Day-by-Day Class Plans: Contract Drafting Spring 2023

Group 1 sits to my left; Group 4 to my right.

Grouping is alphabetical by last name, BUT first names are used here for privacy.

NOTE: I will reshuffle the groups twice during the semester.

6:00 p.m. class:

Group 1: [redesignated as Group 2] Benjamin, Andrea, Mackenzie, Brittany
Group 2: [redesignated as Group 1] Lexi, Lily, Venu, Jacob
Group 3: Edward, Victor, Laura, Jared
Group 4: Joel, David, Josey, Taylor

7:30 p.m. class:

Group 1: Justin, Collin, Jared, Maycie Yvonne
Group 2: Austin, Moriah, Ahmed, Kevin
Group 3: John, Maxwell, Andrew, Graves
Group 4: Brendan, Nathan, Caroline S., Caroline T.

From Twitter: “Elon Musk predicts he will rocket people to Mars in less than 10 years” – does that mean people will depart for Mars in less than ten years, or that it’ll take them less than ten years go get there?

QUESTION: How could this be rewritten to clarify?

Please tell us a little bit about yourself:

• Name
• Class year (3L, 2L, LLM)
• Undergrad school and major
• Work experience?
• Contract-related experience?
• Something boring about yourself?

Here’s how I usually do Socratic-method questioning:

• I pose a question and ask you to discuss the question in your small groups.
• For that question, each group designates each of the group member by a letter A through D – for example, in Group 1 above for the 6:00 p.m. class, the group might designate Brittany as Person A, Benjamin as Person B, etc..
• Then, instead of calling on a student by name, I call on a group and a letter – for example, I might say, “Group 2, Person D, what do you think?”
• I might also call on one or more other groups and letters to see if they have anything else to add – e.g., “Group 4, Person A, what’s your thought about what [the previous student] said?”

That way:

• Neither the students nor I know who will be called on for a question.
• Each student must be ready to answer each question.
• But: Each student gets to discuss each question with his/her group before I call on anyone.

I haven’t done any kind of scientific study, but my sense is:

• that students like being able to discuss the question before I ask a student to answer the question; and
• that students get more out of it when each student prepares to answer each question.

Please provide emails for a (private) Google Groups email list on the Group 1 virtual whiteboard at the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4. IMPORTANT: Please provide an email address that you check regularly — the Law Center asks that you use your UH email address. [I’ll be deleting the email addresses from the whiteboard when I transfer them to the Google Groups email list.]

Canvas setup:

• Self-enroll at https://canvas.instructure.com/enroll/WDDRX3.
• Alternatively: Sign up at https://canvas.instructure.com/register and use the following join code: WDDRX3.
• IMPORTANT: Be sure to use your name when signing up so that I can track progress and watch out for possible issues; if you omit your name, you won’t show up on the Canvas roll-call page as being present in class, nor as having completed the homeworks and quizzes.
• IMPORTANT: Check your personal Canvas settings to be sure that Canvas shows you as being on Central time — otherwise, Canvas will show you as being on Mountain time, and that will show your due dates as being an hour earlier than you think.

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

See this tweet thread

See this blog entry.

Read along: Chapter 1: Introduction

QUESTION: Most contract preambles identify the parties as, e.g., “ABC Corporation, a Texas corporation.”

• How would we identify MathWhiz?
• How would we identify Gigunda Energy?

I’ll bring them to class; that way, you won’t forget them ….

From CNN (since changed): “New US dietary guidelines include babies and toddlers for first time”

A friend posted a screen grab on Facebook with the comment, “Thanks for the offer, but I’m vegan.”

1.  If you haven’t already put your email address in the Google Groups email list on the Group 1 virtual whiteboard, then please do so.

2.  If you haven’t signed up for this course in Canvas, please do so, at https://canvas.instructure.com/enroll/WDDRX3.

Here’s a tweet from the @TexasDemocrats Twitter account: “PRESS RELEASE: Chairman @HinojosaTX Releases Statement on Federal Judge in Texas Siding with AG Paxton, Against Texas Women”

QUESTIONS:

1.  Suppose you didn’t know Texas politics, and you also didn’t know that this tweet came from the Texas Democratic Party — might you be confused about who @HinojosaTX was siding with?

2.  How could this be clarified?

From this article: “Anti-vaccination sentiment was once more evenly distributed between parties and ideologies ….” (Emphasis added.)

QUESTIONS:

1.  Are there two ways to interpret the above quote?

2.  How could this be clarified?

Do Exercises 1 through 8 of Chapter 2 — you can use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 if you think it’d be helpful, but you might want to just make private notes.

(We’ll be doing a lot of ambiguity drills.)

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?

Do Exercises 9 through 13 of Chapter 2 — you can use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 if you think it’d be helpful, but you might want to just make private notes.

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, [BROKEN LINK: sc:], 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?

See this post.

DCT to recount an episode for a wealthy individual client renegotiating his compensation package as CEO of a company.

DCT to recount a “MathWhiz” client episode: A “Gigunda” customer sent two, 100-page master services agreement forms, purportedly “95% identical,” for two “rush” projects in the Middle East and East Africa. QUESTION: What to do without spending a ton of MathWhiz’s money?

In this exercise:

• Groups 1 and 3 represent MathWhiz
• Groups 2 and 4 represent Gigunda.

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

In groups: Draft a short letter of intent between MathWhiz and Gigunda, including the following:

1. Title
2. Preamble
3. Statement that the parties are negotiating for MathWhiz and Gigunda to enter into a ten-year consulting agreement
4. A brief statement of:
   • what’s binding
   • what’s not binding but the parties are going in that direction — feel free to be creative from your client’s point of view
   • what it would take for the final agreement to be binding
5. Signature blocks — just do them one after another vertically, don’t worry about table format (unless you’re a whiz with Google Docs).

Go ahead and make up legal names, entity types, and jurisdictions as needed.

Optional: Skim through the LOI discussion in the course material to get ideas.

Just for grins: Here’s what ChatGPT came up with:

Negotiate the LOI:

• Group 1 with Group 2
• Group 3 with Group 4

Do Exercise 14 of Chapter 2 — you can use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 if you think it’d be helpful, but you might want to just make private notes.

QUESTION: From Chapter 2:

• What surprised you (if anything)?
• What struck you as important for summer associates and new lawyers to know?

Feel free to use the the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

QUESTIONS: From Chapter 3:

–  What surprised you (if anything)?

–  What struck you as important for summer associates and new lawyers to know?

Feel free to use the the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

Ambiguous: See this sign.

More clear: This sign

Here’s one possible answer:

6.5 Tenant’s Audit Rights.

6.5.1 [or, “(a)”] Landlord shall keep reasonably detailed records of all Operating Expenses and Real Estate Taxes for a period of at least two (2) years.

6.5.2 Not more frequently than once in every 12-month period, Tenant together with any representative of Tenant shall be permitted to may audit the records of the Operating Expenses and Real Estate Taxes.

6.5.3 Tenant must give Landlord at least twenty (20) 20 days’ prior written notice to Landlord.

6.5.4 Tenant shall must conduct any inspection audit at a reasonable time and in a manner so as not to unduly disrupt the conduct of Landlord’s business.

6.5.5 Any such inspection audit by Tenant shall must be limited to the sole purpose of verifying the Operating Expenses and/or Real Estate Taxes.

6.5.6 Tenant shall must hold any information obtained during any such inspection in confidence, except that Tenant shall be permitted to may disclose such information to its attorneys and advisors, provided but only if 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.

6.5.7 Any shortfall or excess revealed and verified by Tenant’s audit shall must be paid to the applicable party by the relevant party within thirty (30) 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.

6.5.8 Landlord must reimburse Tenant for Tenant’s reasonable, third party costs of the audit, up to an amount not to exceed $5,000, if all of the following are true:

        (1) The audit for any given year or partial year reveals that Tenant was overcharged for Operating Expenses or Real Estate Taxes by an amount of greater than six percent (6%) [DISCUSSION REQUIRED];

        (2) Tenant paid such overage overcharge; and

        (3) such overage the overcharge was not otherwise adjusted pursuant to the terms of this Lease,

Some discussion points:

1. Some students numbered the paragraphs 6.5.1, 6.5.2, etc., which is useful — alternatively, some partners might prefer the paragraphs to be “numbered” with (a), (b), etc.
2. For anything that’s likely to be a negotiation point, consider making it a separate paragraph for easier discussion (and, if necessary, revision). Remember: Speed to signature (of agreed, workable terms) is a primary goal. Examples of separate issues:
   • Recordkeeping requirement
   • Audit right
   • Advance notice period
   • Confidentiality (but the additional confidentiality-related sentences can stay with the paragraph)
   • True-up
   • Expense-shifting (but probably OK to keep with the true-up provision)
3. Reminder: D.R.Y. for numbers — “two (2) days”
4. Reminder: The convention is:
   • spell out numbers from one to ten
   • use digits from 11 on up — “twenty (20) 20 days” (another D.R.Y. example as well)

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”? Why or why not?

QUESTION: What if you change (and redline) the actual number from $20K to, say, $25K — how do you do phrase that?
a. The same way, i.e., “twenty-five thousand dollars”?
b.  “$25,000.00”?
c.  “$25,000”?
d.  “$25 thousand”?

Here are (sanitized) first pages of an NDA I once marked up for my real-life “MathWhiz” client.

Note how the original is a “wall of words” — note also the first comment in my markup, (“tactfully”) addressing that problem.

Original (first page only)

Markup (first two pages only)

In the markup, you’ll see two different colors of revision marks. That’s because the original Word document was “Protected” to remove the identity of revisers when the document was saved. I noticed this after making the first couple of changes, and removed the protection so that there’d be a paper trail of who’d made what revisions.

From a Washington Monthly piece about what ordinary people might have to do to reverse the effects of climate change: “Which might mean giving up meat or traveling by air. ”

QUESTION: Is the author urging us to give up one thing, or two?

QUESTION: How could this be fixed?

FACTS:

• 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 for a contract, with a title, preamble, and signature blocks (don’t worry about formatting the signature blocks, just put the necessary information in).
2. Draft just a simple background section (a.k.a. recitals).
3. Put together a series of short, simple paragraphs with just the “mechanics” of getting the sale done: Pricing, delivery. Don’t worry about representations or warranties or anything like that; just put in the bare-bones requirements to make a contract.

Product Solutions Int’l, Inc.. Aldez Containers, LLC, 46 F.4th 454 (6th Cir. 2022):

• Small company (“Orgo”) designs a custom cosmetics travel bag.
• Orgo contracts out the design and manufacturer to a middleman supplier.
• Middleman supplier places a big order for the cosmetics bag with a Chinese manufacturer.
• Orgo (the small company) discovers that the cosmetics bags it designed aren’t selling; it stops accepting shipments from the middleman supplier.
• The supplier ends up “eating” > $500K in payments to its Chinese manufacturer for the bags that the supplier ordered for Orgo.
• The supplier sues not just Orgo, but its executives, and the shipping company (think: FedEx).
• The supplier’s case against the executives gets poured out — see Product Solutions Int’l, Inc. v. PB Products, LLC, No. 19-CV-12790 (E.D. Mich. Jun. 12, 2020) (granting in part, denying in part, defendants’ motion to dismiss).
• Later the supplier’s case against the shipping company gets poured out again.

LESSONS:

1.  Litigation counsel can get really aggressive — in part this is because judges seldom punish bad behavior.

2.  The middleman supplier should have been more careful about making sure that Orgo (the designer that ordered the bags) had funding available — and backup funding? — before making a big financial commitment to the Chinese manufacturer on behalf of Orgo.

Worksheet

See this WSJ story (free link). Some points of interest:

• Banks cut off BB&B’s lines of credit
• Banks delivered notice of default to BB&B — which kicks up BB&B’s interest rate by two percentage points
• JPMC “called the loan” (demanded immediate repayment), but BB&B doesn’t have the cash
• BB&B has had trouble stocking its stores because it fell behind in payments to suppliers

1. QUESTION: If you wanted to have a separate document that listed exceptions to the representations in a contract, what would you (conventionally) call that document? (Hint: See here.)
2. SCENARIO: (A) A representation in a contract is in (let’s say) section 5.8 of that contract. (B) In the document referred to in question 1 above, you’re listing an exception to that representation. QUESTION: How would you number that exception?
3. QUESTION: When “redlining” another party’s contract draft, what could (should!) you do, in the Word document’s file name and in the running header, to: (A) avoid “version confusion,” and (B) make it easier to create a timeline later — e.g., in litigation?
4. EXPLAIN IF FALSE: If parties disagree about the meaning of a term in a contract, that’s enough to require that the finder of fact (the jury, in a jury case), not the trial judge or appeals court, must determine the meaning of the term.

From the NY Post:

Human error is to blame for the glitch that caused wild fluctuations in share prices at the start of trading on the New York Stock Exchange on Tuesday.

A NYSE employee who is based out of the exchange’s backup data center in Chicago failed to shut down the disaster-recovery system that is tested every day after the closing bell as part of routine maintenance, according to Bloomberg News.

Recall Murphy’s Law (“anything that can go wrong, will go wrong”), which is why, in our little contract-drafting corner of the world, we try to R.O.O.F. (Root Out Opportunities for F[oul]-ups by users).

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?

Question: What did you find useful to you–

• in class today
• in the reading for this week?

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

Don’t forget: You have two chances — for this quiz, but not for all of the others — so if you get less than a perfect score the first time, you might want to review the answers before taking the quiz a second time.

Think about this for the end of class.

The Houston Chronicle reported on a guarantee agreement that was never signed but was supposedly agreed to. Excerpt:

At the meeting [the lawsuit says], Parker presented a written agreement, and while Souki agreed to the terms, *he refused to sign the agreement, explaining that he could not sign a written agreement since he had not disclosed to his bank his liability to Parker and Red Mango ….

Parker accepted based on the two having “a long history” and on Parker’s continued faith in Tellurian’s core business model, according to the lawsuit.

In October 2021, Parker texted Souki to set up a “firm date to close out on the guarantee,” the lawsuit says, but while Souki confirmed that he and Parker had “talked in Aspen,” he did not commit to paying Parker or fulfilling his obligation.

“Since that date, Parker, on behalf of himself and Red Mango, has demanded that Souki made the payments required of him under the contract,” the lawsuit says. “However, Souki has failed to do so in breach of his agreement.”

Natalie Postgate, Tellurian investor sues co-founder Charif Souki over millions in losses (HoustonChronicle Jan. 22, 2022) (emphasis added).

UPDATE: See Rick Carroll, Text messages don’t make a contract, Souki lawyers argue (AspenTimes.com Apr. 5, 2022) (describing motion to dismiss). Excerpt:

Souki’s attorneys, however, offered a different version of the dealings between Souki and Parker. A March 22-dated motion to dismiss the lawsuit, which was filed in U.S. District Court in Denver, called both Parker and Souki “experienced” and “sophisticated businessmen” who wouldn’t hatch a financial agreement through text messages.

“Parker and Souki know how to create legally binding contractual relationships,” the motion said. “That is particularly true of a contract potentially involving tens of millions of dollars, like the one alleged here. Sophisticated businessmen do not create valid, enforceable contracts through unsigned text messages that omit essential terms such as the identity of the parties, the nature and extent of the obligation, the method of payment, and who is to benefit from performance.”

The text messages alone showed that Parker doesn’t have a case for breach of contract, the motion said. Parker’s lawsuit cited the following text exchange from August 2019 as the written agreement between the two:

Souki to Parker: “How much stock do you have and what is your (cost) basis?”

Parker: “5.5m shares and (his) net is circa 8(.)30 now.”

Souki: “Ok. Please keep this text. I will guaranty [sic; guarantee – guaranty is the noun] your capital by dec. 2020. I’ll make up any deficiency you have at that date. Thanks for your help and confidence.”

Parker: “Ok pal I got confidence in you, always here to lend an ear or advice if needed, let’s catch up in sept for dinner.”

The motion to dismiss said the exchange didn’t meet the standards for a contractual agreement, while Red Mango, for which there is scant information available, wasn’t mentioned in the texts.

(Emphasis added.)

UPDATE 2: What little I could find online indicates that the case seems to be going to trial.

LESSON: People will sue — and will also oppose lawsuits. (Big surprise.)

BEFORE: 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.

We’ll do the following:

• Exercise 1 first;
• Discussion of Exercise 1;
• Exercise 2.

EXERCISE 1: Do the following in the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4: Play around with breaking up and simplifying the second sentence: “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.”

• Consider breaking the sentence into two, or even three, paragraphs.
• Think about creating one or more defined terms in their own paragraphs.
• Think about spinning off the concluding exception into its own paragraph, then forward-referencing it in the “main” paragraph(s).
• Don’t number your paragraphs yet.
• QUESTION: Given the bold-faced heading of the “BEFORE” version, does the first sentence really belong in this provision?

DCT REWRITE:

EXERCISE 2: Rewrite just the italicized portion above (quoted below) to be much more reader-friendly — as though you were talking to a lay jury. (Hint: BLUF.)

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.

DCT rewrite:

During the past couple of spring semesters I’ve been teaching a half-semester course on intellectual property law for MBA students at Rice University’s Jones Graduate School of Business. Recently the administration circulated a document with definitions used by the school’s Honor Council; I’m providing the link to the document in case I want to use any of the definitions in the future.

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?

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:

It’s no surprise that the case settled — but only after Griddy filed for bankruptcy protection to liquidate its business (in what one commentator referred to as an “off-label bankruptcy”).

And it’s certain that Griddy had 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.

We’ll take a quick look at the actual settlement agreement:

• Paragraph 1: Why do you suppose this is in the agreement?
• Paragraphs 5 and 9 use the defined term “the State,” but elsewhere the defined term is “Texas” — how do you think that happened? Is that a problem?
• Paragraph 14: Does this surprise you?
• Paragraph 15: Why do you suppose the last part of the provision is included?
• Paragraph 16: Do you think this would be enforceable?
• Paragraph 18: Note how the signatures were handled.

(To be shown in class)

Signature block sample — what’s wrong with the MathWhiz signature block?

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

EXAMPLE 1:

Notes:

[0] “Retainer Agreement” is an unconventional title for this type of agreement, and “Retainer” is a head-scratcher abbreviation for Gigunda. (Try “Client” or “Customer.”)

[1] Need Gigunda’s full legal name.

[2] You wouldn’t say “global oil and gas company” in the preamble — in the Background, sure, 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), but in the other side’s draft it’s probably not worth fixing.

EXAMPLE 2:

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:

Notes:

[0] Good title.

[1] This is just about perfect.

EXAMPLE 4:

Notes: [0] Good title.

QUESTION: What issues do we have here?

EXAMPLE 5:

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:

QUESTION: What issues do you see here?

EXAMPLE 7:

Notes:

[0] The subtitle is a bit wordy.

[1] I’d use “Contractor” and “Client” (or perhaps “Customer”) as the parties’ nicknames.

EXAMPLE 8:

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:

Notes:

[0] What’s the objection here?

[1] 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. EXPLAIN IF FALSE: Summary judgment (i.e., without a trial) is pretty much always improper when a contract term is ambiguous.
2. TEXT: “Tenant will vacate the Premises no later than 12 midnight on December 15; Tenant’s failure to do so will be a material breach of this Agreement.” FACTS: Tenant moves out at 10:00 a.m on December 15. QUESTION: Is Tenant in material breach? EXPLAIN — INCLUDING coming up with a clearer version.
3. QUESTION: What does contra preferentem mean — both as an English translation of the Latin, and what it means in “our [contract-drafting] world”?
4. QUESTION: What does DCT’s mnemonic “A.T.A.R.I.” stand for?

Contracts can have different formats; here are a few examples, more or less at random, from an advertisement-supported Web site that harvests contracts from the SEC’s EDGAR Website.

In your groups, take a look at the following things — if desired, use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4:

• Titles of the agreements
• Preambles
• Recitals (“whereas” clauses), if any
• Numbering styles for sections / paragraphs

Here are the examples:

• Hewlett-Packard agreement to acquire Palm (as in, Palm Pilot)
• WeWork employment agreement - note the title of the agreement
• Zillow executive employment agreement – notice any difference in the drafting style between this agreement and the WeWork agreement above?
• Green Mountain Coffee “transition agreement” (basically, firing the president of the company):
  • See § 2.a.1: “Base Salary. During the Employment Period, the Company will continue to pay you a base salary at the gross annual rate of $406,000 (”Base Salary“). The Base Salary shall be paid in accordance with the Company’s normal payroll practices.” (Emphasis added.) QUESTION: Why use the bold-faced language?

Question: What did you find useful to you–

• in class today
• in the reading for this week?

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

From the Houston Chronicle:

Houston adjusted its contract with the controversial ShotSpotter program, a technology designed to detect gunshot sounds, on Wednesday to correct a clerical error and pay an overdue $700,000 bill to the company.

City Council voted unanimously to correct the issue from January 2022. The contract was meant to be for five years at a cost of $3.5 million, but a staff error meant council voted to authorize only $700,000. The true cost was listed for council members at the time, but it did not make it into the actual ordinance they passed.

The Houston Police Department went to renew its subscription for another year in December and realized there was no money to pay for it, according to the request for council action. The $700,000 invoice to ShotSpotter now is past due.

(Emphasis added.)

EU and AstraZeneca reach deal to end vaccine row - contract called for AZ to use “best efforts” to deliver specified number of COVID-19 vaccine doses.

QUESTION (group discussion, then open-mike): What are some pros and cons of agreeing to “best efforts” — and why do you think the EU and AstraZeneca might have agreed in this case?

(REMINDER: See the reading on best efforts.)

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 1: As ABC’s lawyer:

• Do you think this is OK?
• If not, what do you think XYZ really wants?

QUESTION 2: As ABC’s lawyer, how might you structure the contract to accommodate Customer’s likely desires — and to protect Supplier?

Consider the following provision (from a real contract — this is one sentence):

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 — especially:

• breaking up “walls of words”
• BLUF
• D.R.Y.

(Don’t try to “retrade the deal” by altering the substantive terms.)

I’ll show my own rewrite in a few minutes.

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.

AFTER: 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) One of both of the following is true: (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 on or before the date 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.

ALTERNATIVE: Here’s another possible rewrite — which still has problems:

12.    TERMINATION.

(a)       A party may terminate this Agreement:

            (1) if the royalties due hereunder have not been paid within the time allowed by this Licence Agreement; or

            (2) if either party shall breach of breaches any of the its representations, warranties, covenants, or promises or undertakings +herein contained and on its part to be performed or observed in this License Agreement and shall not have has not remedied such breach within thirty (30) 30 days after notice is given to the breaching party by the non-breaching party the other party gives notice of breach to the breaching party; or

            (3)  either party shall have has 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.

(b)       The other party need not give any further advance notice of termination.

(c)       Termination will not affect any right the terminating party has:

            (1)  to recover any royalties then due; and

            (2)  to pursue any remedy in respect of any previous breach of any of the covenants or agreements contained in this Licence Agreement.

EXERCISE: In your groups, analyze what changes were made — and why. If you wish, use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 to make notes. Pay particular attention to:

• How is (a)(3) different from (a)(1) and (a)(2), and does it matter? (Hint: Try reading (a) and (a)(3) as though (a)(1) and (a)(2) weren’t even there: Does the language make sense?)
• In (a)(3): If Party A breaches the agreement, does that allow Party A to terminate the agreement?
• Is the terminology consistent?
• In (b), does the term “the other party” fit? (Hint: Look at the beginning of (a).)

TEXT 1: “The team held a meeting to give consideration to the issue.” (Shortened) TEXT 2: “The team considered the issue.” QUESTION: Is this “streamlining” safe? If not, why not?

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: Rewrite the above-quoted sentence twice — once for each possible interpretation.

NOTE: I’ve done individual comments on each student’s assignment – you can see the comments in Canvas.

(All bold-faced emphasis below is mine.)

