’t come to class and infect the rest of us. Please email me if you’ll be absent for illness; I’ll take your word for it without a doctor’s note.

• Other absences, e.g., for job interviews, office visits, work trips, etc., will be counted as missed classes and will lose points as set forth above; please schedule accordingly.

• During times that we meet online via Zoom, I will track absences using the Zoom participant list or using other online tools.

Why attendance is especially important: The class attendance policy arises from the fact that we will be doing:

  • a significant amount of in-class discussion; and
  • a significant number of in-class exercises in small groups.

Consequently, it’s important for all students to attend each class, not just for their own benefit, but so that their teams won’t be shorthanded.

School policy requires attendance at 80% of the class meetings for each course. We will meet a total of 26 times; rounding to the nearest whole number of classes, a student therefore must attend at least 21 class periods to comply with the 80% rule.

7.2 Mid-term take-home quizzes: 350 pts

Take each quiz below — on Canvas — at any time starting at 9:00 p.m. on the Wednesday Thursday immediately preceding the due date.

Each quiz is open-everything (book, Internet, other reference materials). BUT: No collaboration with anyone else; there might be an Honor Code compliance question.

Each quiz will be timed; the duration is TBA but probably quite long The quizzes will be untimed. One of the principal purposes of each quiz is to provide students with an "opportunity" to review and work with the material.

The later quizzes will include material covered in previous quizzes (there's that spaced-repetition concept again).

Each quiz is due at 12:00 noon Houston time on the specified date. Late submissions will be docked points; the exact number of points is TBA.

  • Quiz #1: Due Mon. Feb. 08 — 20 pts
  • Quiz #2: Due Mon. Mar. 01 08 — 50 pts
  • Quiz #3: Due Mon. Mar. 22 29 — 60 pts
  • Quiz #4: Due Mon. Apr. 12 19 — 120 pts
  • Quiz #5: Due Mon. Apr. 26 — 100 pts (this is a more-or-less comprehensive review quiz).

These quizzes will include progressively-more review material.

Each quiz will include a mix of true-false, multiple-choice, fill-in-the-blank, and/or “micro-essay” (short answer) questions.

Each quiz will cover only the following:

  • the readings assigned up through and including the homework due date, whether or not we discuss any particular topic in class;
  • any review questions relating to the reading;
  • anything in the in-class and homework exercises that we have done to date — that way, the homeworks themselves will thus serve as a "spaced repetition" reinforcing review that takes advantage of the testing effect;

Each quiz will be graded partly anonymously — the Canvas software shows me students’ names; I can’t do anything about that, but:

  • Canvas automatically grades the true-false, multiple-choice, and fill-in-the-blank (“FITB”) questions.
  • I review any “incorrect” fill-in-the-blank answers so that I can give credit for simple misspellings, which Canvas can’t always pick up. (I program the quizzes on Canvas to accept as many misspellings as I can think of, but you’d be surprised how "creative" students can be in their spelling ….).
  • If a quiz includes any micro-essay questions, your answers to those questions will not be anonymous at all.

In past semesters, a few students have gotten the right answer to every question on a quiz; in response, one student suggested that I should “[d]esign quizzes to have a wider score distribution.” I’m less interested in a wide score distribution than in helping all students to understand and retain the material.

WARNING: If you just copy and paste answers from this document or from the model answers from previous quizzes you'll get zero points for that question, because:

  1. I need to see how you think;
  2. When you have to rephrase a concept in your own words, it helps you better grasp and retain the concepts.

7.3 Contract-drafting assignments: 100 points total

Students will draft a couple of simple agreements for "MathWhiz," a hypothetical client.

Successive drafts will be due at various dates

Students are free to work collaboratively, but if you partner up with anyone, be sure to note that on your submission.

WARNING: The warning just above about quizzes applies equally to drafting assignments.

7.4 Final exam: 200 points

The final exam:

  • will be one hour in length, at the time scheduled for the final exam;
  • will consist in large part of what amounts to a quiz on steroids;
  • will take place on Canvas (and can be done from anywhere); and
  • will be open-book, open-notes, open-browser — but no communication with anyone else, whether by text, email, IM, or anything else.

The Honor Code will apply; there will be a one-point question asking you to certify compliance.

What’s fair game for the final exam? Anything:

  • in the assigned reading materials, especially the "Pro tips" and "Cautions";
  • in the homework, quizzes, and in-class exercises.

Note: For the micro-essay questions, calling for one- or two-paragraph answers, just copying and pasting from the Tango Terms or other course materials won’t cut it becase I'll be looking for your thinking.

7.5 Class participation bump

As permitted by law-school policy, I reserve the right:

  • to award discretionary increases in student grades by one-third of a grade level for excellent class participation, e.g., from a B to a B-plus, assuming that this doesn’t cause the class average to exceed the maximum permitted; and
  • to reduce grades for sub-standard class participation. (I’ve almost never done that, except some years ago for a couple of students for whom it was like pulling teeth to get them to participate even minimally.)