1. TEXT: “Tenant shall be permitted to disclose such information to its attorneys and advisors, provided *Tenant informs such parties of the confidential nature of such information and uses good faith and diligent efforts to cause such parties to maintain such information as confidential.”
   • DCT COMMENT 1: Better: “Tenant may disclose such information ….”
2. DCT COMMENT 2: DO NOT write, “provided ….” — instead, do a new sentence (and possibly a new paragraph) such as, e.g., “Tenant must inform each such recipient ….”
3. TEXT: “(d) Any information obtained during such inspection shall be held by Tenant in confidence, except that Tenant may disclose such information to its attorneys and advisors. (i) If Tenant discloses such information to its attorneys or advisors, Tenant shall: (1) inform such parties of the information’s confidential nature; and (2) use good faith and diligent efforts to ensure such parties keep such information confidential.”
   • DCT COMMENT 1: Active voice would be better, e.g., “Tenant must hold in confidence any information obtained during any such inspection ….” (That’s a “local BLUF” example: Skimming readers for Tenant will want to know, “what must we [Tenant] do, when?”].)
   • DCT COMMENT 2: In this case the “except that” is OK because the sentence is short enough.
   • DCT COMMENT 3: If you don’t have a “(ii),” don’t do this as “(i)” — instead, start a new paragraph (e).
4. TEXT: “f) If Tenant’s inspection of the records for any given period reveals that: (1) Landlord overcharged Tenant for Operating Expenses or Real Estate Taxes by an amount greater than 6%; (2) Tenant paid such overcharge; and (3) such overcharge was not otherwise adjusted pursuant to the terms of this Lease: (i) Landlord shall reimburse Tenant for its reasonable, third party costs of the audit, up to an amount not to exceed $5,000.”
   • DCT COMMENT: Same as #2 above about not using “(i)” because there’s no “(ii)”; consider instead adding the following: “(f) IF: Tenant’s inspection of the records … ; THEN: Landlord shall reimburse ….”
5. TEXT: “Tenant’s inspection of the records shall be held in confidence except ….”
   • DCT COMMENT: Held in confidence by whom? (This is what’s known as a “false imperative.”)

Vermillion State Bank v. Tennis Sanitation, LLC:

Facts:

1. A bank loaned money to a trash-collection company (the “borrower”).
2. The borrower’s business failed; the borrower filed for bankruptcy protection.
3. The bank sought bidders for its borrower’s business assets (garbage trucks, etc.).
4. The bank itself bought its borrower’s business assets.
5. The bank entered into an oral “flip” agreement with another buyer, under which the other buyer would acquire the business assets from the bank for $6 million.
6. The other buyer backed out of the oral agreement.
7. The bank sold the business assets to another buyer, at a significantly lower price.

Trial: A jury found that the other borrower breached an oral agreement and awarded the bank $1.9 million in damages.

Appeal: Affirmed. The “predominant purpose” of the parties’ “hybrid” oral contract (involving both goods and intangible assets) was not for the sale of goods — “most witnesses testified to the primary value being the customer routes” (id. at 623) — and so the Statute of Frauds in UCC article 2 didn’t apply.

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.)
2. What about just signing it on April 1 when the family gets back to Houston?
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?
4. If Wednesday Addams asks you to sign it as the company’s lawyer, how should you respond?
5. The facts don’t indicate that Widgets is incorporated in Texas.
6. For the Addams signature block, see the model sig. block at NOCD § 3.7.5.
7. For the question whether an attorney for Addams Inv. L.P. would sign, a student writes: “I would tell her that there are issues with me signing the contract, such as raising the question as to whether I am acting as a lawyer or a business person.” DCT COMMENT: Good point!
8. The same student writes: “I would also demand to be indemnified in case the contract ‘goes south.’” DCT COMMENT: That’s not something I’d normally ask a client to do — if I wasn’t comfortable signing without an indemnity, I just wouldn’t sign.
9. The same student writes: “After that, I would want her [Wednesday Addams] to put in writing that I have authority to sign the contract ….” DCT COMMENT: Good point — but do it in a non-threatening, non-defensive manner.
10. The same student writes: “I  would put in a personal signer representation, and then I would sign it.” The student’s draft included the following: “Each individual who signs this Agreement on behalf of an organizational party represents that he or she has been duly authorized to do so.” DCT COMMENT: I would not unilaterally do include such a representation, as it would put a target on my back — if the other side wants a representation like that from me, then let them ask for it.“
11. A student writes, about Widgets Inc.’s motivation: “Because they want to be able to report the deal in their first quarter financial report and look good for investors.” (Emphasis added.) DCT COMMENT: The sale rep might be interested in closing the deal in Q1 so as to get a commission, or to be able to make his- or her sales quota.
12. A student writes (I paraphrase): “Sign the deal on April 1 and recite that it confirms an oral agreement reached on March 31.” DCT COMMENT: That’s good, creative thinking — BUT: The Statute of Frauds would preclude enforcement of an oral agreement for the sale of goods for more than $500, and thus accounting standards might preclude Widgets from recognizing the revenue in Q1.
13. Several students indicated that a “director” of Addams Operations, Inc. could sign on the company’s behalf. DCT COMMENT: That depends on what you mean by director: If it refers to an employee title (one level below VP, one level above manager), then yes. BUT: If it refers to a member of the corporation’s board of directors, then no — a board member, as such, has no management authority for the corporation.

Procedure: I’ll start by calling on a group; Person A in that group is to answer. THEN, that person will call on another group, and Person B from that group is to answer. And so on and so forth.

1. TEXT: “Alice says that Bob is cold.” QUESTION: Is this more likely to be considered vague, ambiguous, or both?

2. FACTS: (A) Your client is located in Vancouver, Canada and The Other Side (which drafted the contract) is located in Houston. (B) The contract states that the amount your client must pay is $1 million.

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

3. QUESTION: When calling a partner’s or client’s attention to a problem, it’s best to have a recommended [BLANK] as well.
4. QUESTION: When taking notes during a meeting, why is it useful to indicate whether one or more lawyers is participating?
5. QUESTION: What does DCT’s mnemonic “S.t.R.” (or “S.T.R.”) stand for?

Question: What did you find useful to you–

• in class today
• in the reading for this week?

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

As mentioned at the start of the semester: So that students will get a chance to work with others, next Wednesday we’ll reshuffle the groups; I’ll post the reshuffled group memberships on Monday.

(We’ll do one more reshuffling during the semester in late March.)

See here. (It looks like a New Yorker cartoon but I can’t be sure.)

From a Facebook comment: “A father of a friend who just turned 96 is a lifelong reader ….”

QUESTION 1: Who just turned 96 — the friend, or the father of the friend?

QUESTION 2: Does this imply that the friend has more than one father?

QUESTION 3: How could this be rewritten — perhaps by moving some key words around and adding some punctuation?

Caution: If doing an “amended-and-restated agreement” (in next week’s reading) you’ll want to consider whether you could be wiping out a provision that your client might later want to rely on. Here’s a real-world example:

–  In 2014, a business that sold historical tours entered into a merchant agreement with a payment-processing company;

–  The merchant agreement, drafted by the payment processor, included a personal guaranty (see generally last week’s reading) signed by the owner of the tour business;

–  Then in 2019 the parties entered into a replacement agreement, also drafted by the payment processor;

–  The replacement agreement likewise included a personal guaranty – –  but this time, the guaranty was signed by another individual, not by the owner of the tour business;

–  The replacement agreement also included an entire-agreement clause.

–  For reasons not relevant here, the payment processor sued the owner of the tour business under the guaranty in the 2014 agreement.

–  The Sixth Circuit held that the 2019 agreement had terminated the 2014 guaranty, and thus the tour business’s owner was not liable in respect of transactions governed by the 2019 agreement. See Electronic Merchant Systems LLC v. Gaal, No. 22-3602, slip op. at 11-13 (6th Cir. Jan. 30, 2023) (affirming, in part, dismissal for failure to state a claim).

From Asli Aydintasbas, Turkey’s earthquake death toll might be more than just a natural disaster (WashingtonPost.com):

The first earthquake, followed by a second one of almost equal magnitude, was massive by any standard. The collapse of buildings directly on the fault line was probably unavoidable.

Yet across the region, there were many structures that stood firm, saving the lives of their occupants, while others next door crumpled — pointing to sloppy construction practices as the main cause of death.

We will need time to fully understand the extent to which human failings may have contributed to the loss of life. But early indications certainly raise questions.

In 1999, we quickly learned that it wasn’t the earthquake itself but human-made concrete blocks that kill people. The blame went to contractors who used cheap materials, to the officials who failed to enforce Turkey’s relatively loose building codes, and, of course, to a government that has failed to develop a nationwide earthquake response strategy.

* * * 

Natural disaster is one aspect of the story. Turkey’s reliance on construction-driven economic growth, cronyism and willingness to ignore its own building standards is the other.

(Emphasis added.)

From late last year: Targa Channelview LLC v. Vitol Americas Corp., 653 S.W.3d 330 (Tex. App–Houston [14th Dist] 2022).

Why we care: Trial counsel made an aggressive argument about the meaning of the term “conclusion of the Term.”

Facts:

1. The contract was between Targa and Vitol.
2. Vitol was to deliver crude oil to Targa.
3. Targa was to buy the crude oil from Vitol and refine it into components – jet fuel, naphtha, etc.
4. Vitol would then buy the refined components from Targa.
5. Targa would build a “splitter” plant to do the refining — it’s unclear whether this was a contract requirement for Targa, or simply a contemplated action.
6. IMPORTANT: Vitol was to pay Targa ~$43M per year for seven years – the money was to go into a “Noble Account” – and that money would be used to fund any net amounts owed by Vitol for buying refined products from Targa. (In effect, Vitol was prepaying Targa for refined products.)
7. Vitol had the right to terminate if, on or before a certain date, Targa failed to achieve “Startup” (a defined term) of the new splitter plant; the termination clause said that termination was Vitol’s “sole and exclusive remedy” for the failure to achieve Startup. (Slip op. at 4-5.)
8. Targa failed to meet the Startup requirement, so Vitol sent a notice of termination. At that point the “Noble Account” had ~$129M in it.
9. The contract also said: “At the conclusion of the Term, Targa shall remit to [Vitol] the remaining balance of the Noble Account, if any, pursuant to a final invoice prepared pursuant to Section 6.2(a).” Slip op. at 6 (emphasis by the court, footnote omitted).
10. The “Term” was defined as follows:

The term of this Agreement shall commence on the Effective Date [i.e., December 27, 2015] and shall continue in full force and effect for eighty-four (84) months from Startup (the “Primary Term”). Upon expiration of the Primary Term, unless extended…, this Agreement shall automatically expire. [Vitol] may elect to extend the Agreement beyond the Primary Term for up to five (5) successive twelve (12) month periods (each, an “Extension Term” and collectively, the “Extension Terms”) by giving written notice to Targa no less than twelve (12) months prior to the expiration date of the Primary Term or the then-current Extension Term (the Primary Term, and Extension Terms, if any, the “Term”). . . .

Slip op. at 6.

QUESTION: Who was entitled to the $129M in the Noble Account? Targa claimed that it, Targa, was entitled to keep the money because “the Term” supposedly never had a “conclusion” due to Vitol’s termination of the Agreement.

Affirming (mostly) the trial court’s decision in favor of Vitol, the court said that “The termination of the Agreement [by Vitol] is included in the expression, ‘the conclusion of the Term’”:

But, Targa is reading words out of the contract, for by its plain language, “Term” is defined to describe “[t]he term of this Agreement.“

Because “term” is a characteristic of “this Agreement,” it has no independent existence and cannot outlive the Agreement itself.

Stated differently, “Term” refers to the Agreement’s lifespan, and that lifespan reaches its conclusion not only when it is passively allowed to “expire” on its own, but also when it is actively terminated.

The parties recognized that both were possible outcomes and used the words “expiration” or “termination” as applicable. For example, the parties agreed that, “[n]otwithstanding any expiration or termination of this Agreement, each of the Parties shall remain liable for any unpaid amounts due and owing under this Agreement as of the termination or expiration of the Agreement.”

Targa also takes issue with the word, “conclusion.” In arguing that the Agreement’s Term has never “concluded,” Targa implicitly assumes that the Agreement’s Term reaches a “conclusion” only when it is allowed to expire naturally.

But “conclusion” is not contractually defined, so its common meaning applies. As Vitol points out, the common meaning of “conclusion” includes “termination.” The reverse is also true: “termination” is commonly defined to include “conclusion.”

If the drafters had intended the Term’s “conclusion” to mean only its “expiration date” as described in CTC section 3.2, then they presumably would have said so. “As a general proposition, using different language in different parts of a contract means the parties intended different things.”

Targa, 653 S.W.3d at 355-56 (cleaned up, extra paragraphing added).

DRAFTING LESSON:

1. When using the term “Term,” think hard about the implications.
2. Consider “roadblock” clauses to anticipate arguments that aggressive counsel will try to make. Example: Vitol cold have put, in the termination clause, that Targa would be required to comply with the Noble Account refund provisions — sure, that would technically violate D.R.Y., but it likely would have been work it.

See this guaranty:

1.  Guaranty. [START FRAG 1:] 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 [sic; that] 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”). [END FRAG 1] 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. [START FRAG 2:] 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). [END FRAG₂] 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

EXERCISE 1: Break up just Fragment 1; use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

I’ll show my rewrite in a few minutes.

Here’s a possible rewrite of Fragment 1:

1.  Guaranty. The Guarantor hereby absolutely and unconditionally guarantees prompt payment, when due, of any and all existing and future indebtedness and liabilities that arise from or are in connection with the “Credit Agreement,” defined below.

Each such indebtedness and liability is referred to generically as a “Debt.”

The term “Credit Agreement” refers to the Credit Agreement dated as of March 24, 2009, among the Borrower; [I changed the comma after “Borrower” to a semi-colon] Heald Capital, LLC; [note that I added an “Oxford semi-colon”] and the Lender, as amended, restated, supplemented or otherwise modified from time to time.

Capitalized terms used herein but not defined in this Guaranty and not defined herein +shall have the meanings ascribed +such terms to them stated in the Credit Agreement).

This Guaranty is a guaranty of payment and performance and not merely a guaranty of collection.

This Guaranty applies to each Debt that is not paid when due, whether the due date arises at stated maturity; by required prepayment; because of acceleration; on demand (when callable); or otherwise. ; and at all times thereafter.

The Debts covered by this Guaranty are those of every kind, nature and character.

Such a Debt could be direct or indirect; absolute or contingent; liquidated or unliquidated; voluntary or involuntary.

Such a Debt could be for principal; interest; premiums; fees; indemnities; damages; costs; expenses or otherwise.

For purposes of this Guaranty, it does not matter:

• whether a Debt is associated with any credit or other financial accommodation made to or for the benefit of the Borrower by the Lender or otherwise;
• when a Debt is created; nor
• whether a Debt may be (or hereafter becomes) unenforceable;
• whether a Debt is an allowed or disallowed claim under any proceeding or case commenced by or against the Guarantor or the Borrower under a Debtor Relief Law (defined below).

The term Debt encompasses (without limitation) all out-of-pocket costs, reasonable attorneys’ fees and expenses incurred by the Lender in connection with the collection or enforcement of a Debt.

For purposes of this Guaranty, the term “Debtor Relief Law” refers to one or more of the following in effect at the relevant time:

• the Bankruptcy Code (Title 11, United States Code) or any successor statute; and
• any other law concening liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief,
• of the United States (or any of its states) or other applicable jurisdictions,
• affecting the rights of creditors generally.

The term Debt also encompasses (without limitation) any interest that accrues after the commencement by, or against, the Borrower of any proceeding under any Debtor Relief Laws.

Emojis can be susceptible to disagreements about their meaning — see, for example, the so-called “chocolate ice cream” emoji 💩.

And from a criminal case: “[W]hile water [emojis] may reference sexual relations, case law also confirms that water can also refer to methamphetamine in drug trafficking communications.” United States v. Swanagan, No. 4:22CR-00003-JHM (W.D. Ky. Jan. 3, 2023) (denying motion to suppress wiretap evidence; citation omitted).

As with the contra proferentem rule (Comment:), if an emoji in a notice is ambiguous — that is, the emoji could plausibly have more than one meaning — then the ambiguity should be resolved against the party that used the emoji in the notice, on the theory that that party could and should have been more clear.

For additional information about the legal effect of emojis, see the emoji-related blog entries of law professor Eric Goldman, such as Emoji Law Year-in-Review for 2021 (blog.ericgoldman.org).

FACTS: An apartment lease states (in part): “The apartment shall be regularly serviced by a professional pest-control service.”

• QUESTION 1: This is an example of what? (Two words — and the words are not “passive voice,” although it is indeed an example of passive voice; I’m looking for two other words.)
• QUESTION 2: Is this an example of acceptable drafting? Why or why not?

FACTS: Same as the previous question.

• QUESTION 3: 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.)

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 4: Could the wording of this provision be improved? How?

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 5: What’s your response to Mary, and why?

1. 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.)
2. STUDENT TEXT: “a. Any shortfall or excess revealed by Tenant’s audit shall be paid 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 were to read the beginning of (a), and then go straight to (ii) without (i), then it wouldn’t be a coherent sentence, and it’s supposed to be that.
3. 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 ….”
4. 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.
5. 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.
6. 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.

As mentioned at the start of the semester: So that students will get a chance to work with others, on Wednesday we’ll reshuffle the groups, this time alphabetically by first name, with a few manual tweaks to get a better shuffle.

(Again, the names are listed here by first name only, so that the full names won’t be on the Web for all to see.)

6:00 p.m. class:

Group 1: Andrea, Jacob, Brittany, Edward
Group 2: Benjamin, David, Jared, Joel
Group 3: Josey, Laura, Lexi, Mackenzie
Group 4: Lily, Taylor, Venu, Victor

7:30 p.m. class:

Group 1: Ahmed, Brendan, Caroline S., Collin
Group 2: Austin, Andrew, Caroline T., John
Group 3: Jared, Justin, Maxwell, Yvonne
Group 4: Graves, Kevin, Nathan

(We’ll do one more reshuffling during the semester in late March.)

In anticipation of the upcoming homework assignment, you might want to look at this video and article (on your own).

From Mary, Queen of Scots prison letters finally decoded (TheGuardian.com Feb. 8, 2023): “Dr John Guy, a fellow in history The University of Cambridge who wrote the 2004 biography of Mary, Queen of Scots, said the findings are a ‘literary and historical sensation’ and mark the most important new find on Mary Stuart, Queen of Scots for more than 100 years.” (Emphasis added.)

As an experiment, I’m advance-posting some of my past comments about common mistakes in earn-out rewrites by students — use them as a guide in doing your own rewrite.

1.  In the event that If Seller shall timely reject timely rejects ….

2.  Seller shall have a period of has [or, will have ] 30 days ….

3.  In the event no Rejection Notice is received by Purchaser If Purchaser does not receive a Rejection Notice during such that 30-day period, then …

COMMENT: Note how this 30-day “shot clock” is tied to Purchaser’s receipt of a Rejection Notice — but what if Purchaser refuses the Rejection Notice?

4.  If Seller rejects an Earn-Out Calculation, such then the rejection notice (the “Rejection Notice”) [do we really need a defined term here?] shall is to set forth forth: (i) the reasons for such rejection in reasonable detail and set forth (ii) the amount of the requested adjustment.

5.  … and such The joint determination and any required adjustments resulting therefrom shall be final, conclusive, and binding on the Parties. [It’s now a separate sentence, but doesn’t need to be a separate paragraph.]

6.  … such the determination ….

7.  The Accounting Firm will is to allocate its fees and expenses between the Parties ….

8.  The Accounting Firm’s determination shall be is to be limited to resolving the disagreement set forth in the Rejection Notice.

Comment A: This should preferably be a separate paragraph.

Comment B: Consider instead: The Accounting Firm’s determination shall be authority is limited to resolving the disagreement set forth in the Rejection Notice. [This makes it clear that the Accounting Firm isn’t intended to be a binding arbitrator for any other matter -— at least not under this clause.]

9.  (At the beginning of the assignment:) Within 60 days after the last day of an applicable Earn-Out Year, Purchaser shall shall: [note the added colon]

OR: … Purchaser shall is to:

OR: … Purchaser shall is to do the following: [the phrase, “the following” is a signal to the reader that the sentence will continue in the following subdivisions — theoretically the colon alone does that, but it might be missed by a skimming reader]

10.  Payment to Seller from Purchaser will be is to be by wire transfer ….

11.  In the event If Seller and Purchaser are unable to do not agree upon the Annual Earn-Out Payment ….

(Preview:) Baseball arbitration is a great way to get parties to settle either-or disputes, such as disputes about:

• numbers; or
• what action would satisfy an imprecise standard such as “best efforts” or “commercially-reasonable efforts”

Here are a couple of recent Houston Astros examples:

– Cristian Javier: “Astros sign pitcher Cristian Javier to five-year contract extension worth $64 million … Javier was scheduled to face the Astros in an arbitration hearing on Friday, but the long-term contract rendered it moot.”

– Kyle Tucker: “The Houston Astros beat Kyle Tucker in arbitration on Thursday, and the All-Star outfielder will make $5 million rather than his $7.5 million request.” And:

Teams have won three of five decisions:

• All-Star pitcher Max Fried ($13.5 million) lost to Atlanta, reliever Diego Castillo ($2.95 million) was defeated by Seattle.
• Pitcher Jesús Luzardo ($2.45 million) and AL batting champion Luis Arraez ($6.1 million) both beat Miami.

(Edited.)

From The Economist:

When the quake hit, the apartment block in Osmaniye, a city in southern Turkey, where Halise Sen had once lived collapsed like a house of cards, burying her former neighbours under nine floors of concrete. Mrs Sen, the head of the local chamber of architects, looks over the wreckage. “There’s no reinforced steel here,” she says, “so the concrete lost its strength and the columns collapsed, along with the floors, as soon as the ground started to shake.”

None of the blocks had basements, says her husband Mustafa, a former developer. Buildings with such weak foundations were doomed in a strong earthquake, he adds. Mustafa, who now grows olives and walnuts, stopped working in the construction sector years ago. Other contractors were undercutting his prices and ignoring building codes. “If we used 100 tonnes of iron in a building, they would use 90 tonnes,” he says. Osmaniye sits near an active faultline. “I knew we were on the brink of catastrophe,” he says.

* * * 

Turkey has strict building codes, adopted in the wake of an earthquake that killed 18,000 people on the outskirts of Istanbul in 1999 and updated five years ago. Under an urban-renewal scheme thought up by Mr Erdogan’s government, more than 3m housing units have been renewed.

The problems lie in implementation and oversight. Building permits are easy to acquire and inspections are weak. Companies mandated by the government to carry them out are paid by the developers. Projects usually comply with government standards at the start of construction, but not by the end, says Mr Guvenc. As soon as the inspectors leave, developers reduce the amount or the quality of the iron they use or cut down on the number of stirrups, the steel loops that prevent beams and columns from buckling under pressure. They may even tack on an extra floor. Then they enter informal negotiations with local authorities. “A lot of money may end up changing hands,” says Mr Guvenc. “We are talking about corruption par excellence.”

This means the difference between life and death.

(Emphasis added.)

The other night our grand-cat was lying on the bed between us as we watched TV. I needed to look for the remote to fast-forward through commercials. But where was it — could the cat be lying on it?

Compare (me saying to my wife):

• “I really didn’t want to move the cat.”
• “I didn’t really want to move the cat.”

Break up just Fragment 2 from the above wall-of-words guaranty; use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

I’ll show my rewrite in a few minutes.

FACTS – from a 2021 Delaware chancery-court case:

1. A merger agreement provided, in section 8.1, that if the merger was not “closed” by a specified date, then either party could pull the plug (so to speak), that is, terminate the merger agreement, as long as that party’s breach was not responsible for the failure to close.
2. The merger agreement also stated in part as follows:

Section 8.2 Effect of Termination. In the event of any termination of this Agreement as provided in Section 8.1, the obligations of the parties shall terminate and there shall be no liability on the part of any party with respect thereto, except for … [list of surviving clauses omitted] … nothing contained herein shall relieve any party from liability for damages arising out of any fraud occurring prior to such termination ….

3. For reasons not important here, one of the parties:
   • pulled the plug, i.e., terminated the merger agreement, as provided in the aforementioned section 8.1; and
   • sued the other parties in Delaware chancery court for breach.
4. Citing section 8.2, the defendants filed a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, on grounds that section 8.2 precluded liability.
5. The plaintiff (i.e., the party that pulled the plug under section 8.1) claimed that the “no liability … with respect thereto” in section 8.2 meant no liability with respect to the termination itself, as opposed to no liability with respect to breach of the obligations of the Agreement. [DCT comment: That would be a pretty-typical intent on the part of the parties.]

The Delaware chancery court disagreed: “Under the Merger Agreement’s plain terms, Yatra extinguished its breach of contract claims when it elected to terminate the Merger Agreement” (emphasis added):

Of course, an agreement is not ambiguous simply because the parties disagree about its interpretation.

Rather, a contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.

By contrast, a contract is unambiguous when the agreement’s ordinary meaning leaves no room for uncertainty, and the plain, common, and ordinary meaning of the words lends itself to only one reasonable interpretation.

[Plaintiff’s] reading of the Effect of Termination provision stretches the words beyond their tolerance.

The comma following “Section 8.1” breaks the sentence, reading naturally to indicate the Merger Agreement’s drafters intended the phrase “with respect thereto” to modify “the obligations of the parties” as opposed to “any termination of this agreement.”

Further, [Plaintiff’s] position—that the provision only extinguishes liability arising from “any termination of this Agreement”—is inconsistent with the language immediately following “with respect thereto,” which “except[s]” certain obligations under the Merger Agreement, as specifically enumerated, from the effects of the contractual limitation of liability. That clause would be superfluous if the effect of the provision was to limit liability only arising from the act of terminating the Merger Agreement.

Moreover, contrary to Yatra’s contention that termination leaves claims for breach of contract based on prior acts unaffected, Section 8.2 expressly carves out only liability for “fraud occurring prior to such termination,” implying that liability for all other claims (including contract-based claims) for acts “occurring prior” to termination do no survive post-termination.

Yatra Online, Inc. v. Ebix, Inc., No. 2020-0440, slip op. at 23 (Del. Ch. Aug. 30, 2021) (quotation edited), aff’d w/o opinion, 276 A.3d 476 (Del. 2022).

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.)

From a real-world contract clause: “(4) Penalty for late payments: Late payments are subject to a penalty of 5%.”

EXERCISE: Spot the issues.

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

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

As mentioned at the start of the semester: So that students will get a chance to work with others, effective today we are reshuffling the groups, this time alphabetically by first name, with a few manual tweaks to get a better shuffle.

(Again, the names are listed here by first name only, so that the full names won’t be on the Web for all to see.)

6:00 p.m. class:

Group 1: Andrea, Jacob, Brittany, Edward
Group 2: Benjamin, David, Jared, Joel
Group 3: Josey, Laura, Lexi, Mackenzie
Group 4: Lily, Taylor, Venu, Victor

7:30 p.m. class:

Group 1: Ahmed, Brendan, Caroline S., Collin
Group 2: Austin, Andrew, Caroline T., John
Group 3: Jared, Justin, Maxwell, Yvonne
Group 4: Graves, Kevin, Nathan

I inadvertently omitted Chapter 13 (representations and warranties) from the reading list; I’ve added it to the reading for Mon. Mar 20, the day we return from spring break.

A tweet: “I just learned that today is Wife Appreciation Day. The wording is ambiguous. Does that mean you’re supposed to appreciate her or that she should appreciate you.”

(Most of the replies were in the vein of, for example, “You really want trouble, do you?”)

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4:

FACTS:

• MathWhiz and Gigunda have agreed (in part) that Gigunda will reimburse MathWhiz for MathWhiz’s out-of-pocket expenses.
• Gigunda’s services agreement template says that MathWhiz must comply with Gigunda’s expense reimbursement policy concerning what Gigunda will or won’t reimburse (e.g., no first-class travel).
• Mary Marvel, the MathWhiz CEO, asks what you think.

QUESTION 1: What advice do you have for Mary?

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 2: What do you think Gigunda’s motivation is?

QUESTION 3: Will MathWhiz even care? Why or why not?

QUESTION 4: What do you advise Mary Marvel?

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 5: From a purely-business perspective, what do we not know, that we might want to find out, before trying to advise Mary?

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 6: Is this a “safe” clause to include? Why or why not? (Think not just legally but also from a business perspective.)

FACTS: Gigunda wants the MathWhiz contract to say that if MathWhiz doesn’t submit an invoice for work within ten days after the end of the calendar quarter in which the work is done, then MathWhiz will be deemed to have waived payment of the invoice.

QUESTION 7: Why might Gigunda want this?

QUESTION 8: How might you advise MathWhiz about this?

QUESTION 9: What does “1% 15 days, net 30” mean?

FACTS: Assume that Gigunda is a Very Big Company, along the lines of ExxonMobil or Chevron.

QUESTION 10: Should you recommend that MathWhiz ask Gigunda to establish payment security?

FACTS: MathWhiz is asked, by a startup-company customer, to do a project that will require MathWhiz to invest a lot of time and resources. Mary Marvel asks you about options for payment security.

QUESTION 11: What might you advise Mary about payment security?

QUESTION 12: Would you want the startup-company customer to confirm itself that it has arranged for payment security? Or would it be better for MathWhiz to get more confirmation than that?

This weekend I’ll be grading the employment agreements that you drafted; here are some comments that I’ve harvested in previous semesters. Edit Feb. 20: I’ve finished the grading for all who submitted the assignment; I’m adding (starting at item 9) comments from grading your submissions.

1. General comment: It can be useful for executives to sign a “standard” employment agreement along with an addendum; see this blog post from 2015.

2. 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.”

3. 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).

4. TEXT: “MathWhiz agrees to employ you in the position of Director of Business Developer [sic; Development].”

   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, exercisable at Buyer’s discretion.

5. 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.

6. 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.”

7. 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)?

8. 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.

9. TEXT: “To the greatest extent not prohibited, you agree that you will be an ”at-will“ employee during the entire time of this Agreement.

   COMMENT: To the greatest extent not prohibit by what? By law? By some other agreement?

10. TEXT: “I. Duties and Scope of Employment.”

    COMMENT: Using Roman numerals isn’t the best idea for agreements of this type, because they get unwieldy and can be hard to reference.

11. TEXT: “For the term of your employment (“Employment”), the Company agrees to employ you ….”

    COMMENT: This is dangerous, because it implies that there’s a fixed and/or determinable term of employment, as opposed to “at will” employment as stated further in the student’s draft (and we don’t want to have to litigate whether one takes precedence over the other).

12. TEXT: “The Company may unilaterally amend this Agreement by providing at least five days’ notice to the you.”

    COMMENT: This would get pushback from Dave — and it’s not necessary, given that employment is at will.

13. TEXT: ““Employment relationship” means the contractual relationship between You and Company entered into under this Agreement and controlled by this Agreement.

    COMMENT: Hmm: This could arguably mean that terminating the employment relationship has the effect of terminating the employment agreement — and with it, the post-term noncompetition covenant, which would make your client MathWhiz very unhappy.

14. TEXT: “Dear Mr. Dave Doright”

    COMMENT 1: “Mr. Dave Doright” would be in the inside address of a letter; you wouldn’t use “Mr. Dave Doright” in the salutation. (For a business letter agreement, the salutation would be “Dear Dave:” — first name only, typically with a colon as opposed to a comma — or possibly “Dear Mr. Doright”)

15. TEXT: “We have agreed that you will continue to serve as an employee of MathWhiz until either you or MathWhiz terminates your employment.”

    COMMENT: You’d want to explicitly say “at will” because it’s a term of art that a judge would immediately understand.

16. TEXT: “/ s / Dave Doright”

    COMMENT: “s” means that it’s been signed by Dave Doright, so you wouldn’t include it here.

17. TEXT: Some students used bullets for their paragraphs.

    COMMENT: Numbering would be better than bullets, for easier referencing in the future.

18. TEXT: “The terms of this agreement can be subject to change.”

    COMMENT: This shouldn’t be included — for “at will” employment, it’s a given, so there’s no need to rub Dave’s face in it.

19. TEXT: “I have not relied upon any other verbal, oral, or written statements, other than the ones contained in this Employment Offer.”

    COMMENT: Good thought, but I think I’d leave it out.

20. TEXT: “The Company will pay you an annual salary of [$XXX,XXX.XX], payable in 24 semi-monthly payments.”

    COMMENT: You’d want to say “a salary at a gross annual rate of ….” for reasons discussed in class — the “24 semi-monthly payments” language would arguably support Dave’s argument that he’d be entitled to a full year’s salary if he were to be let go without cause.

21. TEXT: “This letter confirms our oral agreement ….”

    COMMENT: You probably don’t want this — the offer letter is “it”; you don’t want to leave a paper trail helping Dave to prove up a claim that there was a (supposedly-binding) oral agreement that (according to Dave) differed from what’s stated in the offer letter.

22. TEXT: “In consideration of your excellent qualifications and references, I look forward to you joining the MathWhiz team and have full confidence that you will make a significant contribution to our business development efforts.”

    COMMENT: I wouldn’t say “In consideration of your excellent qualifications and references” — if litigation were ever to ensue between MathWhiz and Dave, the inclusion of “In consideration …” could be offered into evidence by Dave’s lawyer as evidence that MathWhiz had an opportunity to check Dave’s references and hired him after doing so.

23. TEXT: “If these terms are agreeable, please countersign the enclosed copy of this letter and return it to me.”

    COMMENT: The “enclosed copy” bit is really old-school (as in, creakily geriatric); it’s what I showed in my Tom Arnold NDA example, but that was in the early 1980s; I seriously doubt that many people use this approach in this day and age of email for pretty much everything.

24. A couple of students’ submissions didn’t say anything about compensation — strictly speaking it’s not necessary, but it’s something that Dave likely will be very desirous of getting in writing.

25. TEXT (in transmittal email to Mary): “I hope this Agreement is adequate ….”

    COMMENT: I wouldn’t say this in an email to a client, even one I’d worked with for a long time — it doesn’t exactly bespeak confidence in one’s own work product ….

26. TEXT: “Upon accepting this agreement, your employment by MathWhiz shall be in compliance by the following terms and conditions (this ‘Agreement’).”
    • COMMENT 1: So it’s “your employment by MathWhiz” that will be accepting the agreement? (Look up “dangling participial phrase” – see, e.g., this article.)
    • COMMENT 2: So who is obligated by this sentence?
    • COMMENT 3: Also “shall be in compliance with the following” would not be the correct preposition; it’d be “shall be in compliance with the following ….”

We’re at almost exactly two years to the day since the Great Texas Blackout caused by Winter Storm Uri in February 2021, which 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.)

As has been reported and discussed at length in the ensuing two years, 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).

UPDATE: Debate still goes on about whether the Texas electricity grid is structured to provide incentives for maintaining reliable power. See, e.g., Shelby Webb, PUC to take next step on ERCOT market redesign (HoustonChronicle.com Jan. 19, 2023); Shelby Webb, Major PUC decision about Texas’ power market won’t be the end of debate (HoustonChronicle.com Jan. 9, 2023).

In your groups, using the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, break up the following, from an employment agreement for the vice-chairman of the board of The Men’s Wearhouse:

[BEGIN]

In addition to the Annual Salary, Employee shall have an opportunity to earn an annual cash bonus (the “Bonus”) in respect of each fiscal year of the Company in accordance with the terms of the Company’s annual cash bonus program for executive officers then existing for such fiscal year based on the achievement of performance objectives as may be established from time to time by the Board of Directors or a committee thereof; provided, however, that, except as otherwise provided herein, the Bonus for any fiscal year shall be payable to Employee only if Employee is employed by the Company on the date on which such Bonus is paid, except that if Employee remains employed by the Company through February 5, 2017 as contemplated hereunder, then Employee shall be entitled to receive any Bonus earned for the fiscal year ending January 30, 2017 notwithstanding the fact that Employee ceases to be an employee after February 5, 2017. In no event will such Bonus be paid later than the last day of the third month following the close of the Company’s fiscal year to which such Bonus relates. Employee’s target annual cash bonus opportunity shall be set from time to by the Board of Directors or a committee thereof, but such bonus opportunity shall not be less than 100% of Employee’s Annual Salary for any given year (the “Target Bonus”). The actual Bonus payable may be greater or lesser than the Target Bonus and shall be determined consistent with the criteria set for other senior management executives at the Company by the Board of Directors or a committee thereof, based on such factors as it shall determine.

[END]

DCT REWRITE:

[BEGIN]

(a) In addition to the Annual Salary, Employee shall have an opportunity to earn an annual cash bonus (the “Bonus”) in respect of each fiscal year of the Company.

(b) The Bonus (if any):

      (1) will be payable in accordance with the terms of the Company’s annual cash bonus program for executive officers then existing for such fiscal year; and

      (2) will be payable to Employee only if Employee is employed by the Company on the date on which such that Bonus is paid, except as provided in subdivision (d) below.

(c) The amount of the Bonus will be based on the achievement of performance objectives as may be established from time to time by the Board of Directors or a committee thereof of the Board., [moved up:] in a manner consistent with the criteria set for other senior management executives at the Company.

(d) If Employee remains employed by the Company through February 5, 2017, as contemplated hereunder, then Employee shall will be entitled to receive any Bonus earned for the fiscal year ending January 30, 2017 notwithstanding the fact that even if Employee ceases to be an employee after February 5, 2017.

(e) In no event will any such Bonus Any Bonus is to be paid no later than the last day of the third month following the close of the Company’s fiscal year to which such that Bonus relates. EXAMPLE: If the Company’s fiscal year ends on January 30, then the Bonus (if any) is to be paid no later than April 30 of the same year.

(f) Employee’s target annual cash bonus opportunity shall will be set from time to by the Board of Directors or a committee thereof of the Board.

(g) but such bonus opportunity shall not be less than Employee’s target annual bonus opportunity will be at least 100% of Employee’s Annual Salary for any given year (the “Target Bonus”); the actual Bonus payable may be greater or lesser than the Target Bonus.

[END]

(Bold-faced emphasis added for pedagogical purposes.)

Notes:

• In subdivision (c), note that I kept the passive voice for “the achievement of performance objectives” and did not say “Employee’s achievement of performance objectives ….” Why might that be?
• In subdivision (g), the deleted portion seems redundant in view of (b)(1).

From Joe Wallace, Swiss Trader Trafigura Hit by Suspected Nickel Fraud, Says It Could Lose $577 Million (WSJ.com Feb. 9, 2023):

Trafigura Group thought it was buying containers full of nickel. What showed up wasn’t nickel at all, the giant commodities trader said, describing itself as the victim of a “systematic fraud” that could cost it more than half a billion dollars. …

The trading house had dealt with Mr. Gupta’s companies for years without any problems, a spokesperson said. But in 2022 red flags began to emerge.

Cargoes purportedly containing nickel were taking longer to arrive at their destination than expected, a spokesperson said. They were also stopping off at more ports en route than expected, the spokesperson said, and the companies stalled on showing documentation. …

Trafigura started to inspect a small number of containers in Rotterdam, a person familiar with the matter said. When it opened them, they didn’t contain nickel, a silvery-looking metal that fetches around $30,000 a metric ton and whose price has shot up in line with demand for EVs.

Instead, the boxes had lower-value materials such as carbon steel, the person said. The financial charge Trafigura is taking reflects the hit from receiving less valuable, or in some cases potentially worthless, goods in place of the pricey nickel that it paid for.

From Order Granting in Part Plaintiffs’ Motion for Sanctions, No. 18-md-02843-VC (N.D. Cal. Feb. 9, 2023):

[At 1:] This case is an example of a wealthy client (Facebook) and its high-powered law firm (Gibson Dunn) using delay, misdirection, and frivolous arguments to make litigation unfairly difficult and expensive for their opponents. Unfortunately, this sort of conduct is not uncommon in our court system. But it was unusually egregious and persistent here. …

[At 1:] … Merely reciting this argument [about the required scope of document production] shows how ridiculous it is, but Facebook and Gibson Dunn repeated it over, and over, and over again—despite the presiding magistrate judge telling them many times that it made no sense. …

[At 2:] All the while, Facebook and Gibson Dunn had the audacity to accuse the plaintiffs’ lawyers of delaying the case, and to assert that the plaintiffs’ reasonable efforts to obtain obviously relevant discovery were frivolous. It’s almost as if Facebook and Gibson Dunn spent the better part of three years trying to gaslight their opponents, not to mention the Court. …

[At 37 n.10:] Orin Snyder, who served as lead counsel when Gibson Dunn’s conduct was at its worst, should consider himself lucky that he has not been sanctioned personally. Presumably this ruling will help ensure that he will not be so lucky if he acts this way again.

[At 53:] Facebook and Gibson Dunn are ordered to pay the plaintiffs $925,078.51 in sanctions. They are jointly and severally liable for this amount, and they must compensate the plaintiffs within 21 days of this ruling. To be sure, this amount is loose change for a company like Facebook, and even for a law firm like Gibson Dunn. But it’s important for courts to help protect litigants from suffering financial harm as a result of their opponents’ litigation misconduct. And hopefully, this ruling will create some incentive for Facebook and Gibson Dunn (and perhaps even others) to behave more honorably moving forward.

QUESTION: Do you think the ordered sanction will have the effect desired by the court?

Background: Citi Can’t Get Back $500 Million It Accidentally Wired To Revlon Lenders, Federal Judge Rules (see also the court’s findings of fact and conclusions of law)

From the S.D.N.Y.’s findings of fact (slip op. at 11-16): Three different people misinterpreted the information displayed on the wire-transfer software.

Second Circuit on Sept. 8: Vacated and remanded; “[t]he traditional rule of New York law governing mistaken payments generally calls for restitution of the mistaken payment unless the recipient so significantly changed its position in reliance on the mistake that it would be unjust to require repayment. … The facts were sufficiently troublesome that a reasonably prudent investor would have made reasonable inquiry, and reasonable inquiry would have revealed that the payment was made in error.” (Emphasis added.)

LESSON: It took two years — and who knows how much in legal fees — for Citi to get the Second Circuit to rescue it from an employee [foul]-up. “You get what you INspect, not what you EXpect.” (And: Second-checking can be a lifesaver.)

See here.

1. TEXT: The party seeking to terminate this Agreement pursuant to this Section 6.01(b)(ii) shall have will have must have used its reasonable best efforts to remove such Governmental Order or other action.

   COMMENT: “Reasonable best efforts” seems to appear in contracts, but it’s not entirely clear what it supposedly means. See the efforts-related reading assignments.

2. TEXT: Termination of this Agreement pursuant to Section 6.01(b)(ii) is not available to … (a) A party a party ….

   COMMENT: I wouldn’t capitalize the “A in ”(a) A party,“ inasmuch as subdivision (a) is part of the previous sentence, and capitalizing the ”A“ could give the reader the (mis)impression that it’s the beginning of a new sentence.

3. TEXT: IF: the The Terminating Party seeks to terminate this Agreement, THEN: the The Terminating Party must use its reasonable best efforts to remove any Governmental Order or other action under Section 6.01(b)(ii)(1)-(2).

   COMMENT: This shouldn’t be imposed as a positive obligation, but as merely a prerequisite — as in, “you’re not obligated to use RBE, but you can’t terminate if you didn’t use your RBE ….”

4. 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.

So how about with this version?

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 unless the terminating party failed to use its reasonable best efforts to remove the Order or action. [Emphasis added.]

5. OBLIGATION VS. PREREQUISITE:

Option 1: “A party subjected to a Governmental Order must make reasonable efforts to remove such Governmental Order or other action.”

versus:

Option 2: “A party subjected to a Governmental Order may not terminate this Agreement under Section 6.01(b)(ii) unless that party made reasonable best efforts to remove such Governmental Order or other action.”

QUESTION: Suppose that Party A is subjected to a Governmental Order but doesn’t use reasonable efforts — what are Party B’s options? Can Party B sue Party A for breach of contract?

From this essay about the eight-hour Get Back documentary, referring in this quote to Paul McCartney:

We see a toothy, boyish, involuntary grin, different to [sic; from, or than] his practiced public smile, which lights up his face when John makes a joke or Billy Preston plays a ravishing lick on the keyboard.

QUESTION: Which of these “lights up [McCartney’s] face” — his involuntary grin? Or his practiced public smile? (The answer should be obvious, but the words themselves leave this open.)

QUESTION: How could this ambiguity be resolved with just a change of internal punctuation?

FACTS: A partner in your firm sends you the following email: “Hey [your name], I’m heads-down on another matter — attached is a draft of a consulting-services agreement that I’m helping one of my clients negotiate; it has an interest clause in it, quoted below. Please make a recommendation about what I should say to the client about it.” The interest clause is the following:

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 as far as what the partner should say to the client?

FACTS: You have a school-aged daughter (let’s say). You want to bribe reward her if she makes straight-A grades for a given report-card period.

QUESTION: Which of the following would she prefer — and why:

• Option A: “I’ll pay you $100 at the end of the reporting period unless your report card has any grade less than an A.”
• Option B: “I’ll pay you $100 at the end of the reporting period if you show me your report card and it has all A’s.”

(This is a preview exercise for Chapter 16, coming up next month.)

FACTS:

1.  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.

2.  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.

3.  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?

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.)

This online article is by Kyle Mitchell, a (younger) lawyer friend of DCT in California. EXCERPT:

For example, many big companies’ form master procurement agreements obligate vendors to replace personnel the customer objects to, for any reason at all. If that person’s role happens to be account manager, and your company has a dozen of those, you might assume you’ll have a replacement to hand.

But even so, you’re betting that bad things won’t happen, and won’t happen at once. If they do, you’ll get stuck scrambling to train, recruit, or contract a new sub.

If you happen to be a small startup of three people without a reserve mountain of cash, you run a higher risk.

• Any objection could mean hiring someone you did not intend to hire, or at least not hire yet.
• You might accelerate plans and take that person on ahead of schedule … and get a termination notice soon after, or fail to renew the deal. After all, the customer’s already unhappy with at least part of the relationship. Now you’re firing someone you never really wanted to hire in the first place.

Solution?

• Add a “reasonableness” limit on the customer’s veto, to your obligation to replace, or both.
• Put a hard numeric limit on the number of people they can ding, like one per year, or tie it to fees paid.
• Or just strike the whole concept of a designated, replaceable person.

(Extra paragraphing and bullets added.)

In small groups, be ready to discuss these:

1. What happened to the Trump Organization when one of its contract clauses “boomeranged” on it? (This was in 2015 before Donald Trump announced his presidential candidacy.) (Hint: That part of the reading was here.)
2. What’s DCT’s view of the term, “true and correct”? Do I have a preferred alternative? If so, why?
3. In the Fail-Safe NDA case, what exactly went wrong for the plaintiff — as in, what did the plaintiff’s business people likely do, or not do, that caused problems for the plaintiff? (The reading: Here.)
4. Any speculation about the historical basis for using “provided, however, that ….” (emphasis added) in wall-of-words contract provisions? (Hint: It’s been in past reading.)

From an employment agreement for the vice-chairman of the board (!) of The Men’s Wearhouse:

… In the event of termination of Employee’s employment, other than for “cause”, as described in Section 7, or by reason of voluntary termination as described in Section 8, a number of unvested shares of Restricted Stock shall immediately vest equal to 19,360 times a fraction the numerator of which shall be the sum of (i) the number of days from and including the most recent February 6 to and including the Termination Date (as defined below) and (ii) the lesser of 730 or the number of days from the Termination Date to and including the second following February 5, and the denominator of which shall be 365; any other unvested shares of Restricted Stock shall immediately terminate and be of no further force or effect.

(Emphasis added.)

This brought to mind Monty Python’s Holy Hand Grenade of Antioch scene from Monty Python and the Holy Grail:

And the Lord spake, saying, “First shalt thou take out the Holy Pin. Then shalt thou count to three, no more, no less. Three shall be the number thou shalt count, and the number of the counting shall be three. Four shalt thou not count, neither count thou two, excepting that thou then proceed to three. Five is right out! Once the number three, being the third number, be reached, then lobbest thou thy Holy Hand Grenade of Antioch towards thy foe, who, being naughty in My sight, shall snuff it.

Here’s a possible rewrite, along the general lines of NCD § 7.11:

[x]. Accelerated vesting.

(a) This section will apply if either of the following occurs:

      (1) the Employee’s employment is terminated by the Company, other than for “cause”, as described in Section 7; or

      (2) the Employee resigns for “good reason” as set forth in Section 6.

(b) When this section applies, a certain number of previously-unvested shares of the Employee’s Restricted Stock will immediately vest as follows:

• No. of shares vesting = 19,360 x Vesting Fraction (defined below)
• Vesting Fraction = Additional Vesting Days (defined below) / 365

• Additional Vesting Days = The sum of:

          (i) the number of days: (x) from and including the most recent February 6; (y) to and including the Termination Date (as defined below); and

          (ii)  the lesser of (x) 730, and (y) the number of days from the Termination Date to and including the second following February 5.

(c) Any other unvested shares of Restricted Stock will immediately terminate and be of no further force or effect [sic].

FACTS:

• Groups 1 and 3: You represent MathWhiz, which wants you to draft and help negotiate a long-term master data-processing services agreement (“MSA”) with Gigunda.
• Groups 2 and 4: You represent Gigunda.
• The MSA will serve as a master agreement with detailed terms and conditions — but the only actual work and payment obligations will be as set forth in any agreed “Work Orders” (sometimes called “Statements of Work”) that incorporate the MSA by reference.

ASSIGNMENT: ABOUT ASSIGNMENTS:

1.  Build a list of clause requests for your respective clients about whether MathWhiz can “assign” the MSA and/or any particular Work Orders. (You might want to scan through the upcoming reading assignment about assignments.)

• Consider whether it’d be “kicking a sleeping dog” for either party to bring up the subject of assignments.
• Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

2.  Negotiate with each other.

From a real-life contract drafted by The Other Side of a deal (sanitized):

Within thirty (60) days of the close of previous quarter term, ABC shall provide XYZ with a revenue report that provides a total amount of Data Revenue and Software Revenue obtained by ABC during the referenced quarter term, minus any associated costs or expenses and customer returns or refunds (“Revenue Report”).

QUESTIONS:

1. Any drafting problems with this?
2. Ignoring the substance, how might this be otherwise improved to make it more readable? Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4. (Note: In the real world, the above clause isn’t that bad, so you probably wouldn’t rewrite it if the other side drafted it.)

ANSWERS: (DCT to show his version)

In small groups, be ready to discuss these:

1.  What does the reading material mean by the phrase, “hamburger for the guard dog”? Does tonight’s in-class work suggest a good example to illustrate the point? (The reading: Here.)

2.  In the Tilly’s case, how did the company’s contract language boomerang on the company? (The reading: Here.)

3.  Did Conan O’Brien’s lawyers do it right, or did they screw up, when he negotiated his Tonight Show hosting contract with NBC? (The reading: Here.)

https://www.sec.gov/news/press-release/2022-173

QUESTION: If all else fails in trying to interpret a contract provision, what two-word Latin maxim about “against the drafter” will courts often follow?

This is a provision from a real-life contract form provided by Customer.

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

1. Break up the “wall of words” in the provision below to make it more readable — think about whether a conversational style would work for some or all of it.
2. Fix any drafting errors you see — including “style” errors, as though you were using the language below as a “go-by” in preparing your own first draft.
3. As the attorney for Provider, build a list of substantive issues to discuss with Provider, e.g., whether Provider wants to offer up a particular term on the front end, or whether Provider instead wants to keep that term in reserve as a potential negotiation concession.

–BEGIN QUOTE–

Provider warrants that it has with respect to all Provider’s Personnel who are expected to perform Services under this Agreement: (i) conducted background checks; (ii) conducted checks against relevant persons-wanted lists published by national or international law enforcement bodies, the Consolidated Screenings List compiled by the United States Departments of Commerce, State, and Treasury, and any comparable lists maintained by non-U.S. authorities that are applicable to the activities engaged in under this Agreement (collectively “Government Sanctions or Watch List”); (iii) verified all qualifications used as a condition of employment (e.g., education, licensing, certifications, references, previous employers, etc.); and (iv) conducted a credit history review if the position pertains to a position of substantial trust such as involving large sums of money or substantial assets of value where theft or similar financial improprieties could reasonably occur. At a minimum, background checks required in (i) above shall include the checking of criminal convictions for any offenses other than minor traffic violations for all geographic areas wherein such individual have resided during the past five (5) years. Should any member of Provider’s Personnel appear on a Government Sanctions or Watch List, or the background checks or verifications disclose inaccurate or false information, a criminal conviction record, credit history or factors that could bear upon the desirability of a particular individual performing Services under this Agreement, Provider will advise Customer of the result of the check.  Customer shall have the right to request that Provider remove from the Services or Customer’s or its Affiliate Companies’ premises, any such individual. Provider shall be responsible for complying with any notice requirements associated with such disqualification as may be established by Applicable Law. Provider warrants that it has, by operation of law or valid agreements with Provider’s Personnel, the right to obtain this information and to disclose it to Customer as required herein, to the extent reasonably practicable. Additionally, Customer shall have the right to conduct additional background checks on Provider’s Personnel who will be performing Services for Customer. Provider shall take all actions and execute all documents and shall cause Provider’s Personnel to take all actions and execute all documents as are necessary to assist Customer in this process.

–END QUOTE–

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

FACTS: Your elderly, childless Uncle Ed is selling his car to a stranger and wants your help. He says he doesn’t know of any mechanical problems.

QUESTION 1: If the stranger asks Uncle Ed to represent and warrant in writing that the car has no problems, how might Uncle Ed respond as to the requested representation?

QUESTION 2: How might Uncle Ed respond as to the requested warranty?

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:

• do due diligence as to The Other Side’s ability to pay;
• ask for one or more sources of payment security (readings § 22.119) such as a standby letter of credit and/or personal guaranties (readings § 22.74).

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: Are there any disadvantages to including the items listed in #1 above?
3. FACTS:
   • MathWhiz’s Mary Marvel asks you to review a contract form that’s provided by a prospective MathWhiz supplier.

   • The contract form includes a statute-of-limitations provision as follows: “Any action for breach of this Agreement must be brought within three months year after the date of execution of this Agreement.”

     QUESTION: Any issues here?

4. SAME FACTS AS #3: The contract says: “Either party may terminate this Agreement if the other party materially breaches this Agreement and fails to cure the breach within ten (10) business days after the non-breaching party gives notice of the breach.” QUESTION: Any issues here?

From a presidential tweet (by President Trump) of April 3, 2017: “Such amazing reporting on […] the crooked scheme against us by @foxandfriends. …” (Hat tip: Chris Richardson.)

QUESTION: How could this be rewritten to clarify?

Question 7: Conventionally, “net 10 days” uses digits, even though ordinarily “ten” is spelled out.

Question 9: We don’t know whether net 10 days is “enough time” for payment because we don’t know which side we represent — the payer, or the biller.

Question 13: The federal Fair Credit Reporting Act imposes advance-consent requirements in all states, including Texas.

Question 16: Invoices: The “phrase that pays” is internal controls. (Invoices also give the billing party a convenient way of tracking payments owed, a.k.a. “accounts receivable.”)

Excerpt from the cert. petition in Pulsifer v. United States, No. 21-609 (cert. granted today):

The “safety valve” provision of the federal sentencing statute requires a district court to ignore any statutory mandatory minimum and instead follow the Sentencing Guidelines if a defendant was convicted of certain nonviolent drug crimes and can meet five sets of criteria. See 18 U.S.C. § 3553(f)(1)–(5).

Congress amended the first set of criteria, in § 3553(f)(1), in the First Step Act of 2018, Pub. L. No. 115-391, § 402, 132 Stat. 5194, 5221, broad criminal justice and sentencing reform legislation designed to provide a second chance for nonviolent offenders.

[Here comes the salient point:] A defendant satisfies § 3553(f)(1), as amended, if he “does not have—(A) more than 4 criminal history points, excluding any criminal history points resulting from a 1-point offense, as determined under the sentencing guidelines; (B) a prior 3-point offense, as determined under the sentencing guidelines; and (C) a prior 2-point violent offense, as determined under the sentencing guidelines.” 18 U.S.C. § 3553(f)(1) (emphasis added).

The question presented is[:]

• whether the “and” in 18 U.S.C. § 3553(f)(1) means “and,” so that a defendant satisfies the provision so long as he does not have (A) more than 4 criminal history points, (B) a 3-point offense, and (C) a 2-point offense (as the Ninth Circuit holds), or
• whether the “and” means “or,” so that a defendant satisfies the provision so long as he does not have (A) more than 4 criminal history points, (B) a 3-point offense, or (C) a 2-point violent offense (as the Seventh and Eighth Circuits hold).

(Emphasis, extra paragraphing, and bullets added.)

QUESTION: How could the congressional staff have clarified the intended meaning when drafting the amendment to the First Step Act?

The Demcratic-majority National Labor Relations Board — overruling a decision by the Republican-majority Board issued during the Trump presidential years — has said:

[A]n employer violates Section 8(a)(1) of the Act when it proffers a severance agreement with provisions that would restrict employees’ exercise of their NLRA rights. …

Where an agreement unlawfully conditions receipt of severance benefits on the forfeiture of statutory rights, the mere proffer of the agreement itself violates the Act, because it has a reasonable tendency to interfere with or restrain the prospective exercise of Section 7 rights, both by the separating employee and those who remain employed. …

Examining the language of the severance agreement here, we conclude that the nondisparagement and confidentiality provisions interfere with, restrain, or coerce employees’ exercise of Section 7 rights. Because the agreement conditioned the receipt of severance benefits on the employees’ acceptance of those unlawful provisions, we find that the Respondent’s proffer of the agreement to employees violated Section 8(a)(1) of the Act.

McLaren Macomb and Local 40 RN Staff Council, OPEIU, 372 NLRB No. 58, at 7-8 (Feb. 21, 2023) (opinion) (cleaned up, emphasis added); explained in this Bryan Cave memo.

From Variety:

On a Thursday earnings call, Warner Bros. Discovery CEO David Zaslav announced that newly-installed studio leaders Mike De Luca and Pam Abdy have brokered a deal to make “multiple” films based on the beloved J. R. R. Tolkien books.

TERM-SHEET EXERCISE: In your groups, make an initial list of business terms that your respective clients might want in a deal of this kind. (Hint: Consider the assigned reading for this week. Don’t worry about the intellectual-property aspects.)

• Groups 1 and 3 represent whoever owns the rights to the LotR books and characters.
• Groups 2 and 4 represent Warner Bros.

As usual, feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

Last week Amazon closed its acquisition of One Medical (formally, 1Life Healthcare, Inc.).

Here’s the Agreement and Plan of Merger, from the Securities and Exchange Commission’s EDGAR Web site.

Note that the agreement is “Exhibit 2.1” of a Form 8-K filing; it’s also part of a proxy statement sent to One Medical shareholders to get them to approve the transaction.

QUESTIONS:

1. What was to happen at the “Closing”? (See Article I of the Agreement — note the numbering scheme used in the Agreement for “Articles” and “Sections.”)
2. In Section 7.02(d), what must an officer of the “Company” (i.e, One Medical) certify?
3. If no One Medical officer was willing to sign the certificate referred to in #2 above, would Amazon be able to sue One Medical for breach of contract for that alone?
4. Name one thing that would allow One Medical to walk away from the deal but would not allow One Medical to sue Amazon for breach of contract.

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

See this blog post (I’ll play the video clip).

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

1. QUESTION: Name four examples of “Hollywood accounting.” (I’ll ask each group for an example.)

2. FACTS: MathWhiz is ordering some expensive, high-powered computer gear from a supplier in Singapore, to be delivered to Ulaan Baatar (the capital of Mongolia).

   QUESTION: Would MathWhiz prefer that delivery of the equipment be made under: 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 successive new project’s “statement of work” under the master services agreement become an addition to that agreement, versus
   • having each new statement of work be a separate agreement that incorporates the master agreement by reference?

4. FACTS: Gigunda asks MathWhiz to send Gigunda a sales quotation (a “quote”) for data-processing services for a different project.

   QUESTION: Why might MathWhiz want its quote 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?

6. FACTS: Same as in #5.

   QUESTION: As ABC’s lawyer, how might you structure the contract to accommodate Customer’s likely desires — and to protect Supplier?

7. 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, referred by MegaLeads, 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?

From an E.J. Dionne column in the Washington Post, quoting then-House Minority Leader Kevin McCarthy: “We should ensure women only compete in women’s sports.”

QUESTION: Was now-Speaker McCarthy suggesting that women’s professional-tennis pioneer Billie Jean King should not have played (and beaten) Bobby Riggs in 1973’s legendary “Battle of the Sexes”?

QUESTION: How could McCarthy’s quote be rewritten in two different ways to clarify each meaning?

You previously rewrote an audit clause — now work together to draft a bare-bones, one-paragraph audit clause that you could save for use as a “hamburger for the guard dog” provision. Use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

Let’s look at the following example of “readability malpractice per se,” from the Agreement and Plan of Merger, which we discussed briefly last time — the drafting of which presumably was overseen by partners Krishna Veeraraghavan and Kyle Seifried of Paul, Weiss, Rifkind, Wharton & Garrison LLP (see Section 9.02, notices).

QUESTIONS:

1. As a lawyer, which version would you prefer:
   • to draft?
   • to review as the supervising partner — or as the non-drafting party?
   • to revise if changes needed to be made?
   • to proof-read one last time before signature?
2. As a client, which version would cost you less money for the above law-firm and in-house activities?

ORIGINAL:

Section 3.03, Capitalization.

(a) [omitted]

(b) As of the close of business on July 18, 2022, (i) 195,170,531 shares of Company Common Stock were issued and outstanding, all of which are duly authorized, validly issued, fully paid and nonassessable and were issued free of preemptive (or similar) rights, (ii) no shares of Company Common Stock were held in the treasury of the Company, (iii) no shares of Company Common Stock were held by the Company Subsidiaries, (iv) no shares of Preferred Stock were issued (whether outstanding or held in the Company’s treasury), (v) 52,973,002 shares of Company Common Stock are reserved for future issuance in connection with the Company Stock Plans and the Purchase Plan (including 28,040,107 shares of Company Common Stock subject to outstanding Company Stock Options (assuming satisfaction of any market or performance conditions at maximum levels) and 11,324,697 shares of Company Common Stock subject to outstanding Company Restricted Stock Unit Awards, 6,562,538 shares of Company Common Stock reserved for issuance under the Company Stock Plans, and 7,045,660 shares of Company Common Stock reserved and available for issuance under the Purchase Plan, (vi) 9,252,432 shares of Company Common Stock were reserved for issuance pursuant to the Indenture and (vii) 437,741 shares of Company Common Stock were reserved for issuance pending the tender of letters of transmittal pursuant to the Agreement and Plan of Merger, dated June 6, 2021, by and among the Company, SB Merger Sub, Inc., Iora Health, Inc. and Fortis Advisors LLC, solely in its capacity as the representative of the stockholders of Iora Health, Inc. Since the close of business on July 18, 2022, through the date hereof, (x) no shares of Company Common Stock have been issued, except pursuant to the exercise of Company Stock Options or settlement of Company Restricted Stock Unit Awards, in each case, outstanding on or prior to the close of business on July 18, 2022, and (y) no grants of Company Stock Options or Company Restricted Stock Unit Awards have been made. Except for the Convertible Notes and as set forth in this Section 3.03, there are no options, warrants, calls, subscriptions or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued shares or other equity interests or capital stock of the Company or any Company Subsidiary or any securities convertible into or exchangeable or exercisable for any such shares, capital stock or other equity interests, or any other rights or instruments that are linked in any way to the price of the shares of Company Common Stock or any shares of capital stock of any Company Subsidiary, the value of all or any part of the Company or any Company Subsidiary (the “Equity Interests”), in each case, obligating the Company or any Company Subsidiary to issue, sell or grant any such Equity Interests. All shares of Company Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable and free of preemptive (or similar) rights.

[Subdivisions (c) through (e) omitted]

REWRITE:

(b) [Rewritten:] The following table (with its accompanying notes) sets forth the shares of Company Common Stock and Preferred Stock that existed as of the close of business on July 18, 2022: [DCT COMMENT: In the table below, the right-hand column would be right-justified so that the numbers are flush-right.]

CATEGORY	NO. OF SHARES
(i) Issued and outstanding [a]	195,170,531
(ii) Held in the treasury of the Company	0
(iii) Held by Company Subsidiaries	0
(iv) Preferred Stock issued	0
(v) Total reserved for future issuance under certain plans [b]	52,973,002
Subject to outstanding Company Stock Options [c]	28,040,107
Subject to outstanding Company Restricted Stock Unit Awards	11,324,697
Reserved for issuance under the Company Stock Plans	6,562,538
Reserved and available for issuance under the Purchase Plan	7,045,660
(vi) Reserved for issuance pursuant to the Indenture	9,252,432
(vii) Reserved for issuance for Iora Health merger [d]	437,741

Notes:

      [a] All duly authorized, validly issued, fully paid and nonassessable and were issued free of preemptive (or similar) rights.

      [b] Reserved for future issuance in connection with the Company Stock Plans and the Purchase Plan.

      [c] Assumes satisfaction of any market or performance conditions at maximum levels.

      [d] Reserved for issuance pending the tender of letters of transmittal pursuant to the Agreement and Plan of Merger, dated June 6, 2021, by and among the Company, SB Merger Sub, Inc., Iora Health, Inc. and Fortis Advisors LLC, solely in its capacity as the representative of the stockholders of Iora Health, Inc.

[DCT COMMENT: At this point, I split off the rest of original subdivision (b) and created new subdivisions (c) through (e), so the original subdivisions (c), (d), etc., would be “bumped down” alphabetically.]

(c) Since the close of business on July 18, 2022, through the date hereof,

      (i) no shares of Company Common Stock have been issued, except pursuant to the exercise of Company Stock Options or settlement of Company Restricted Stock Unit Awards, in each case, outstanding on or prior to the close of business on July 18, 2022, and

      (ii) no grants of Company Stock Options or Company Restricted Stock Unit Awards have been made.

(d) Except for the Convertible Notes and as set forth in this Section 3.03, there are no options, warrants, calls, subscriptions or other rights, agreements, arrangements or commitments of any character relating to the “Equity Interests,” defined as the following:

      (i) the issued or unissued shares or other equity interests or capital stock of the Company or any Company Subsidiary; or

      (ii) any securities convertible into or exchangeable or exercisable for any such shares, capital stock or other equity interests, or

      (iii) any other rights or instruments that are linked in any way to the price of[:]

• the shares of Company Common Stock or
• any shares of capital stock of any Company Subsidiary,
• the value of all or any part of the Company or any Company Subsidiary[,]

(the “Equity Interests”), in each case, obligating the Company or any Company Subsidiary to issue, sell or grant any such Equity Interests. [DCT COMMENT: Note how THIS paragraph is not indented, to show that the “in each case” language applies to all of subdivision (d) and not just to, say, subdivision (d)(iii).]

(e) All shares of Company Common Stock subject to issuance as aforesaid [huh?] — upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable — [DCT COMMENT: Note the change from commas to em-dashes] will be duly authorized, validly issued, fully paid and nonassessable and free of preemptive (or similar) rights.

FACTS: Consider a contract for the purchase of 1,000 small electric motors, which Buyer — your client — intends to use in manufacturing small, battery-powered nose-hair trimmers. (Yes, there is such a thing.) All parties are in Texas. The contract, drafted by Seller, states in part as follows:

Seller warrants to Buyer, for 30 days after delivery, that the motors will have a service life of at least one hundred (100) hours.

QUESTION 1: What if anything is wrong with this provision? (Hint: Think about the business aspects of the provision.)

MORE FACTS: A summer associate is reviewing and redlining Seller’s draft contract for you on behalf of your client Buyer. The summer associate notices that there is no disclaimer of implied warranties in the draft. After looking up the Tango Terms implied-warranty disclaimer language, the summer associate inserts the following text into the draft (with redlining, of course):

Seller DISCLAIMS all other warranties, express or implied.

QUESTION 2: What if anything is wrong with this provision?

In a Slow Boring political newsletter, Matthew Yglesias talks about how some people are vegans, some try to cut back on meat for ethical reasons, and some are concerned about humane conditions in which animals are rasied for slaughter. Then comes this:

But absolutely nobody I know who is anywhere on the spectrum of concern about animal welfare is confused as to why Joe Biden isn’t giving speeches about this or doing “animal welfare is infrastructure” tweets and getting mad at Congress.

Notice how much “distance” there is between the subject (“absolutely nobody I know”) and the verb (“is confused”); that makes it more difficult for the reader to figure out what the sentence is supposed to be about.

Here’s one possible rewrite of the quoted sentence:

But of all the people I know who are anywhere on the spectrum of concern about animal welfare, absolutely none of them is confused as to why Joe Biden isn’t giving speeches about this (or doing “animal welfare is infrastructure” tweets) and getting mad at Congress.

Here’s another possible rewrite of the quoted sentence:

I know a lot of these people who are at various points on the spectrum of concern about animal welfare — and absolutely none of them is confused as to why Joe Biden isn’t giving speeches about this (or doing “animal welfare is infrastructure” tweets) and getting mad at Congress.

Per a student’s request, I created this (sanitized) excerpt from a markup that I did for a client last week.

11. 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.
    • COMMENT B: You might consider adding some kind of “fence,” e.g., gotta be reasonably available during working hours in MathWhiz’s time zone.
12. 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 (or a noncompetition covenant supported by 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.
13. 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 — and it’d be unlikely to be mentioned in an employee handbook.
    • COMMENT B: If the Company were to terminate for cause, there’d typically be NO severance.
14. 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 [blank] 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.
15. 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.”
16. 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.
    • COMMENT 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.

When designing “business plans” for contracts, think about the humans who will have to carry out the contract’s obligations and exercise its rights.

See Gabby Birenbaum, Accidents Waiting to Happen, Wash. Monthly, Jan/Feb./Mar. 2022, reviewing Jessie Singer, There Are No Accidents: The Deadly Rise of Injury and Disaster—Who Profits and Who Pays the Price (2022).

Excerpt from Birenbaum review:

In Singer’s telling, mistakes are inevitable. Injury and death should not be.

But our workplaces and politics mete out individual punishment for mistakes, rather than preventative [sic; preventive] measures that make such mistakes less lethal.

We’re terrible at holding institutions accountable for their systemic errors even as we hunt for individual culprits.

AND: A 26-year-old Cuban immigrant living in Houston, with a recently-acquired commercial drivers license, was sentenced to 110 years in Colorado prison for vehicular manslaughter after he lost control of a runaway truck carrying lumber — causing a 28-vehicle accident that killed four people and injured six others. See Kevin Davis, Runaway Sentences, ABA Journal, Oct./Nov. 2022, at 38. (Colorado’s governor commuted the driver’s sentence to ten years.)

A comment from activist Jason Flom (son of legendary M&A lawyer Joe Flom):

“I mean, this is not a guy who did anything on purpose,” Flom says. “The culpability lies more with the people who didn’t train him and put a 23-year-old kid with limited training behind the wheel of a massive 18-wheeler.”

And from a Houston lawyer representing one of the victims in a lawsuit against the broker that arranged the lumber transport:

Federal Department of Transportation records show that [the driver] was not properly trained before taking the fatal journey. “The carrier did not ensure this entry-level driver received required training prior to operating in interstate commerce.” He had been fired from his previous job because he did not know how to drive a stick shift.

“They should have never put that guy in a truck,” McCormick says. “He was in way over his head driving a tractor-trailer. It would be like possessing a pilot’s license for a Cessna and piloting the space shuttle.”

LESSON: Don’t be afraid to ask (tactful) questions of your supervising partner, and/or your client, about safety matters, and even just business efficacy.

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?

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?

Think about what it takes to get thousands of different consumer products actually, physically onto the shelves at Walmart, Target, H-E-B, etc. — including, for example:

• Who will bear the cost of getting products from the grocery store’s receiving dock, into the “back room,” and ultimately onto the correct shelves;
• Who will bear the cost of correcting mistakes in labeling, bar-coding, etc.

Apropos of those questions, see Daniela Sirtori-Cortina, Retailers Crack Down on Suppliers With Harsher Rules for Orders (Bloomberg.com Oct. 3, 2022). Excerpt:

Walmart recently rolled out extra levies for suppliers using its transportation services.

The company is telling suppliers that their shelf space will be reviewed more frequently than in the past, a person familiar said, and that vendors with persistent out of stocks could see their products quickly replaced.

 * * *

Store operators that grappled with empty shelves over the past three years say that penalties encourage vendors to get their supply chains in order to avoid out of stocks, which in 2021 cost consumer-goods retailers $82 billion, according to NielsenIQ.

 * * *

Artisan coffee purveyor Bean Box, which entered Walmart this year, uses a workaround: It only bills the retailer for the number of cases that actually made it to a distribution center, not for the number ordered.

That way invoices won’t get held up over the difference, allowing the coffee firm to get paid on time, said Chief Executive Officer Matthew Berk.

“We’ve engineered our whole process to be as Walmart-friendly as possible,” he said.

(Formatting modified.)

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.)

See this thread by Jack Shepherd.

(This is partly a preview of the upcoming reading on reps and 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!)

FACTS: In the negotiation of a master services agreement, Gigunda wants the agreement to contain a most-favored customer (“MFC”) clause.

EXERCISE: Draft the MFC clause, as follows:

• Groups 1 and 3: You represent Gigunda.
• Groups 2 and 4: You represent MathWhiz.

BE SURE to address how the MFC clause will be administered as time goes on.

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

(The relevant reading was here.)

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 [barista]: sorry, we only take cash

manager: can I talk to you

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

17. TEXT: “Salary will be reviewed each year ….”

    COMMENT: This language triggers the question: Reviewed by whom? (Is this a false imperative?)

    QUESTION: What would you suggest as an answer to the “Reviewed by whom?” question above?

18. 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, “… that may be offered by MathWhiz 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.

19. 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.

20. One student created a formal employment agreement and used the defined term “You” for Dave Doright. COMMENT: 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.
21. 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.

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 1: What might you want to tell Mary?

QUESTION: How — and why — might you document that you told this to Mary?

(Consider the reading.)

(The reading was here.)

FACTS: Same as the fact pattern on Mon. Feb. 13:

• MathWhiz and Gigunda are negotiating a five-year master services agreement as “pre-negotiated” terms and conditions (a.k.a. “T&Cs”) for any projects that Gigunda and MathWhiz agree to undertake.
• Gigunda wants to limit pricing increases for MathWhiz’s services.

TEAMS: Again:

• Groups 1 and 3 represent Gigunda;
• Groups 2 and 4 represent MathWhiz.

EXERCISE:

• Each group is to come up with a “hamburger for the guard dog” proposal for pricing limitations.
• Then the groups will discuss.

Here’s my revision of the “Termination” clause homework:

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) subject to subdivisions (c) and (d): any Governmental Authority of competent jurisdiction shall have has issued or entered any Governmental Order or taken any other action permanently restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the Sale and the Reorganization Transactions, and such Governmental Order or action shall have has become final and non-appealable. provided, however, that the party seeking to terminate this Agreement pursuant to this Section 6.01(b)(ii) shall have used its reasonable best efforts to remove such Governmental Order or other action; and provided, further, that the right to terminate this Agreement under this Section 6.01(b)(ii) shall not be available to a party whose failure to fulfill its obligations under this Agreement shall have been the primary cause of, or shall have resulted in, the issuance of such Governmental Order or taking of such action; or

[other subparagraphs omitted]

(c) The party A party seeking to terminate this Agreement pursuant to this under Section 6.01(b)(ii) shall must have used its reasonable best efforts [???] to remove such Governmental Order or other action.

(d) ; and provided, further, that the right to A party may not terminate this Agreement under this Section 6.01(b)(ii) shall not be available to a party whose if that party’s_ failure to fulfill its obligations under this Agreement shall have been was the primary cause of, or shall have resulted in [QUESTION: Does the term “resulted in” swallow the term “primary cause”?], the issuance of such Governmental Order or taking of such action

And without redlining:

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) subject to subdivisions (c) and (d): any Governmental Authority of competent jurisdiction has issued or entered any Governmental Order or taken any other action permanently restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the Sale and the Reorganization Transactions, and such Governmental Order or action has become final and non-appealable; or

[other subparagraphs omitted]

(c) A party seeking to terminate this Agreement under Section 6.01(b)(ii) must have used its reasonable best efforts [???] to remove such Governmental Order or other action.

(d) A party may not terminate this Agreement under Section 6.01(b)(ii) if that party’s failure to fulfill its obligations under this Agreement was the primary cause of, or resulted in [QUESTION: Does “resulted in” swallow “primary cause”?], the issuance of such Governmental Order or taking of such action

Here’s another, even-more-readable possibility:

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) Except as provided in subdivision (c), either party may terminate this Agreement if both of the following are true:

      (1)  a Governmental Authority of competent jurisdiction has issued any Governmental Order or other action that permanently restrains, enjoins, or otherwise prohibits or makes illegal the consummation of any of the Sale and the Reorganization Transactions (a “Blocking Action”); and

      (2)  the Blocking Action is final and non-appealable.

(c) A party may not terminate this Agreement pursuant to Section 6.01(b)(ii), however, unless both of the following are true:

      (1)  The terminating party used its reasonable best efforts [sic] to have the Blocking Action set aside; and

      (2)  The terminating party’s failure to fulfill its obligations under this Agreement was not the primary cause of, or resulted in [???], the issuance of the Blocking Action.

From a Fifth Circuit opinion:

The Texas Oilfield Anti-Indemnity Act (“TOAIA”) voids indemnity agreements that pertain to wells for oil, gas, or water or to mineral mines, unless the indemnity agreement is supported by, inter alia, liability insurance.

 * * *

When the parties agree to provide differing or unspecified amounts of coverage, the mutual indemnity obligations are limited to the lower amount of insurance.

 * * *

CP Well contended that it only agreed to maintain $1 million in general liability insurance and $2 million in excess liability insurance to meet its indemnification obligation under the MSA; the remaining coverage in its excess liability coverage was thus not for the benefit of Cimarex.

In response, Cimarex contended that because CP Well obtained a $1 million general liability policy and a $10 million excess liability policy, CP Well effectively agreed to maintain $11 million in indemnity coverage for Cimarex’s benefit.

 * * *

Enter TOAIA. The statute states that, “[w]ith respect to a mutual indemnity obligation, the indemnity obligation is limited to the extent of the coverage and dollar limits of insurance . . . each party as indemnitor has agreed to obtain for the benefit of the other party as indemnitee.” Tex. Civ. Prac. & Rem. Code Ann. § 127.005(b).

 * * *

The parties in this case agreed to indemnify each other, consistent with TOAIA, by setting a “floor” of required insurance coverage each was to obtain. They were free to procure more. CP Well obtained a policy that expressly set the “ceiling” of coverage “for the benefit [of Cimarex] as indemnitee” at the minimum “floor” provided by the parties’ contract. CP Well did not breach its contractual duties to Cimarex in doing so.

Cimarex Energy Co. v. CP Well Testing, L.L.C., 26 F.4th 683, passim (5th Cir. 2022) (cleaned up, emphasis and extra paragraphing added): The court affirmed summary judgment that CP Well owed no further indemnity than the contract’s minimum insurance requirement.

See John Montague, What Does A Merger and Acquisition Attorney Do? (JDSupra 2022).

1. QUESTION: What’s DCT’s preferred way of having notices be effective — and why?
2. TEXT: “An email notice under this Agreement will be deemed received when sent.” THOUGHTS?
3. TEXT: “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.”

From the WSJ: “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.

(Emphasis added.)

Lesson: In every contract, consider including contingency plans to terminate in case the other side doesn’t perform.

QUESTION 1: What happened in the Oregon v. Oracle lawsuit that’s of interest to us in this context? (Hint: See the reading.)

QUESTION 2: What’s a Himalaya clause — and when might you want to use one? (Hint: Google is your friend, or you could see this reading.)

QUESTION 3: Is it ethically permissible to look out for a client’s employees, when the employer is the client?

QUESTION 4: What does it mean for an employee to be “put on plan”?

DCT to recount his wife’s DAR bylaw-amendment problem:

• Any proposed bylaw amendment must be distributed to the chapter members 30 days before the meeting where the amendment is to be voted on.
• She emailed a proposed amendment well in advance.
• But she discovered that in another place in the bylaws, there’s another “copy” of the language to be amended — which wasn’t mentioned in her email about the proposed amendment.

See this article (which I’d intended to feature during the last class before spring break; ah, well ….)

(The article is the subject of much discussion — often-sardonic and occasionally inane, but sometimes-useful — by techies; see Hacker News.)

Apropos of “Combat Barbie” distractors — i.e., giving The Other Side’s contract reviewer something to object to in an otherwise-balanced draft, discussed at NOCD 16.3 — see the Dilbert strip for Monday, Feb. 15, 2021. [EDIT: Here’s the Wayback Machine archive copy.]

From a tweet: “Trump removed the regulations that would have prevented the Silicon Valley Bank crash in May 2018”

QUESTION: How could this be clarified?

(Original version)

DCT mark-up:

DCT write-up without markup:

General notes:

1. A number of students seriously misread the “without prejudice” language.
2. “Contributions” refers to things such as 401(k) contributions (and probably health-insurance premiums). THAT MEANS that the Contractor wouldn’t pay those things to its employees, etc. but for (or of) its employees.
3. The language about “losses are considered to have been suffered by Buyer” is probably intended to give Buyer the “standing” to sue Contractor for breach if Contractor doesn’t indemnify as required.
4. The “Contractor acknowledges” term is probably superfluous.

5. Business practicality: Buyer wants Contractor to “just take care of it” for ALL claims concerning Contractor’s or subcontractors’ employees, no matter what law a claim happens to arise under. As in: “Hey Contractor: As Buyer, I don’t want to have to think about these things, I want you to take care of them.”

   COMMENT: These should be fairly-predictable risks for Contractor, and less so for Buyer, so it’s not unreasonable for Buyer to want Contractor to take responsibility.

6. It’s not unreasonable for Buyer to want Contractor’s indemnity obligation (for Contractor’s employees) to extend to Buyer’s other contractors.
7. Put fences around indemnity obligation? Time? (Buyer might agree.) Dollar cap? (Buyer will push back.)
8. “Without prejudice to the generality of the foregoing” is a stupid phrase here, because it’s an expansion of subdivision (a), not an illustrative example of what’s required by subdivision (a).
9. “Deemed to be Losses suffered by Buyer” — how is that useful? (Hint: It’s not, as far as I can tell.)
10. What does “keep indemnified” mean? (At best, it’s redundant — same with “hold harmless.”)

See this tweet.

Discuss the following in your small groups:

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 — and why?

   • OPTION 1: “To MathWhiz’s knowledge, there are no lawsuits or other claims pending or threatened by any MathWhiz client against MathWhiz.”
   • OPTION 2: “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.”

   EXPLAIN.

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? EXPLAIN.
3. QUESTION: Under English law, is it enough for a supplier to disclaim implied warranties? EXPLAIN.

See this tweet.

FACTS:

• For a contract, Gigunda’s lawyer proposes an entire-agreement clause that states (paraphrasing), “There are no representations other than those stated in this Agreement.”
• Assume we don’t know what law would apply.

QUESTION 1: If MathWhiz were to have trouble complying with its services obligation, to what extent (if any) would this entire-agreement clause preclude Gigunda from suing MathWhiz for fraudulent misrepresentation about MathWhiz’s capabilities?

QUESTION 2: As MathWhiz’s lawyer, is there anything you could propose to add to the contract that might help MathWhiz get a fraudulent-misrepresentation claim dismissed early?

At the request of a client’s general counsel, I had a Zoom call with two young entrepreneurs who were longtime friends of the GC’s now-adult children and who the GC had thus known for years The GC asked me to give some “general advice” to the two entrepreneurs. (It was tacitly understood that this would be “off the meter.”)

• The entrepreneurs needed more work than I had 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 [two 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.)

FACTS: You represent MathWhiz — for each of the following, write out your group’s thoughts about whether it makes sense to include the text in a MathWhiz / Gigunda contract. Use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

CONSIDER ALSO how the language might be rephrased if necessary.

1.  TEXT: “MathWhiz represents and warrants that MathWhiz’s business includes analyzing seismic data.”

2.  TEXT: “MathWhiz warrants that MathWhiz is headed by Mary Marvel.”

3.  TEXT: “So far as MathWhiz is aware, some individuals have called Mary Marvel an ‘expert in analyzing seismic data to determine where oil and gas natural deposits may be.”

4.  TEXT: “Gigunda represents and warrants that all seismic data from the Mongolian Field was lawfully obtained and that Gigunda has the legal power to share the data with MathWhiz.”

WARM-UP QUESTION: What does Texas law say about the implied covenant of good faith and fair dealing — does it apply in all contracts?

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 contract included a Delaware choice-of-law clause.
4. The royalty agreement called for royalties to be paid on products covered by “Valid [patent] Claims.”
5. 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.
6. The definition of “Valid Claim excluded patent claims that were ”disclaimed,“ i.e., voluntarily surrendered by Glaxo.
7. After Biogen assigned the Agreement to DRIT LP, Glaxo filed a statutory disclaimer that disclaimed the patent and all its claims — then stopped paying royalties on its drug sales in question. (Sort of a “Samson in the temple” move.)
8. DRIT sued for breach of the implied covenant of good faith and fair dealing.

… 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.

Th[is] 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 [of good faith and fair dealing], 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, 248 A.3d 911, 919-20 (Del. 2021) (reversing, in part, trial-court judgment) (cleaned up, emphasis and extra paragraphing added).

LESSON: A choice-of-law clause could be important.

DCT to recount his recently-retired wife’s consideration of whether to buy “tail coverage” for her arbitrator malpractice insurance.

I’ll post the new groups next week.

See this tweet:

Apropos of the referral-agreement assignment that’s due next Monday, here are some comments I made in a past semester when grading students’ referral agreements — keep in mind that you get three attempts to upload your assignment, so if you’ve already submitted it once, feel free to do another one.

1. At the beginning, “This Clause applies …” isn’t appropriate (it should be: “This Agreement ….”) . The Tango Terms referral language is written designed to be incorporated by reference; if you’re going to copy and paste that language into an actual contract, then the language needs to be adjusted accordingly.
2. Gigunda: The assignment facts didn’t say Gigunda would be a referrer, nor to plug in Gigunda’s name.
3. “Resident”: In a contract, an organization typically isn’t referred to as being a “resident” of a particular county or state; a corporation or LLC is organized under the laws of a particular state, and it has its principal place of business in a specified city, county, etc.
4. “Person” generally means an individual or organization, so you wouldn’t say “person or organization” (emphasis added.)
5. Running header: Good idea — but be sure that it’s hand-typed in, not an automatically-updated Word field.
6. Recordkeeping: If you want to include a recordkeeping requirement: Until such time (if any) as the Tango Terms become more widely recognized and adopted, it’s better either: (i) to leave out a recordkeeping requirement, or (ii) to include a bare-bones, standalone requirement in the body of the agreement, without referencing the Tango Terms as an external standard. (The same is true for all Tango Terms protocols.)
7. Numbering: For subdivision paragraphs that are all part of the same sentence, it’s better to use (a), (b) or (1), (2) — numbering such as “3.2.1” should be for complete sentences.
8. Numbering: The (a), (b) numbering works here, but for internal subdivisions in a sentence, I often go with (i), (ii), etc.
9. Numbering: If you don’t have a subdivision (b), then you don’t want to use “(a)”; you could just make it a standalone, unnumbered, grammatical paragraph.
10. Capitalization: Be consistent about capitalizing “Company” and similar defined terms; see the readings about defined terms for cases where that has been important.
11. Paragraphing: The Tango Terms referral language is heavily paragraphed for easy skimming — but that might not be the best approach for an actual contract provision.
12. Evergreen term: Some students had a “termination” section that included both a 30-day termination-at-will clause AND a 30-day period to opt out of an automatic evergreen term extension — but that means the opt-out period is redundant. COMMENT: It’s usually better to keep an opt-out provision together with the “evergreen” provision so that in the future they can be “transplanted” together into another contract.
13. Confidentiality: “All” reasonable measures (equivalent to “best efforts”) is more than you’d want to commit MathWhiz to doing for the other party’s information — if anything, you’d want to limit the confidentiality obligations to just the referring party.
14. Termination for breach after 30 days might be too long a cure period; from MathWhiz’s perspective, it might make more sense to just be silent and count on the law.
15. Performance requirements: These are something you might not put into a garden-variety referral agreement, as opposed to a reseller agreement — especially if there’s a short-notice “termination at will” provision.
16. Reduced commission percentage: One student usefully stated that the first referred sale would get 5%, the second referred sale would get 2.5%, and then nothing after that. This is good, because it gives the referring company an incentive to go and find more customers to refer, instead of just sitting back and collecting commissions on previous referrals.sale second
17. Entire-agreement & amendments-in-writing provisions: Almost any contract should have an entire-agreement provision, and probably an amendments-in-writing provision as well.
18. Governing law: In many low-footprint commercial agreements (such as a low-dollar referral agreement), you can probably get away without a governing-law clause — and including such a clause could amount to kicking a sleeping dog.
19. Signatures: For a reusable contract form, it’s best to leave the client’s signature block “blank” (as with the signature block for the other party). That’s because, for any given deal, we don’t know who will be signing on behalf of the client.
20. [NEW 4/3/23] Don’t say, “Associate agrees to refer potential clients to Company within the Referral Term.” The business deal is very likely to be something like, “Associate has no affirmative obligations to refer customers, BUT MathWhiz will pay a commission if Associate does ….”
21. [NEW 4/3/23] Don’t say, “This Agreement applies if and when Company is to pay Associate commissions on Company sales during a specified time period ….” The agreement being drafted IS the “if and when ….”

See Anne Trafton, Objection: No one can understand what you’re saying (MIT.edu March 7, 2022). Excerpt (bullets, and bold-faced and italics emphasis added):

The biggest culprit, they found, was center-embedding. In this type of construction:

• a writer introduces the subject of a sentence,
• then inserts a definition of the subject,
• and then continues on with the sentence.

In their paper, the researchers included this sentence, with a lengthy definition in parentheses, as an example:

“In the event that any payment or benefit by the Company (all such payments and benefits, including the payments and benefits under Section 3(a) hereof, being hereinafter referred to as the ‘Total Payments’), would be subject to excise tax, then the cash severance payments shall be reduced.”

The paper offers this as a more understandable alternative, with the definition separated out:

“In the event that any payment or benefit by the Company would be subject to excise tax, then the cash severance payments shall be reduced. All payments and benefits by the Company shall hereinafter be referred to as the ‘Total Payments.’ This includes the payments and benefits under Section 3(a) hereof.”

The researchers found that when they tested people on their ability to understand and recall the meaning of a legal text, their [sic; whose?] performance improved the most when center-embedded structures were replaced with more straightforward sentences, with terms defined separately. [Implied: Break up long sentences into shorter ones]

* * * 

[The MIT researchers] found that many of the jargony terms used in legal documents can be replaced with more common words without changing the meaning, and the center-embedded clauses can also be replaced by nonembedded clauses to give rise to the same meaning.

You’re encouraged to read the whole thing.

BACKGROUND: The owner of the copyrights in various NBA players’ tattoos filed a lawsuit against the maker of an NBA-licensed video game that showed animated images of the players. The court granted the video-game maker’s motion for summary judgment dismissing the case.

TEXT: Here’s a quote from the S.D.N.Y. opinion:

Familiarity with the facts underlying this case, which have been detailed in prior decisions of the Court, including the August 2, 2016, Memorandum Opinion and Order, the May 16, 2017, Memorandum Order, and the March 30, 2018, Memorandum Opinion and Order, is presumed.

EXERCISE: In the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, rewrite the above quote to make it more readable.

Hints:

• Do we reallly need so much verbiage between (i) the start of the sentence, and (ii) the punch line, i.e., the words “is presumed,” at the end? (BLUF!)
• Would the sentence be more readable if it were broken up into, say, two sentences — or even three?
• Do we really even need the “Familiarity … is presumed” thought? Or is the excerpt just as useful with just a list of the prior decisions?

Then we’ll discuss.

DCT version:

The facts of this case have been detailed in prior decisions of the Court, including the following: (i) the August 2, 2016, Memorandum Opinion and Order; (ii) the May 16, 2017, Memorandum Order; and (iii) the March 30, 2018, Memorandum Opinion and Order. [DELETE: Familiarity with those facts is presumed.]

[NOTE the use of romanettes, AND the use of semicolons to separate the list elements because of the commas within the dates.]

See this tweet — not for any ambiguity or anything like that ….

From Oct. 2022 in The Texas Lawbook (paywalled, but I think you can log in with your UH.edu credentials):

The Boeing Company has sued a subcontractor working with it to construct the CST-100 Starliner space vehicle for NASA, accusing it of repeatedly busting deadlines and turning in shoddy work.

Hamilton Sundstrand Co., which does business as Collins Aerospace, is named as the defendant in the lawsuit that was filed Oct. 14. Boeing was awarded the firm, fixed-price contract for the space vehicle that will access the International Space Station after NASA retired a space shuttle in 2011.

It contracted with Collins for $127 million to design, develop and deliver 38 components for the vehicle’s environmental control and life support system — the reusable module that houses astronauts and cargo, according to the lawsuit.

“Over a period of several years, however, Collins has repeatedly and materially breached the purchase contracts by delivering late and defective parts, causing significant and costly extra work on the crew module build process,” Boeing told the court.

The lawsuit is seeking more than $1 million in damages and has been assigned to Harris County District Judge Robert Schaffer.

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.

Case: Express Scripts, Inc. v. Bracket Holdings Corp., 248 A.3d 824, 825 (Del. 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.)

In the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, come up with a list of (up to) five noteworthy points in Chapter 16: Getting to signature sooner.

QUESTION: Did anything in this chapter remind anyone of anything they’ve experienced themselves?

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).

ALSO: Note the ambiguity in the “due to contractor” in the heading of this section.

Let’s look at this typical example of how reps and warranties are done in M&A agreements, at Article III of the IBM-Red Hat acquisition agreement.

• Note that the IBM-Red Hat deal has all reps and warranties for all companies in Article III, which means that the seller’s reps and warranties, in section 3.01, go all the way to subdivision (u). The buyer’s reps and warranties, in section 3.02, are much shorter.

• In contrast, in the Google-Motorola deal (Google acquired Motorola’s “Android” mobile-phone division) Article III was for the seller’s warranties, while Article IV was for the buyer’s warranties, with more-sensible numbering.

(For your amusement, disgust, or both: Take a look at the WOW Section 3.04 in this agreement.)

BASIC 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 as MathWhiz envisions it:
  • 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.  MORE FACTS: Mary Marvel asks you if MathWhiz can specify a minimum price at which the reseller may resell the GeeWhiz licenses.

QUESTION: What do you tell her — and how can you help her achieve her (likely) business objective? EXPLAIN.

2.  MORE FACTS: The reseller wants MathWhiz to agree that the reseller will have exclusive rights to resell the GeeWhiz licenses.

QUESTION: What if any legal and/or business issues does that raise in your mind? (Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4)

3.  QUESTION: In #2, what business goals do you think the reseller is concerned about? How might you help the reseller accommodate the reseller’s concern(s) — assuming that MathWhiz is OK with doing so?

4.  EXERCISE: Groups 1 and 3 represent the reseller; Groups 2 and 4 represent MathWhiz — in the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, set up a “term sheet” of points to be covered in the contract. THINK ABOUT what you read in Chapter 16 concerning getting to signature sooner.

Then we’ll have the pairs of groups negotiate the terms.

See the Notices clause in the IBM-Red Hat agreement — notice anything?

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.”

A former student referred someone to me today. The referral and I talked on the phone; it was a good conversation. I quoted a likely price for the desired work; the referral said he’d need to check with his boss.

Before turning back to other matters, I immediately sent the following email, to document the facts that:

• the referral wasn’t expecting me to do anything, and
• we hadn’t yet entered into an attorney-client relationship.

(I did this immediately because otherwise I might forget ….)

Here’s the email:

Great talking to you just now, [NAME]; I’ll wait to hear from you about whether y’all are interested in going forward.

FYI, my standard attorney-client engagement agreement is at http://www.oncontracts.com/engage/; it’s also archived at the Harvard Law Library’s perma.cc site at https://perma.cc/J6M8-L2GQ. If we do go forward and establish an attorney-client relationship, I’ll be asking that you agree to it by a simple “Agreed” email.

Regards,

D. C.

Dell C. “D.C.” Toedt III Attorney & neutral arbitrator — tech contracts & IP
(My last name is pronounced “Tate”) +1 (713) 364-6545
dc@toedt.com @dctoedt www.OnContracts.com/About

Unless expressly stated otherwise, this message is not intended to serve as assent to an agreement or other document, even if attached to this message.

(Note the last part of my signature block ….)

I also immediately sent the former student a thank-you note by email.

FACTS: MathWhiz agrees to defend and indemnify Gigunda against certain claims.

1. QUESTION: What is the “express negligence” rule?
2. QUESTION: Why would MathWhiz want the right to control the defense?
3. QUESTION: Might Gigunda be concerned about letting MathWhiz control the defense? Why?
4. QUESTION: How might MathWhiz and Gigunda compromise about control of the defense?
5. QUESTION: What would be a sensible way of allocating control of settlement authority?

Apropos of the NCAA Final Four coming to Houston, see Ryan Herrera, Rice sues a former coach for $87,500 in [sic] breach of contract:

• 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 the buy-out amount is the same 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:

1. Is this an unenforceable penalty? Why or why not? (Consider: When would the coach’s “busy period” be?)
2. Why didn’t Duke pay the buy-out?
3. Why did things get this far?

UPDATE: Rice soon dismissed the case unilaterally — what do you think happened?

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.

1. 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.

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?

(Here’s the reading material.)

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 education- and/or experience qualifications of the individuals who perform the services?

https://cases.justia.com/texas/supreme-court/2022-20-0273.pdf

From Sonia Rao, Alec Baldwin denies financial responsibility for ‘Rust’ shooting death:

Alec Baldwin’s lawyers argued in an arbitration demand filed Friday against fellow “Rust” producers that his contract shields him from financial responsibility in the on-set death of Halyna Hutchins, the cinematographer he fatally shot in October. They also asked the production to cover his legal fees. …

In the filing, Baldwin’s lawyers wrote that his only financial involvement on “Rust” was the $100,000 portion of his own fees that he “gave back to the production to enhance the budget.” The document states that his contract as a producer required Rust Movie Productions to “indemnify, defend, and hold harmless” Baldwin and his company, El Dorado Pictures, from “any loss, damage, liability, claim, demand, action, cost and expense” arising from issues with the production.

1. QUESTION: Based just on what we know from this article excerpt, how enforceable is this indemnity provision likely to be in Texas?
2. Same question, but for other jurisdictions in general?
3. QUESTION: For the sake of argument, assume that Baldwin was negligent in firing the shot that killed the cinematographer (which Baldwin has denied) — under Texas law, does that affect the analysis of whether Baldwin’s indemnity clause is enforceable?

Here are the new groups starting Monday April 4; I resorted the groups manually to try to reduce repetition:

6:00 p.m. class:

Group 1: Victor, Jacob, Taylor, Lexi
Group 2: Andrea, Lily, David, Laura
Group 3: Josey, Jared, Brittany, Mackenzie
Group 4: Venu, Benjamin, Edward, Joel

7:30 p.m. class:

Group 1: Ahmed, Andrew, Maxwell, Kevin
Group 2: Brendan, Jared, Caroline T.
Group 3: Caroline S., Austin, Justin, Nathan
Group 4: Collin, John, Graves, Yvonne

Recently my “MathWhiz” client emailed me a contract for use in (let’s say) Bangladesh under which:

• For five years, MathWhiz will use the (small) company of a longtime Bangladeshi colleague of “Mary Marvel” as MathWhiz’s exclusive representative in getting work in Bangladesh.
• MathWhiz will pay the small company a percentage of revenues derived.
• The draft contract was provided to MathWhiz by Mary’s Bangladeshi colleague; all in all it looks pretty good.
• Mary is pretty comfortable with her personal relationship with her colleague.

Here comes the part relevant to the questions below:

1.  The contract states that Bangladeshi law will apply but any litigation would be in Texas.

2.  Bangladesh (formerly part of India) has a common-law system that was developed by during British colonial rule of India.

3.  The last paragraph of the contract states, in part: “b) Agreement [sic] is made out in two (2) original copies, one for each of Parties.”

QUESTIONS:

1. How should I advise “Mary” about the Bangladeshi-law provision?
2. Should I change anything about item #3 above, concerning signatures?

Story - just published

In groups, do the exercise at 2.17.13.

Groups 1 and 3 represent a prospective reseller.
Groups 2 and 4 represent MathWhiz

Announcement

EDGAR filings (the acquisition agreement isn’t posted — and might not be if it’s not “material”).

The usual hierarchy of numbering schemes is something like this:

Example 1 – this is typical for merger- and acquisition agreements:

• Article 2
• Section 2.1 (or Section 2.01)
• (a)
• (1)
• (A) — and even (A) is probably too deep —

with (i) reserved for within-paragraph subdivisions.

Example 2 – the numbering hierarchy is similar but without the words “Article” and “Section”:

4.  SERVICES

[provisions omitted]

4.2 Changes to statements of work: A change order to a statement of work must be agreed to: (i) in writing, or (ii) as shown by clear and convincing evidence, which must include corroboration of any statements by interested witnesses.

Example 3: IBM’s acquisition of Red Hat – scroll down to Article II. (Note: underlining is passé but seems to persist in many BigLaw firms because We’ve Always Done It That Way).

From a litigation perspective, what is likely to be the most-significant difference between a representation and a warranty, in terms of being able to get summary judgment?

See, e.g., this Houston Public Media piece

Thoughts?

As previously announced, here are the new groups, starting today:

6:00 p.m. class:

Group 1: Victor, Jacob, Taylor, Lexi
Group 2: Andrea, Lily, David, Laura
Group 3: Josey, Jared, Brittany, Mackenzie
Group 4: Venu, Benjamin, Edward, Joel

7:30 p.m. class:

Group 1: Ahmed, Andrew, Maxwell, Kevin
Group 2: Brendan, Jared, Caroline T.
Group 3: Caroline S., Austin, Justin, Nathan
Group 4: Collin, John, Graves, Yvonne

FACTS: You represent Supplier, Inc., which is considering signing a confidentiality agreement (“NDA,” or nondisclosure agreement) with a potential customer, Buyer, Inc.

MORE FACTS: The NDA says:

The Receiving Party acknowledges that the Confidential Information is proprietary to the Disclosing Party, has been developed and obtained through great efforts by the Disclosing Party and that Disclosing Party regards all of its Confidential Information as trade secrets.

QUESTION: As Supplier’s attorney, are you OK with this? Do you know enough to say?

From Minnesota v. Clark, No. A22-0611, slip op. at 2 (Minn. App. Mar. 27, 2023) “In 2020, appellant Stephanie Louise Clark was in a romantic relationship with D.B. Clark, her five-year-old son, D.B. lived in Clark’s home.”

(See the screenshot.)

The court later revised the opinion to read “and D.B. lived in Clark’s home,” but the sentence is still muddy — it reads as though “D.B. Clark” is the name of Stephanie Clark’s romantic partner.

Better would have been a semi-colon: “In 2020, appellant Stephanie Louise Clark was in a romantic relationship with D.B.; Clark, her five-year-old son, and D.B. lived in Clark’s home.”

Or better still, an em-dash“ as in, ”In 2020, appellant Stephanie Louise Clark was in a romantic relationship with D.B. — Clark, her five-year-old son, and D.B. lived in Clark’s home.“

https://tweetdeck.twitter.com/profdaniellej/status/1641462456676409346/photo/1

TEXT (in honor of the upcoming first night of Passover on Wednesday, 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?

(For more words to avoid and safer alternatives, see this compilation I did in 2012.)

From Smithsonian.com: “Researchers Discover the Tallest Known Tree in the Amazon”

Discuss.

The provision below, at https://goo.gl/Qn2e9m (edgar.sec.gov), is from a 2007 real-estate lease in which Tesla Motors, Inc., leased a building from Stanford University:

–BEGIN QUOTE–

12.5 Indemnity. Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord), protect and hold Landlord and Landlord’s trustees, directors, officers, agents and employees and their respective successors and assigns (collectively, “Landlord’s Agents”), free and harmless from and against any and all claims, liabilities, penalties, forfeitures, losses or expenses (including reasonable attorneys’ and consultants’ fees and oversight and response costs) to the extent arising from (a) Environmental Activity by Tenant or Tenant’s Agents; or (b) failure of Tenant or Tenant’s Agents to comply with any Environmental Law with respect to Tenant’s Environmental Activity; or (c) Tenant’s failure to remove Tenant’s Hazardous Materials as required in Section 12.4. Tenant’s obligations hereunder shall include, but not be limited to, the burden and expense of defending all claims, suits and administrative proceedings (with counsel reasonably approved by Landlord), even if such claims, suits or proceedings are groundless, false or fraudulent; conducting all negotiations of any description; and promptly paying and discharging when due any and all judgments, penalties, fines or other sums due against or from Landlord or the Premises. Prior to retaining counsel to defend such claims, suits or proceedings, Tenant shall obtain Landlord’s written approval of the identity of such counsel, which approval shall not be unreasonably withheld, conditioned or delayed. In the event Tenant’s failure to surrender the Premises at the expiration or earlier termination of this Lease free of Tenant’s Hazardous Materials prevents Landlord from reletting the Premises, or reduces the fair market and/or rental value of the Premises or any portion thereof, Tenant’s indemnity obligations shall include all losses to Landlord arising therefrom.

–END QUOTE–

ASSIGNMENT: In your breakout groups, as the attorney for Tenant:

1.  Break up the provision — use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

For the first-level subdivisions, use lettering (a), (b), etc.; then use (1), (2), etc., for the second level — make corresponding changes to the internal numbering of (a), (b), and (c) in the original.

CONSIDER:

• Could some of the lists be moved to “definition” subdivisions, instead of having them part of a wall of words? (Example: “Landlord’s Agents”)
• Could any of these provisions be moved to “list” subdivisions? (E.g., in the sentence starting out with “Tenant’s obligations hereunder shall [ugh] include ….”

QUESTION: What “fences” might you want to consider asking Landlord to put on Tenant’s obligations? (Think: Time? Money? Geography?)

QUESTION: Anything else you might want to request on behalf of Tenant? (Scan through the Tango Terms Defense of Claims clause for possible ideas.)

Some time back I negotiated a contract between my “MathWhiz” client and “Gigunda.”

Gigunda’s in-house counsel, “George,” and I agreed that the parties would sign the agreement by email.

At the last minute, Gigunda’s in-house counsel George said that the contracting party for the other side would be “Gigunda-Payroll LLC” and that the signer would be Gina Garson, the general counsel.

By prior agreement with George, I sent the following email to all concerned, including George, Gina Garson (the GC and signer) and my client’s CEO, Mary Marvel:

[Subject line:] CONTRACT SIGNATURE BY EMAIL: MathWhiz Inc. & Gigunda-Payroll LLC Terms of Service / Software License Agreement

MARY and GINA: Please do a Reply to All with the text “Agreed” to confirm that MathWhiz Inc. and Gigunda-Payroll, LLC. have agreed to the attached MathWhiz Inc. Terms of Service / Software License Agreement, reflecting agreed revisions.

GEORGE: As previously discussed by email, the attachment is a PDF of the final document that we discussed by email today, with no other changes.

Regards,

[my signature block]

Gina replied “Agreed” — her signature block said that she was “General Counsel, Gigunda-Services LLC” (emphasis added), with no mention of Gigunda-Payroll.

QUESTION: Should I have inquired about Gina’s authority to sign on behalf of Gigunda-Payroll? Discuss.

See this (redacted) document excerpt – DISCUSS. (Hint: There are two obvious issues.)

With permission of the drafter (Maxwell Lewis), here’s an excellent example of a succinct referral agreement that would likely do the trick in many, many typical cases:

You know the drill – discuss in your groups, name the A-B-C-D people. Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

1. What’s the general rule about the assignability of contracts — and why is that the rule?
2. What three categories of contract can’t be assigned without the other party’s consent — even if the contract is silent about assignability the subject?
3. What’s a strategic danger to a client if the client agrees to obtain the other party’s consent to assigning the contract?
4. What kind of language can be inserted into an assignment-consent provision —
   • to mitigate the strategic danger in #3 entirely?
   • to reduce the danger that the reviewing party will just sit on the request for consent?
5. In the real world, how useful is a “consent not to be unreasonably withheld” provision in an assignment-consent requirement? EXPLAIN.
6. Would a sale of all shares of a corporate party trigger an assignment-consent requirement (if that party was required to obtain consent to assignment)?
7. FACTS:
   • A contract says that Assignor must obtain consent.
   • The contract also says that Reviewer may not unreasonably withhold consent.
   • There’s no exception to the consent requirement for asset-related transactions.
   • Reviewer withholds consent to an asset spinoff and refuses to budge — and so Assignor’s deal (which would include an assignment of the contract) blows up.
   • Assignor sues Reviewer; the jury finds that Reviewer unreasonably withheld its consent.
   • BUT: The contract includes an exclusion of “consequential damages.”

QUESTION: Would the exclusion of consequential damages apply to Assignor’s claim for damages against Reviewer?

(Hint: See the Tango Terms definition of consequential damages.)

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?

See Shaun Sethna, An M&A Guide (For Those Who Barely Know What M&A Is) (ContractNerds.com Mar. 30, 2022).

In groups; feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4:

FACTS: See the case summary of Jacobs Eng’g Group v. ConAgra Foods in the commentary to the Indemnities Protocol.

QUESTION 1: Why was Jacobs Engineering even involved in the lawsuit by ConAgra’s injured employees?

QUESTION 2: Why did Jacobs Engineering settle the claims brought against it in the ConAgra employees’ lawsuit?

QUESTION 3: Why do you think ConAgra refused to comply with its contractual duty to indemnify Jacobs Engineering?

QUESTION 4: When negotiating its contract, should Jacobs Engineering have asked ConAgra to obtain insurance to cover ConAgra’s indemnity obligation? Why or why not?

WSJ article: How Brands Split With Celebrity Partners (WSJ.com Oct. 28, 2022). FTA:

Marketers that have made their decision can often quietly terminate a contract if it is relatively basic, such as those requiring a celebrity to appear at an event or letting brands use someone’s name and likeness for promotional purposes, said Christopher R. Chase, a partner specializing in advertising and entertainment law at Frankfurt Kurnit Klein & Selz.

But cases in which celebrities help design products that bear their names and may even own some equity in the company are more difficult to resolve, he said. …

Brands have increasingly come to rely on so-called morals clauses, which give them the right to terminate a contract when a spokesperson behaves in ways that could be perceived as damaging to the client’s reputation. …

At the same time, vaguely worded morals clauses can lead to costly and potentially damaging litigation as lawyers argue over whether a spokesperson’s behavior constitutes a violation.

See The Recipe for Contract Design, by Stephania Passera (@StewieKee), a Finland-based designer who specializes in trying to make contracts more understandable.

I’ll point out selected highlights:

• Relationship
• How to Design Contracts with the Relationship in Mind
• How to Design Contracts with Usability in Mind

FACTS: Widgets, Inc. (from the Addams Family exercise) has contacted you.* Widgets has been approached by MyReps, LLC, which wants to get the right to resell the Widgets product line. Widgets’ CEO, Wanda, doesn’t know anything about MyReps; she’d like your assistance in checking out MyReps and — if it makes sense to do business with MyReps — in drafting and negotiating the contract.

* If a party in a contract negotiation is impressed with the other party’s lawyer, it’s not unusual for the first party to want to hire the other party’s lawyer to help with subsequent contract negotiations.

Discuss the following in Zoom breakout groups (picking a spokesperson for each question as usual); use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4:

QUESTION 1: What sorts of information might Widgets want to know about MyReps? How might Widgets (or you) go finding out? Any legal issues there?

QUESTION 2: What sorts of things might go wrong in a reseller relationship between Widgets and MyReps? How might you contractually try to protect Widgets? (I’ll be asking this of multiple groups.)

MORE FACTS: MyReps wants an exclusive territory for all of Widgets’s product lines.

QUESTION 3: How might you advise Wanda? (I’ll be asking this of multiple groups.)

See NY Times article.

QUESTION: What — if anything — could this small company have done to protect itself (contractually or otherwise)?

See here.

BACKGROUND: For the big Christmas and Easter church services, my parish (like many) uses lots of extra floral arrangements. Families can donate to the flower fund and have their memorials and dedications listed in the service booklet.

FACTS: The following dedication is adapted from my church’s Easter Sunday service booklet of a few years ago (with the family’s name changed and emphasis added):

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?

Here’s Question 14:

FACTS:

1. Your client MathWhiz (based in Texas) and Gigunda (in California) are negotiating a contract for MathWhiz to perform services for Gigunda.
2. For this particular contract, Gigunda wants MathWhiz to send people to Gigunda’s California headquarters to work with Gigunda’s people.
3. The draft contract is silent about choice of law and choice of forum, because Gigunda rejected specifying Texas law and forum.
4. MathWhiz plans to sign the contract at Gigunda’s California headquarters.
5. MathWhiz asks you whether you should add a waiver of jury trial to the contract.

CHOOSE THE BEST ANSWER: What do you advise MathWhiz?

A.  Not a great idea – on these facts, any litigation would likely be filed in (or transferred to) California, and California law would apply; under California law, pre-dispute waivers of the right to jury trial are unenforceable.

B.  You could do it but it’d probably be unenforceable.

A great idea - jury trials are expensive, and a California jury would likely be unsympathetic to a Texas company.

C.  A great idea - jury trials are always a roll of the dice, especially when technical subjects are involved.

D.  A great idea - courts favor bench trials over jury trials, which take longer and require more judicial effort.

[DCT to reveal notes in class – holding off now because two students haven’t yet submitted Quiz 4]

A lease states that

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

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

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

(Hint: See NOCD § 11.5.)

From BNA Assoc. LLC v. Goldman Sachs Specialty Lending Grp., L.P., No. 22-5491, slip op. (6th Cir. Mar. 29, 2023) (affirming dismissal of complaint).

Ruby Tuesday, a restaurant proprietor, leased property in Maryville, Tennessee to support its corporate operations.

The company thought it had said goodbye to the property when it agreed to transfer its interest to BNA Associates, a real estate developer.

But a new day brought a new development. As a debtor to Goldman Sachs, Ruby Tuesday, per the parties’ credit agreement, was required to get Goldman’s consent before transferring any property subject to the agreement.

And when Goldman refused to consent, Ruby Tuesday and BNA missed out on closing their deal.

Unable to put its name on the property, BNA sued Goldman, alleging intentional interference with business relations under Tennessee law.

The district court dismissed BNA’s complaint. We affirm.

Id., slip op. at 1-2 (emphasis and extra paragraphing added).

Also: “Adding salt to the wound, the lease later ended up in Goldman’s hands after Ruby Tuesday’s eventual bankruptcy.” Id. at 2.

And: “Goldman was perhaps playing hardball. Any rational actor would likely have done the same, were it in their perceived best interest.” Id. at 5 (citations omitted).

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 — the software will be run on the hospital’s own computers, and MathWhiz won’t be involved except to provide phone support for hospital users.

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 — see especially the heading, “Avoiding Business Associate Requirements,” items 1 and 6, and “Avoiding Business Associate Agreements,” especially item 4.)

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

FACTS: This is about a client of mine, a longtime “SaaS” (Software as a Service) provider — let’s call it “MathWhiz” to fit in with our semester-long fact pattern, even though it wasn’t my MathWhiz client.

1. Not long ago, MathWhiz was acquired by a leading Silicon Valley company, which we’ll call “Gigunda” to fit with our fact pattern (but it’s not an oil-and-gas company).
2. Under one of the related agreements, each of two MathWhiz executives and major shareholders signed a noncompetition agreement in which the executive was labeled as a “Stakeholder.” (This is quite common in acquisitions of non-public companies.)
3. The noncompetition agreement required the Stakeholder, i.e., the former MathWhiz executives, to notify Gigunda of any new position that the Stakeholder accepted during the noncompetition period.
4. One of the MathWhiz executives — we’ll say it was “Mary Marvel” — was approached about becoming an executive in another company whose business was somewhat related to that of MathWhiz.
5. Mary asked me to represent her individually to make sure she wasn’t going to violate her noncompetition agreement with Gigunda. (This is important to remember: Clients’ people will sometimes change jobs, and could be a source of additional work at the new job.)
6. At Mary’s request, I drafted the following notice email to Gigunda; Mary reviewed the text and made some minor edits, after which I sent the notice to the “legal-notices@gigunda.com” email address specified in the noncompetition agreement.
7. For pedagogical reasons, I’ve slightly edited the email text (which is in bold). The italicized text was not part of the email.

1.  On behalf of Mary Marvel, this is a contractual notice under section 4 of Mary’s noncompetition agreement with Gigunda (as part of the MathWhiz acquisition), advising that Mary expects to join GeoData, Inc. [a fake name and Web address] in an executive position that includes joining the board of directors and a potential future cash investment as a shareholder.

DCT NOTES

• The “On behalf of …” phrase establishes for the record that I’m acting as Mary’s attorney.
• As an attention-getter, I used the term “contractual notice.”
• In a longer email like this, I like to number the paragraphs, for two reasons: (A) to signal the reader when a somewhat-different topic is coming up, and (B) to make it easier, in the future, to reference specific parts of the email.
• I included the word “MathWhiz” to increase the chances that my email would show up in any litigation-discovery search relating to Gigunda’s acquisition of MathWhiz.

This notice is required by section 4 of Mary’s noncompetition agreement, which says as follows: [quotation omitted].

• I cited the section number of the specific notice requirement, and reproduced its text, as a form of “completed staff work,” so that the Gigunda people wouldn’t have to hunt through the document — the idea is (i) to identify all the little tasks that might delay Gigunda’s response, and (ii) to do as many of those little tasks as possible for Gigunda.

2.  REQUEST: Please acknowledge receipt of this email, as contemplated in section 7(a) of the noncompetition agreement.

• Notice how I put the word “REQUEST,” above, in all-caps, bold-faced type. Also note how I cited the specific section of the noncompetition agreement that requires receipt.

I’m sending this email to the Gigunda email address for notice that’s stated in the noncompetition agreement.

• The notices provision of the agreement specified a preference for email notices, but also that emailed notices were not effective unless receipt was acknowledged, and NOT just by an auto-responder.

Per Mary’s request, I’ve copied [two Gigunda execs].

• This leaves a paper trail that, when I copied the two Gigunda execs on my email, I was acting under instructions from my client. That’s because under legal ethics rules, a lawyer is not supposed to communicate directly with another party concerning a matter if the lawyer knows that the other party is represented by counsel in that matter. It’s unclear whether this rule extends to copying non-lawyer people on emails when counsel is also copied.

I’m also copying Jane Doe [a Gigunda in-house attorney], who oversaw the legal aspects of the MathWhiz acquisition for Gigunda, to keep her in the loop.

• This was a professional courtesy, even though I didn’t know for sure that Jane Doe would be handling this matter — Jane and I had worked well together during Gigunda’s acquisition of MathWhiz, and I wanted to keep that going.

3.  GeoData’s Website indicates that the company’s XXX™ offering provides “[quotation from GeoData Website omitted].” I’ve attached a screenshot of a portion of the home page to provide more detail.

• This was is another “completed staff work” example — but ALSO note how I worded item 3 by explicitly quoting a publicly-available data site, so that I myself wasn’t personally representing anything to Gigunda about GeoData.

4.  Mary advises that in previous email correspondence, [a Gigunda exec] indicated informally that this likely wouldn’t be a problem for Gigunda but that Gigunda wasn’t in a position to formally confirm that it wouldn’t breach Mary’s noncompetition obligation.

• Item 4 has two purposes: (A) To give Gigunda’s decision-maker — whose identity we didn’t know — some background context, in case he or she wasn’t already up to speed; and (B) to provide the same background context to possible future readers — such as litigation counsel.
• Here again I made sure to specify that was Mary, not I, who was making statements about what Gigunda’s execs had said — I’d seen the email correspondence but that was only because Mary had forwarded the emails to me.

5.  As always, please let me know if you have any questions.

Regards,

–D. C.

Somewhat to my surprise, Gigunda’s in-house attorney Jane Doe responded later that day, copying all concerned:

Congrats, Mary. Receipt confirmed.

Additionally, I confirm that GeoData’s business, as it is currently conducted, is not considered to be a “Competing Business Purpose” by Gigunda, as defined in the non-competition agreement.

Best,

Jane

Mary (my client) emailed me:

Nicely done!

I responded to Mary:

I was a bit surprised that they confirmed there wasn’t a problem with the new position; if I had to guess, they appreciated that we played nice with them, including providing a link, screenshots, and the text of the relevant sentence of the noncompete — that made it easy for Jane to go, “yup, it’s fine.” I’m going to show this to my students [anonymized of course] as an example of how to make the client’s business go more smoothly by doing “completed staff work” for others with whom you’re dealing.

Mary responded to me:

I was shocked as well, particularly how quickly they responded.

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? (Hint: Think “I & I.”)

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.

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

Caution: I’ll be erasing the “whiteboards” in between classes, so save whatever notes you want.

1.  “If (1) either Party breaches this Agreement, and (2) the breaching party fails to cure the breach within 5 business days after receiving written notice of the breach from the non-breaching party ….” DISCUSS.

2.  “‘Good Reason’ [for termination] means (i) a transfer of all, or substantially all of Client’s business assets to another entity, and (ii) a contraction of Client’s business eliminating Client’s need for Service Provider’s data analytic services.” (Emphasis added.) QUESTION: Are both (i) and (ii) required to establish “Good Reason,” or would just one suffice?

3.  “The solvent Party may Terminate upon the filing by the other Party (the insolvent party) ….” DISCUSS. (Hint: See question 1.)

4.  “If the Termination at will is for a material breach, ….” QUESTION: Does this even make sense?

5.  “Except for material breach or legal violation, Client may terminate this Agreement at-will where Client gives written notice: ….” DISCUSS.

6.  “However, if the Terminating Party and the Nonterminating Party fail to cooperate, in a professional manner, both the Terminating Party and Nonterminating Party may agree to a shorter effective termination date.” QUESTION: What are the odds that there’d be such an agreement if, by hypothesis, the parties failed to cooperate in a professional manner?

7.  QUESTION: If termination is at-will, would the notice of termination need to state a basis for termination?

8.  “This Agreement may be terminated by either party upon no less than 30 calendar days written notice, without cause, unless a lesser time is mutually agreed upon by both parties. Said notice shall be delivered by certified mail, return receipt requested, or in person with proof of delivery.” QUESTION: Any issues about the italicized part?

9.  “Either Buyer or Seller may terminate the Agreement if the other party commits any act or omission that: a. is material to the other party’s rights or responsibilities under the Agreement, and b. violates any applicable law where the violation is likely to materially and adversely affect the other party.” QUESTION: Does this allow termination for breach?

10.  “11.1 Any termination of the agreement does the following: [¶] 11.1.1 cancels any right that a party has to continue its performance [¶] 11.1.2 cancels any relevant post-termination rights of the parties ….” COMMENT: Use (1), (2), etc., or romanettes — not “11.1.1,” etc. — for subdivisions that aren’t complete sentences.

11.  “X.1. Each party may, at its sole discretion and with at least 30 days written notice, terminate this Agreement at-will. All amounts due must be paid within 30 days of termination.” QUESTION: Any thoughts about the italicized part?

12.  “Upon the occurrence of a material breach, as that term is defined in this Agreement and as it is defined under the laws of the State of Texas, the party not responsible for said material breach may, at its option, terminate this Agreement.” QUESTION: Would that work for you if your client might someday be a breaching party?

Apropos of Daylight Savings Time a couple of weeks ago:

• 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 said: “So, like, Manchin and Sinema?”

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

Caution: I’ll be erasing the “whiteboards” in between classes, so save whatever notes you want.

1.  “If (1) either Party breaches this Agreement, and (2) the breaching party fails to cure the breach within 5 business days after receiving written notice of the breach from the non-breaching party ….” DISCUSS.

2.  “‘Good Reason’ [for termination] means (i) a transfer of all, or substantially all of Client’s business assets to another entity, and (ii) a contraction of Client’s business eliminating Client’s need for Service Provider’s data analytic services.” (Emphasis added.) QUESTION: Are both (i) and (ii) required to establish “Good Reason,” or would just one suffice?

3.  “The solvent Party may Terminate upon the filing by the other Party (the insolvent party) ….” DISCUSS. (Hint: See question 1.)

4.  “If the Termination at will is for a material breach, ….” QUESTION: Does this even make sense?

5.  “Except for material breach or legal violation, Client may terminate this Agreement at-will where Client gives written notice: ….” DISCUSS.

6.  “However, if the Terminating Party and the Nonterminating Party fail to cooperate, in a professional manner, both the Terminating Party and Nonterminating Party may agree to a shorter effective termination date.” QUESTION: What are the odds that there’d be such an agreement if, by hypothesis, the parties failed to cooperate in a professional manner?

7.  QUESTION: If termination is at-will, would the notice of termination need to state a basis for termination?

Here’s a case from the High Court (i.e., trial court) in England:

• A contract appendix provided a step-by-step narrative of how a particular payment calculation was to be made; the appendix also provided several “worked examples” with hypothetical calculations.
• But some of the worked examples included an extra calculation step — which hadn’t been described in the appendix’s step-by-step narrative.

One party asserted that the extra calculation steps in the appendix’s worked examples should be ignored because those extra steps weren’t part of the appendix’s step-by-step narrative. The court* disagreed:

The “Worked Examples” in Section 5 of Appendix M do not appear, in their context, to be mere optional extras, but rather to be integral parts of the contract terms which explain how that adjustment is to be calculated. Each of those two “Worked Examples” specifically provides for what I have referred to as “Step 6”. To disregard them would, in my judgment, be to re-write the contract that the parties have made.

Altera Voyageur Production Ltd v Premier Oil E&P UK Ltd [2020] EWHC 1891 (Comm), para 66.

*  Incidentally, the judge in the case was not a full-time judge, but a working lawyer, in this case a QC, or Queen’s Counsel — who automatically became a King’s Counsel when Queen Elizabeth died and her son Charles became king — sitting as a part-time deputy district judge.

From this tweet:

In Harvard’s defense of its race-conscious admission program (pending at SCOTUS), a federal judge has ruled that Harvard’s insurance carrier properly denied coverage. FTA: “The Zurich policy required that Harvard should have given notice of the lawsuit by Jan. 30, 2016. However, Harvard first informed Zurich of the suit May 23, 2017.” Julianne Hill, Harvard flubbed insurance deadline, cannot access $15M policy, judge rules (ABAJournal.com Nov. 4, 2022).

https://www.jdsupra.com/legalnews/dr-mehmet-oz-introduces-company-to-8385203/

https://hh-law.com/wp-content/uploads/2022/11/Balmuccino-v.-Starbucks-Complaint-H2017482x9CF62.pdf

From Yochi Dreazen, Here’s what war with North Korea would look like (Vox.com):

Gregson thinks Kim [Jong Un] wouldn’t only use his chemical weapons against military targets in South Korea. The Pentagon has a sizable military presence in neighboring Japan, and the island of Guam is a US territory that is home to more than 163,000 American citizens. Both are well within range of Kim’s missiles and rockets — and Gregson expects both would be hit.

QUESTION: What are the two possible meanings of the italicized portion?

EXERCISE: Come up with two better ways to phrase the italicized portion — one for each possible meaning.

TEXT, provided by a customer to my client (“Supplier”):

Prices in this Agreement are fixed for the initial five (5) [sic] years of this Agreement.

Supplier reserves the right to increase prices for subsequent Renewal Terms by giving 30 days’ notice, subject to a cap not to exceed the increase in the Consumer Price Index (CPI).

[and later:] The [sic] Agreement shall renew [sic] automatically for 12 months at the end of the Initial Term (the ’Renewal Term’) and at the end of each Renewal Term unless notice to terminate is provided in writing at least 30 days before the end of the Initial Term or Renewal Term.

(Emphasis added.)

BACKGROUND: My client Supplier wants to make sure that it can non-renew if necessary, so that it doesn’t get stuck with five-year pricing.

I could propose to revise the italicized part so that it reads, “unless notice to terminate is provided in writing by either party ….”

QUESTION 1: Should I propose such a revision?

QUESTION 2: In return for the five-year price lock-in, should Supplier ask for some kind of business- or economic concession?

QUESTION 3: In return for the CPI-based price lock-in after the first five years, should Supplier ask for some kind of business- or economic concession?

QUESTION 4: Would “CPI” be the best inflation index?

From this Facebook post that was “liked” by a former colleague:

DCT to recount a Zoom call:

• The non-executive chairman of Client A became the new CEO of (new) Client B in the Pacific Northwest. (This sort of thing can be a significant source of new client work.)
• The CEO got me on a three-way get-to-know-you call with another senior executive of Client B (the CEO’s new company).
• At some point in the call, to get the point across that I wasn’t a newbie, I mentioned to the other senior executive that I’d been vice president and general counsel of BindView Corporation and that I’d helped BindView’s founder to start the company.
• The senior executive of Client B interrupted to say that his first job, as a junior software developer, had been at BindView; he had really enjoyed the job and the people he worked with because they’d set him on the path to where he is today (i.e., a senior exec at an established software company). We hadn’t known each other back then, but I could sense that in his eyes, I was now clearly “a good guy.”

Using the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, make some group notes about:

• what you thought was noteworthy about last week’s reading concerning confidentiality provisions)
• questions you think business people might have about carrying out confidentiality provisions

From here: “When filling out a job application, I saw they had a section for ‘previous life experience’, so I wrote down that I was a Pharoah in 2300 B.C.”

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

Caution: I’ll be erasing the “whiteboards” in between classes, so save whatever notes you want.

1.  “This Agreement may be terminated by either party upon no less than 30 calendar days written notice, without cause, unless a lesser time is mutually agreed upon by both parties. Said notice shall be delivered by certified mail, return receipt requested, or in person with proof of delivery.” QUESTION: Any issues about the italicized part? (Hint: Assume there’s a separate “Notices” provision.)

2.  “X.1. Each party may, at its sole discretion and with at least 30 days written notice, terminate this Agreement at-will. All amounts due must be paid within 30 days of termination.” QUESTION: Any thoughts about the italicized part?

3.  “This provision will apply if the Agreement, or applicable law, provides for termination at will.” QUESTION: So is termination-at-will allowed, or not?

4.  “… any termination of the Agreement has the effect of releasing both parties of all obligations and rights – except for those regarding confidentiality – that exist under the Agreement.” QUESTION: Any concerns here?

5.  “For a termination to be effective, the terminating party must give the non-terminating party 30 days notice of termination (separate from notice of breach, if any).” QUESTION: Would this work for you if your client was the terminating party?

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.)

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).

QUESTION: From the quotation: Wasn’t it a conflict of interest for the judge to preside over a trial where her own husband was the intended victim? Or is that the correct way to read the quotation?

QUESTION: From the headline in the link: 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?

This is a provision from an actual contract form provided by the “Customer” party; do the following in the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4.

–BEGIN–

x.x Termination. Customer may terminate the Agreement or any Statement of Work, in whole or in part, for convenience (i.e., for any reason or no reason) effective as of any date by giving Provider written notice of the termination. Except as provided in the last sentence of this Section, Customer’s failure to perform in accordance with the Agreement or otherwise comply with the terms of the Agreement will not be deemed to be grounds for termination by Provider, and Provider hereby expressly waives any such termination rights it may have. Provider acknowledges that Customer would not be willing to enter into the Agreement without assurance that the Agreement may not be terminated by Provider and that Provider will not have the right to suspend performance of the Services, in each case except, and only to the extent, expressly provided in the following sentence. If Customer fails to pay Provider when due any amount owed Provider hereunder, Provider will notify Customer of such default in writing, and if Customer has not cured such default within sixty (60) days after Customer’s receipt of such notice, then Provider may terminate the affected Statement of Work in whole upon at least ninety (90) days prior written notice to Customer.

–END–

ASSIGNMENT: As the attorney for Provider:

1. Break up the provision.
2. Rewrite to improve the readability AND to R.O.O.F.
3. Be prepared to discuss: Under what circumstances might this be a reasonable provision, looking at the provision “neutrally,” i.e., without advocating for either party?

See the Law Center academic calendar.

As an experiment:

• I’m going to use this link to randomly pick students to be called on – see the number assignments below.
• We’ll still do the “talk to your neighbor” part before I call on anyone to answer questions.
• If the random-number generator repeats itself before everyone has been called on, I’ll just generate another number.

Number assignments – 6:00 p.m. class

1. Josey
2. Joel
3. Jared
4. Jacob
5. Edward
6. David
7. Brittany
8. Benjamin
9. Victor
10. Venu
11. Taylor
12. Mackenzie
13. Lily
14. Lexi
15. Laura
16. Andrea

Number assignments – 7:30 p.m. class:

1. Jared
2. Andrew
3. Austin
4. Brendan
5. Caroline S.
6. Caroline T.
7. Collin
8. Graves
9. Yvonne
10. John
11. Justin
12. Kevin
13. Maxwell
14. Nathan
15. Ahmed

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

From the 11th Circuit:

… Tessco Technologies Inc. hired Landstar Ranger, Inc. as a transportation broker to secure a motor carrier to transport an expensive load of Tessco’s cargo to a purchaser across state lines.

But Landstar mistakenly turned the shipment over to a thief posing as a Landstar-registered carrier, who ran off with Tessco’s shipment.

Tessco’s insurer, Aspen American Insurance Company, sued Landstar, claiming Landstar was negligent under Florida law in its selection of the carrier.

Aspen American Ins. Co. v. Landstar Ranger, Inc., No. 22-10740, slip op. at 2 (11th Cir. Apr. 13, 2023) (affirming dismissal of insurance carrier’s negligence claim against transportation broker as preempted by Federal Aviation Administration Authorization Act) (emphasis and extra paragraphing added).

Comment: The insurance carrier’s lawsuit against the transportation broker is an example of subrogation: When the insurance carrier must pay out a loss on behalf of an insured, then the carrier “stands in the shoes” of the insured for purposes of being able to sue the party responsible for the loss.

FACTS:

• MathWhiz LLC’s draft services agreement with Gigunda Energy Inc. is silent about attorney fees.
• MathWhiz is in Texas, Gigunda (mainly) in California but has a significant Texas presence.
• MathWhiz will be doing its work pretty much exclusively in Texas.
• Mary Marvel (MathWhiz’s CEO) has heard confidentially that Gigunda’s board of directors is likely to fire the company’s CEO, and that Mary and Gigunda’s likely new CEO (whom Mary has known for years) do not have a great relationship.
• MathWhiz expects that it might someday have to sue Gigunda for payment.

CHALLENGE: Figure out how to set up the MathWhiz-Gigunda contract so that:

• Gigunda would (likely) be liable for MathWhiz’s attorney fees if MathWhiz had to sue for payment and won; BUT
• MathWhiz (likely) would not be liable for Gigunda’s attorney fees if MathWhiz sued for payment and lost.

QUESTION 1: If Texas law applied, and the contract was silent about attorney fees, what would be the attorney-fees rule if MathWhiz sued Gigunda for payment and won? EXPLAIN IN DETAIL.

QUESTION 2: Same question as 1 but MathWhiz sues Gigunda for payment and loses. EXPLAIN IN DETAIL.

QUESTION 3: If California law applied, and the contract was silent about attorney fees, what would be the attorney-fees rule if MathWhiz sued Gigunda for payment and won?

QUESTION 4: Same question as 3 but MathWhiz sues Gigunda for payment and loses.

QUESTION 5: What’s likely to happen if MathWhiz proposes the following clause to Gigunda: “Texas law will govern the interpretation and enforcement of this Agreement?

QUESTION 6: Under standard choice-of-law rules, what jurisdiction’s law will a court normally apply if neither side says anything on that subject?

QUESTION 7: Under standard choice-of-law rules, what factors would a court likely consider in determining what law to apply to a contract if the contract itself is silent about governing law?

QUESTION 8: In what jurisdiction is a contract considered to have been “made” if the contract is silent on that point?

QUESTION 9 — wrap-up: How could you, as MathWhiz’s counsel, try to set things up so that MathWhiz might get the result it wants as described above?

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 and extra paragraphing added.)

FACTS:

1. Gigunda wants MathWhiz to sign a master services agreement (“MSA”).
2. The MSA includes a one-sided confidentiality provision to protect Gigunda’s information.

3. The MSA also states that:

   a.  “Gigunda will be entitled to injunctive relief if MathWhiz breaches its obligations under the MSA or any statement of work.”

   b.  “MathWhiz WAIVES any requirement that Gigunda post a bond as a prerequisite to obtaining injunctive relief.”

4. Gigunda is a huge company that is loaded with cash.
5. MathWhiz very much wants to sign the MSA and get to work on a large, lucrative project for Gigunda.

QUESTION 1: Could item 3.a above be tweaked to make it a “sleeves from my vest” concession by MathWhiz?

QUESTION 2 – EXPLAIN IF FALSE: Item 4 above means that MathWhiz doesn’t need to worry about waiving the bond requirement.

QUESTION 3: What might you discuss with MathWhiz in advising whether MathWhiz should just hold its nose and agree to the above MSA terms?

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? (Hint: See the reading.)
4. What if anything could Texaco have done differently?

Tweet: “The commission that oversees ‘the process for obtaining a license as a building contractor in Maryland… has shifted its activities mostly online. Contractors report monthslong delays in renewing licenses, putting them at risk of liability for working without a valid license.’”

In groups, prepare to answer the following questions; feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4:

QUESTION 1: Which type of survival clause is better — and why:

• one that enumerates (lists) all surviving provisions; or
• one that states simply, “all provisions that by their nature should survive, do survive ….”

QUESTION 2: Would a survival clause preserve particular provisions after expiration of the agreement, as opposed to after termination?

QUESTION 3: Representing MathWhiz — but having a care for what Gigunda might want — what kind of post-termination “wrap-up” provisions should a drafter consider including in a MathWhiz-Gigunda services agreement?

QUESTION 4: Suppose that Gigunda wants to be able to “pull the plug” at will on its MathWhiz services agreement. Representing MathWhiz, how might you try to negotiate this request by Gigunda so as to protect MathWhiz’s business interests?

QUESTION 5: What kind of post-termination provisions could be included in a reseller agreement between a manufacturer and a reseller? (Consider what each party might want, especially from a business perspective.)

Know the difference — “it’s never a good thing to assume that a party will always act in its own best interest.”

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).

QUESTION: What could DTC have done differently — both in the contract AND operationally?

Walmart Is Flexing Its Muscle Again (WSJ.com Nov. 12, 2022): “The largest U.S. retailer and other industry giants are taking an increasingly aggressive stance with suppliers as the economy slows. ‘The world has turned.’”

1. FACTS: MathWhiz’s CEO asks you to draft a confidentiality agreement (“NDA”) between MathWhiz and Gigunda Energy. TRUE OR FALSE: In the NDA’s preamble, it’s OK to list Gigunda as simply “Gigunda Energy,” without more. EXPLAIN.
2. What would be a good title for the NDA?
3. For the NDA in #1, describe two ways you could avoid having to repeat the parties’ full legal names throughout the contract. What are some pros and cons of each way?
4. In the NDA’s preamble, how important is it to include the parties’ full legal names, and why? What about their state(s) of incorporation or other organization?
5. In the NDA’s preamble, would you say that the confidentiality agreement is (i) “between,” or (ii) “by and between,” or (iii) “among,” Gigunda and MathWhiz? (Does it matter?)
6. MORE FACTS: MathWhiz’s CEO tells you that she and her contact at Gigunda have already discussed, on a Zoom call, a limited amount of each party’s confidential information but they agreed orally to keep the information confidential. QUESTION: Is that oral agreement enforceable?
7. Same facts as #6: How could you set up the written NDA to cover the previous Zoom call?
8. MORE FACTS: MathWhiz’s CEO tells you that Gigunda wants the NDA to cover not just Gigunda’s confidential information, but also some confidential information of Gigunda’s wholly-owned Mongolian subsidiary. QUESTION: Which would be preferable:
   • State in the preamble that the NDA is between (i) MathWhiz, and (ii) Gigunda and its affiliates
   • State in the NDA that the Mongolian subsidiary’s information is to be treated as Gigunda’s confidential information.
9. To what extent would you want to put specific details of the NDA — for example, how long the confidentiality obligations of the NDA will last — into the NDA’s /Background section?
10. MORE FACTS: You learn that Gigunda’s lawyer has already prepared a draft of the NDA; that draft says, at the beginning: “This Agreement is made effective January 31, 20xx.” MathWhiz’s CEO asks you to review the draft and make any necessary revisions. QUESTION: Would you change the just-quoted sentence to state that the Agreement is effective the last date signed? Why or why not?
11. True or false: In an agreement title that contains party names, the full legal names of the parties must be spelled out in full in the title.

From the obituary of Inez Neill Winton, who died at age 97:

In early 1942, when American’s [sic] of Japanese ancestry were taken from their homes and relocated to internment camps, Inez went to the camp at Amache, Colorado to teach the children and open a library. She still received Christmas cards from several of the children she taught well into the 1960s including two who fought in the 442nd Infantry Regiment Brigade [sic].

QUESTIONS:

1.  What are two possible interpretations of the italicized portion?

2.  How could this be rewritten to clarify?

The case: Wagner v. Apache Corp., 627 S.W.3d 277, 285-86 (Tex. 2021) (affirming reversal of refusal to compel arbitration of indemnity claim; nonsignatory assignees’ assumption of contract caused them to be bound by arbitration provision).

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. [footnote 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.

(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.

(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?

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., 627 S.W.3d 277, 280 n.1 (Tex. 2021) (affirming reversal of refusal to compel arbitration; emphasis added).

See this rewrite of a (statutory) termination clause.

Apropos of unilateral amendments and arbitration clauses: 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, 990 F.3d 470 (6th Cir. 2021) (reversing order compelling arbitration).

After giving zero points to a number of students who said, “It’s probably unenforceable,” I decided to give 12 points out of 16 (I originally started giving 8 points but changed my mind). If you received fewer than 12 points for choosing the “it’s probably unenforceable” answer, shoot me an email and I’ll fix it.

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

FACTS:

• Gigunda is impressed with how you’ve represented MathWhiz, and has asked you to represent Gigunda USA in negotiating a master purchase agreement under which Gigunda USA and its various affiliates can issue purchase orders to buy widgets from Widgets Inc. You’ve been asked to review a draft of the master agreement, prepared by Widget’s lawyers.

QUESTION 1: Can you ethically represent Gigunda USA in this matter?

MORE FACTS:

• The preamble of the master purchase agreement begins: “This ‘Agreement’ is between Gigunda USA Corporation (‘Gigunda’), a California corporation ….”
• One provision of the draft states that “Widgets warrants to Gigunda that the widgets, as delivered, will be free from defects in materials and workmanship.”

HYPOTHETICAL: Suppose that one of Gigunda USA’s affiliate corporations, Gigunda Europe, were to order widgets under this master agreement, and it turned out that those widgets did have defects.

QUESTION 2: Would Gigunda Europe be able to sue Widgets for breach of warranty?

QUESTION 3: As Gigunda USA’s lawyer, how could you improve the warranty provision on this point?

FACTS:

1.  You’re a new associate in a law firm.

2.  A partner in the firm assigns a 1L part-time law clerk to draft a guaranty, under which the firm’s client ABC Corporation (“ABC”) — whose stock is publicly traded — will guarantee the payment obligations of one of ABC’s subsidiary companies to another company, XYZ. The partner asks you to look it over.

3.  The 1L part-time 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 1: Any thoughts? Is this a “hamburger for the guard dog” clause, and if so, is it appropriate? (Hint: Consider also the implications of the fact that ABC is a public company.)

MORE FACTS:

4.  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.” BUT the draft does not include a notices clause

5.  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 2: Any thoughts?

Apropos of our discussion this past Monday, I’ve been playing around with the following concept for a set of rules that parties could agree to as a way of promoting collaborative business relationships, without the rules being too much to read.

(Each of the rules below would include a link to the relevant Tango Terms [will that be the name?] provisions for additional background reading, but those provisions would not be binding unless the parties specifically agreed.)

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.

DCT to talk about this document that I recently did for a client.

FACTS:

1. You represent MathWhiz in a negotiation with Gigunda.
2. Gigunda’s lawyer, Ginny, sends you an email.
3. The “cc” line of Ginny’s email includes Gerry, a Gigunda business person.

QUESTION: Can you do a Reply to All without violating Rule 4.2 of the ABA Model Rules of Professional Conduct (which prohibits a party’s lawyer from communicating directly with another, represented party about the subject of the representation)?

POSSIBLE ANSWER: The ABA’s Formal [ethics] Opinion 503 says “yes, unless ….”:

In the absence of special circumstances, lawyers who copy their clients on an electronic communication sent to counsel representing another person in the matter impliedly consent to receiving counsel’s “reply all” to the communication.

Thus, unless that result is intended, lawyers should not copy their clients on electronic communications to such counsel; instead, lawyers should separately forward these communications to their clients.

Alternatively, lawyers may communicate in advance to receiving counsel that they do not consent to receiving counsel replying all, which would override the presumption of implied consent.

Worth reading. Excerpt:

Obviously, the best practice is not to include a client on emails with opposing counsel, although in my experience it is not uncommon. [DCT comment: It’s extremely common in transactional practice.]

By choosing to include clients, attorneys create practical problems (when a client responds to all or, at least, to opposing counsel), and raise ethical issues, including:

• Whether including a client’s email address in the CC line may disclose confidential information about the representation in violation of Model Rule of Professional Conduct 1.6;
• Whether opposing counsel is permitted under the Model Rules of Professional Conduct to reply to all in a response to an email that includes opposing counsel’s client;
• Whether including the client on an email as a CC or BCC creates a risk, contrary to the Model Rules of Professional Conduct, that a client will respond and include opposing counsel as a recipient, potentially disclosing privileged and/or confidential information; and
• Whether an attorney who receives privileged information on an email chain created by the use of CCs or BCCs has a duty to report the disclosure to opposing counsel.

(Formatting modified.)

FACTS:

• Gigunda’s lawyer wants to include an arbitration clause in the services agreement between Gigunda and MathWhiz.
• MathWhiz’s CEO, Mary Marvel, says that she’s heard that many lawyers consider arbitration “the worst of both worlds”; she doesn’t know why that would be, but she wonders whether it really makes sense for a small company like MathWhiz to agree to arbitration with a big company like Gigunda.

QUESTION 1: What specific disadvantages of arbitration do you think Mary might be referring to?

DIFFERENT SITUATION — FACTS:

• You’ve assigned a law clerk in your firm to prepare a draft of a simple project agreement with Gigunda.
• The law clerk has included a forum-selection provision stating that any dispute arising out of or relating to the agreement must be heard exclusively in “the courts of Texas.”

QUESTION 2: What TWO litigation-strategy dangers (depending on your perspective) might this pose?

QUESTION 3: What ONE negotiation-strategy danger might this pose for MathWhiz — is this something you really want to include in the draft project agreement that you send to Gigunda?

MORE FACTS:

• Gigunda’s lawyer, Ginni, reviews your draft project agreement.
• Among other changes, Ginni wants: (i) to add a waiver of the right to trial by jury, and (ii) to change the “heard exclusively in the courts of Texas” language to “courts of California”; she says that both are “required by company policy.”

QUESTION 4: What might those changes do to your overall risk assessment — and why?

QUESTION 5: If MathWhiz goes along with the courts-of-California language, and Gigunda sues MathWhiz in California state court, what kind of options might MathWhiz have: (i) to remove to federal court, and then (ii) to transfer to Texas federal court for the convenience of witnesses under 28 U.S.C. § 1404(a)?

QUESTION 6: Is there any way you can try to talk the Gigunda lawyer out of the change to California courts?

QUESTION 7: Can a contract specify multiple governing laws, to respectively handle different sections of the contract?

TEXT: From a Chris Tomlinson column in the Houston Chronicle: “Today, hydrogen is made almost exclusively for industrial uses from natural gas.”

POSSIBLE REWRITES — note the subtle differences in meaning:

1. “Today, hydrogen is made almost exclusively from natural gas.”
2. “Today, hydrogen is made almost exclusively for industrial uses.”
3. “Today, when it comes to industrial uses, hydrogen is made almost exclusively from natural gas.”
4. “Today, hydrogen is made almost exclusively from natural gas, and most hydrogen production goes to industrial uses.”

From a former student:

(When I looked up the actual article, it had been revised to fix this problem.)

Under California law and principles of contract law, the burden is on Amazon, as the party seeking arbitration, to show that it provided notice [to its drivers] of a new TOS [online terms of service] and that there was mutual assent to the contractual agreement to arbitrate.

The panel held that there was no evidence that the email allegedly sent to drivers adequately notified drivers of the update.

The district court therefore correctly held that the [narrower] arbitration provision in the 2016 TOS still governed the parties’ relationship.

Jackson v. Amazon.com, Inc., No. 21-56107, slip op. (9th Cir. Apr. 19, 2023) (affirming district court’s denial of Amazon’s motion to compel arbitration) (emphasis and extra paragraphing added).

FACTS:

• You represent Wanda, who manufactures electronic widgets. Each widget has a battery that Wanda buys from Bob; the battery is sealed into the widget and not replaceable.
• Gary manufactures electronic gadgets that include electronic widgets.
• Wanda wants you to draft a contract for her to enter into with Gary; under that contract, Gary will buy electronic widgets from Wanda.
• Gary has told Wanda that he wants the contract to include, among other provisions:
  • a warranty that the widgets do not contain any defects in design or manufacture; and
  • a provision requiring Wanda to indemnify Gary against any and all harm or expense that Gary suffers or incurs as a consequence of defects in the widgets.

“QUESTION” (exercise) 1: Using the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4, draft an appropriate provision — including any “fences” you think might be appropriate.

MORE FACTS:

• IMPORTANT: The negotiated contract between Wanda and Gary includes an exclusion of incidental- and consequential damages.
• Gary takes delivery of a large quantity of Wanda’s widgets and stores them in an appropriate storage room.
• In the storage room, the batteries in several of Wanda’s widgets spontaneously catch fire, resulting in major damage and causing significant “down time” for Gary’s gadget-manufacturing operations. (Remember hoverboards from a few years ago.)
• Citing the indemnity provision, Gary demands that Wanda reimburse him for the cost of:
  • repairs to Gary’s building;
  • replacement of the damaged contents of the storage room;
  • the travel expenses that Gary incurred in going to China and India to check out alternative sources of widgets;
  • the profits that Gary lost from the manufacturing down time.

QUESTION 2 – EXPLAIN IF FALSE: Wanda (the indemnifying party) need not reimburse Gary (the protected party) because under the law, an indemnity provision covers claims by third parties against the protected party, not direct claims by the protected party against the indemnifying party.

QUESTION 3 – EXPLAIN IF FALSE: If Gary sues Wanda for breach of her indemnity obligation, Wanda can probably get Gary’s claim for lost profits thrown out early (by moving for partial summary judgment) as barred by the contract’s exclusion of consequential damages.

QUESTION 4 – EXPLAIN IF FALSE: Wanda can probably get Gary’s claim for travel expenses dismissed on partial summary judgment as barred by the contract’s exclusion of incidental damages.

Question: Are multiple-answer quiz questions significantly harder than the equivalent true/false questions?

Note: If I were to break up a multiple-answer question into four or five T/F questions, then students would have to read the background of each T/F question, instead of having to read just one background and then choose the correct answer(s) (if any).

From Kevin Collier, New FTX CEO details ’complete failure of corporate controls’ at crypto platform (NBCNews.com Nov. 17, 2022):

The new CEO of FTX issued a searing indictment of the company’s operations Thursday in a court filing as part of the company’s ongoing bankruptcy process.

New CEO and restructuring officer John Ray wrote that the company had a striking lack of financial records, internal communications or even a clear idea of who worked there.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray, who noted that he has more than 40 years of legal and restructuring experience including overseeing Enron when it declared bankruptcy, wrote in the filing.

(Emphasis added.)

From Katherine Ellison, Getting his tattoo took less than 20 minutes. Regret set in within hours (WashingtonPost.com 2020): “Slavin, a former senior living properties executive, … argued that Zapatat has performed far more [tattoo-removal] treatments than most dermatologists ….”

QUESTION: What is a “living properties executive”?

QUESTION: How could this be clarified?

FACTS:

1. A professional-services firm asked me to draft an addendum to an existing “statement of work” that the firm had entered into with one of its customers. (I wasn’t involved.)
2. The statement of work recites that it is entered into under a Master Services Agreement dated March 21, 2022.
3. The firm provided me with copies of the statement of work and of the (purported) MSA.
4. The MSA, however, is actually titled “Master Purchase Agreement” (emphasis mine).
5. And the effective date of the MSA is not March 21, but March 30, 2022.

DISCUSSION QUESTION: How to fix this? Hint: Scan through this document – focus on:

• the title – notice the struck-out text;
• section 1;
• footnote 1; and
• the yellow-highlighted text.

From the Houston Chronicle: Offer to massacre survivors draws scorn

(My wife spotted this one over breakfast — and in the next day’s paper, a letter to the editor said that the headline writer and editor were tone-deaf.)

Summary:

• A contract’s forum-selection clause said that lawsuits “shall be brought before the district courts of Harris County” (Houston).
• The clause provided an exception for IP- or confidentiality-related injunctive relief “in any appropriate jurisdiction.”
• The plaintiff sued in state court.
• The defendant removed to federal court.
• The trial judge (Chief Judge Lee Rosenthal) ordered remand to state court.
• The Fifth Circuit affirmed, on grounds that the forum-selection clause was worded in a way that waived removal right: “Removal would thus amount to bringing a matter before a U.S. district court, in violation of the Agreement’s forum selection clause.” (Cleaned up.)

FACTS: The provision below is from a services agreement form used by Duke Energy, at https://goo.gl/imaf3v (archive.org).

ASSUME: You represent Contractor and are reviewing the services agreement form linked above — but don’t worry about any provisions in the agreement form that aren’t reproduced below.

1.  CONTRACT TEXT: “Upon prior written notice to and consent of Duke Energy (not to be unreasonably withheld), Contractor may have any portion of the Services performed by any Subcontractors of, including Persons related to or affiliated with, Contractor.”

QUESTION 1A: What practical problems could arise for Contractor from the “not to be unreasonably withheld” language?

QUESTION 1B: How could those problem(s) perhaps be at least somewhat mitigated?

QUESTION 1C: Why is the “including Persons related to or affiliated with Contractor” language included:

2.  TEXT: “Contractor and any proposed Subcontractors must meet the specific safety criteria as defined in the Duke Energy Health and Safety Supplemental Requirements [H&SSR].” COMMENT: It’s unlikely that Duke would back off from the substance of this requirement.

QUESTION 2A: Operationally, how is Contractor supposed to know just what it is supposed to do (or not do) under this clause?

QUESTION 2B: What would happen if Duke Energy were to revise its H&SSR?

QUESTION 2C: In view of Questions 2A and 2B above, what revisions — if any — might Contractor want to make to this clause?

3.  TEXT: “If requested by Duke Energy, Contractor must provide Duke Energy with copies of any contracts with third parties regarding the assignment of rights or delegation of duties hereunder.”

QUESTION: What changes — if any — might Contractor want to make here?

4.  TEXT: “Contractor will deliver to Duke Energy for Duke Energy’s review a written list of the Subcontractors that the Contractor proposes to engage or use in the performance of the Services before the [sic] Contractor enters any contract with any Subcontractor, and Duke Energy will have the right to approve or reject each proposed Subcontractor.”

QUESTION 4A: Substantively, what do you think Contractor might say about the “before the [sic] Contractor enters into any contract with any Subcontractor” language?

QUESTION 4B: Any issues with “Duke Energy will have the right to approve or reject each proposed Subcontractor”? (Hint: See #1 above.)

5.  TEXT: “No contractual relationship will exist between Duke Energy and any Subcontractor with respect to the Services.”

QUESTION 5: How might things play out if a Subcontractor sued Duke Energy, claiming that a contractual relationship did exist?

6.  TEXT: “Contractor will be fully responsible to Duke Energy and any applicable third party for all acts, omissions, failures, and faults of all Subcontractors as fully as if they were the acts, omissions, failures, and faults of Contractor.”

QUESTION 6: What kind of self-protective steps could Contractor take here?

In your small groups, use this checklist (in NCD) and the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4 to help you to answer the questions below about this purchase-order form (which I have not broken up, but you’re free to do so):

16. Warranty

16.1. Supplier warrants to Honeywell, its successors, assigns, customers, and end users that during the entire Warranty Period specified below, all Goods furnished (including all replacement or corrected Goods or components and regardless of whether all or any part of such furnished Goods or any replacement or corrected Goods was manufactured, distributed or otherwise commercialized by a third party prior to delivery by or on behalf of Supplier to Honeywell) will (a) be free from defects in material, workmanship, and design, even if the design has been approved by Honeywell, (b) conform to applicable drawings, designs, quality control plans, specifications and samples and other descriptions furnished or specified by Honeywell, (c) be merchantable, (d) be fit for the intended purposes and operate as intended, (e) comply with all laws and regulations, (f) be free and clear of any and all liens or other encumbrances, and (g) not infringe any patent, published patent application, or other intellectual property rights of any third party and not utilize misappropriated third party trade secret information. Goods that fail to meet the preceding standards are collectively called “non-conforming Goods.” Supplier must obtain third party warranties consistent with Section 16 for all raw materials, components, and services required by Supplier to perform under this Agreement (“Components”) and Supplier is solely responsible for ensuring that all Components meet these requirements. Any Component that fails to meet these requirements will be deemed to be a non-conforming Good.

16.2. As to services, in addition to any express or implied warranties, Supplier warrants that (a) it possesses the requisite expertise, facilities and equipment necessary and appropriate to perform the services, (b) the services will be performed in a safe and workmanlike manner, and (c) the services will be performed in accordance with the highest standards in the industry.

16.3. The Warranty Period is 36 months from the date of delivery to the end user or such longer period of time mandated by any longer government requirement covering the Goods. In addition to the warranties described above, Supplier also warrants all Goods to the same extent and for the same time period (if extending beyond 36 months) as the warranties provided by Honeywell to Honeywell’s customers relating to such Goods. These warranties are for the benefit of Honeywell, Honeywell’s customers, and any other person claiming by or through Honeywell. These warranties will survive any delivery, inspection, acceptance, or payment by Honeywell. Claims for breach of warranty do not accrue until discovery of nonconformance, even if the Goods were previously inspected. Any applicable statute of limitations runs from the date of discovery. If conforming Goods are not furnished within the time specified by Honeywell then Honeywell may, at its election, have the nonconforming Goods repaired, replaced, or corrected at Supplier’s expense or credited to Honeywell. Supplier is responsible for the costs of repairing, replacing or correcting nonconforming Goods or crediting them to Honeywell, and for all related costs, expenses and damages including, but not limited to, the costs of removal, disassembly, failure analysis, fault isolation, reinstallation, re-inspection, and retrofit of the nonconforming Goods or of Honeywell’s affected end-product; all freight charges, including but not limited to incremental freight expenses incurred by Honeywell for shipments of repaired, replaced, or corrected Goods to Honeywell and for shipments of repaired, replaced, or corrected Goods or finished product containing or incorporating repaired, replaced, or corrected Goods from Honeywell to any customer of Honeywell; all customer charges; and all corrective action costs. Unless set off by Honeywell, Supplier will reimburse Honeywell for all such costs upon receipt of Honeywell’s invoice. Any replacement Goods are warranted for the same period as the original Goods. Additionally, if any services are found not to be performed as warranted within a period of 36 months after the conclusion of the performance of the services by Supplier, Honeywell may direct Supplier to either refund to Honeywell the amount paid for the services, or perform the services again in a proper manner to the extent necessary to provide Honeywell with the result originally contemplated by Honeywell. The warranties and rights provided are cumulative and in addition to any warranty provided by law or equity.

16.4. If, following delivery, Goods exhibit a substantially similar repetitive root cause, failure mode or defect indicating a common or systemic failure (“Epidemic Failure”), then, without prejudice to Honeywell’s rights under Section 22: (a) the party discovering the failure will promptly notify the other and Supplier will provide to Honeywell a preliminary plan for problem diagnosis within one business day of such notification, which plan Supplier will revise at Honeywell’s request; (b) Supplier and Honeywell will diagnose the problem, plan an initial work-around and effect a permanent solution; (c) Supplier and Honeywell will agree on a plan for customer notification, replacement scheduling and remediation, including identification of suspect population, field removal, return and reinstallation, work in process (“WIP”), inventory replacement, and repair, or retrofitting, regardless of location or status of WIP completion; and (d) Supplier is responsible for all costs and damages associated with any Epidemic Failure. Honeywell and Supplier will work together in good faith to establish and expeditiously implement an Epidemic Failure action plan. If Supplier or any of its Component suppliers initiate any Product or Component recalls, retrofits, or service bulletins that affect Product quality, Supplier will immediately communicate this information to Honeywell.

16.5. [Omitted]

16.6. Goods and Services covered by this Purchase Order will comply with all applicable treaties, laws, regulations of the place of manufacture and Canadian, European Union and U.S. state and federal laws, regulations and standards (a) concerning the importation, sale, design, manufacture, packaging and labeling of its Goods, (b) regulating the sale of Goods, and (c) relating to the environment and/or the toxic or hazardous nature of Goods or their constituents, including (without limitation) the U.S. Toxic Substances Act, the U.S. Occupational Safety and Health Act, the U.S. Hazardous Communication Standard, the Federal Hazardous Substances Act, the California Proposition 65, European ROHS standards, and other current and subsequently applicable requirements; and Supplier agrees that it shall furnish promptly on request and provide all information and certifications evidencing compliance with such laws, regulations, standards and requirements.

QUESTIONS:

1. Who could sue Supplier for breach of warranty?
2. How long do Supplier’s warranties last?
3. Do Supplier’s warranties say that:
   • goods will be in a specified condition at delivery; and/or
   • goods will perform in a certain way for a certain period of time? Does that make any difference?
4. What if goods are bad due to a design flaw for which Honeywell is responsible?
5. In 16.1(c), what does “merchantable” mean?
6. In 16.1(d), what is “the intended purpose”?
7. In 16.1(g), what would it take for Supplier to know whether goods infringed a patent?
8. In 16.2, is there any inconsistency between (b), “safe and workmanlike,” and (c), “in accordance with the highest standards in the industry”? Should Supplier care?
9. In 16.2(a), why does Honeywell want Supplier to warrant Supplier’s skill, etc. — why not just ask for a warranty of results?
10. In 16.2, what is the implication of “in addition to any express or implied warranties”?
11. In 16.3, second and third sentences: Any issues here?
12. In 16.3, what could be the significance of the following:
    • “These warranties are for the benefit of Honeywell, Honeywell’s customers, and any other person claiming by or through Honeywell”
    • “Any applicable statute of limitations runs from the date of discovery.”
    • Any replacement Goods are warranted for the same period as the original Goods.“ Any ambiguity here?
    • “The warranties and rights provided are cumulative and in addition to any warranty provided by law or equity.”
13. In 16.3, do you see any potentially-enormous financial exposure for Supplier?
14. In 16.4(c): “Supplier and Honeywell will agree on a plan for customer notification, replacement scheduling and remediation, including identification of suspect population, field removal, return and reinstallation, work in process (“WIP”), inventory replacement, and repair, or retrofitting, regardless of location or status of WIP completion[.]” QUESTION: Any issues here?
15. In 16.6: Any potential problems here?

1. QUESTION: When parties argue for opposing interpretations of a particular contract provision, what’s the court’s FIRST step in analyzing each of the proffered interpretations?
2. FACTS: “Alice” claims that a contract term means one thing, “Bob” claims that the term means something else.
   • QUESTION – 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.

From this tweet: “Biden ripped for meeting protesting TN Dems, not shooting victims’ families”

One of the tasks you’re likely to face as a junior associate will be to supervise having contract-related documents “notarized.”

ASSUME: All events take place in Houston and are subject to Texas law.

NOTE: When a question cites a specific subdivision of a Texas statute — e.g., “(c)” or “(d)” — be sure to zero in on that specific subdivision.

FACTS: Nick, a notary public, is approached by Sigourney Signatory, an individual. Sigourney asks Nick to “notarize” a document, which appears to have a handwritten name, “Sigourney Signatory.”

QUESTION 1 – MORE FACTS: Sigourney says that her driver’s license and passport were both stolen. The notary form at the bottom of the document recites this assertion and states that Sigourney orally swore before Nick that Sigourney was in fact her name. TRUE OR FALSE: In these circumstances, Sigourney’s oath about her identity would be an acceptable way for Nick the Notary to confirm that Sigourney was indeed who she claimed to be. (See Tex. Civ. Prac. & Rem. Code § 121.005(a).)

QUESTION 2 – MORE FACTS: Nick has known Sigourney since they were both in the same fifth-grade class (but they’re not married and have never dated or anything like that). TRUE OR FALSE: Nick can notarize Sigourney’s signature without asking for her driver’s license.

QUESTION 3. TRUE OR FALSE: In Sigourney’s document, the certificate of acknowledgement for Nick to sign must state that, in Nick’s presence, Sigourney took an oath (or affirmation) that the contents of her signed document were true. (See this explanation.)

QUESTION 4 – MORE FACTS: Nick rummages around his desk drawers and can’t find his embosser (“scruncher”) notary seal. TRUE OR FALSE: Nick may simply sign the notary certificate and skip applying any kind of seal. (See Tex. Gov. Code § 406.013; Tex. Civ. Prac. & Rem. Code § 121.004(b)(3).)

QUESTION 5 – MORE FACTS: In checking another desk drawer, Nick finds an ink-stamp seal with the notary seal of office and his name and notary-public title. TRUE OR FALSE: Nick can use his ink-stamp seal in lieu of his embosser seal.

QUESTION 6. MORE FACTS: Nick keeps looking and does find his embosser seal. He signs the acknowledgement certificate and “scrunches” the paper with the embosser. TRUE OR FALSE: That’s all Nick needs to do — he can collect a fee from Sigourney and send her on her way. See Tex. Civ. Prac. & Rem. Code § 121.012; Tex. Gov. Code § 406.014.

QUESTION 7 – MORE FACTS: Sigourney asks Nick if, while he’s at it, he can also notarize the signature of Sigourney’s business partner, Irving, who is traveling on business. TRUE OR FALSE: While Nick is a “traditional” notary public, he has also qualified and registered to be an “online” notary, so he can use a special procedure to notarize Irving’s signature in absentia. (See Tex. Civ. Prac. & Rem. Code § 121.004(a) and this Texas Secretary of State publication, especially “Eligibility”.)

QUESTION 8. TRUE OR FALSE: Most contract signatures should be notarized.

TEXT (from a dispute that I arbitrated): A contract states that payments remaining past due more than 30 days after the due date will bear interest at “a rate per annum equal to the prime rate published by the Wall Street Journal on the business day before the date on which such interest begins to accrue, changing with each change in such published rate, plus two percent (2%).“

FACTS: On the relevant date, the Journal’s published U.S. prime rate was 4.00%.

QUESTION: On its face, from a drafting style perspective, what’s wrong with this interest-rate provision?

QUESTION: What interest rate should be applied to the late payment — 6%, or 4.08%?

QUESTION: How could the interest-rate language be clarified?

A student wrote: “If Math-whiz fails to provide the Invoice on the tenth day of any particular month, Gigunda will penalize Math-Whiz up to USD$200.00 per day until the Invoice is received. This provision may be altered by written agreement, acknowledged by both parties.”

QUESTION 1: Is the “penalize” language the best choice?

QUESTION 2: What’s an alternative way to express this?

QUESTION 3: What exactly does the second sentence mean — and is it even needed?

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.”

In groups — feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       •  Group 3       •  Group 4

1.  Conceptually, what is the difference — if any — between an indemnity and a warranty?

2.  TRUE OR FALSE? IF: Alice agrees to indemnify Bob against damage arising from occurrence of Event X; THEN: This reduces the risk to the parties associated with the (possible) occurrence of Event X. (CAUTION: Read this carefully.)

3.  TRUE OR FALSE? An indemnity obligation allocates at least some of the financial risk of Event X.

4.  TRUE OR FALSE? The following is an acceptable conventional phrasing: Alice hereby indemnifies Bob against any damage Bob might incur if it rains tomorrow.

From Katie Stancombe, COA affirms breach, fraud, unjust enrichment claims brought by bank:

A bank that brought breach of contract, fraud and unjust enrichment claims against its loanee won each of those claims on appeal, but failed to state a claim that the loanee violated the “usual and customary practices” laid out in its participation agreement, according to a Friday opinion from the Indiana Court of Appeals.

(Emphasis added.)

QUESTION: “Loanee” ????? What might be a better word?

Please fill out my feedback document – I’m always looking for ways to improve the “download speed” of information.

See the UH instructions

Jeopardy! game

RULES:

1. No prizes — sorry ….
2. You MUST wait to buzz in for a question until I finish reading that question aloud (so that slower readers won’t be penalized).
3. I’m not a stickler for the answer being in the form of a question.
4. If one team gets too far ahead, I might “bench” that team for a time, so that others will have a chance to answer.
5. If one team consistently buzzes in but gets beat to the buzzer by another team, I might call on the later-buzzing team anyway.
6. And the greatest of these rules: My game, my rules ….