Class Plan for Contract Drafting Fall 2025

Here are some student questions from prior semesters and my answers (edited):

Thinking ahead:

STUDENT: As Wednesday Addams is unavailable to sign the agreement on September 30 and because the assignment states to draft the signature block for Addams Investments, LP, are we only drafting their signature block? Or should we also draft Widget, Inc.'s signature block on the next page?

DCT: You’ll want to: (1) Read the assignment carefully. (2) Try to anticipate what your supervising partner would want next and take a stab at doing it — as long as it wouldn’t involve a lot of billable time — to give the partner something to look at and maybe prompt him or her to think of something that s/he might otherwise have forgotten. (Label it appropriately.) Good job checking.

Drafting for signature by a designated "agent":

STUDENT: Since an agent will need to sign with actual or apparent authority, would it be best to put "Title of Agent" underneath the signature to evidence that I am acting as an agent of the LP?

DCT: Be sure to read the assignment carefully. If an agent is signing, I'd probably have it say, e.g., "By Andy Anderson, authorized agent."

STUDENT: Do I need to even list the general partner, Addams Operations Inc., if I am signing as an agent?

DCT: Probably not, if the signer is identifying him/herself as the agent of Addams Investments LP.

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

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

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

1. you think are sufficiently important that you would normally want such a letter agreement to address — and why that's the case, i.e., what could go wrong if the issues aren't addressed in the letter agreement, BUT:
2. given the circumstances and Mary's expressed concerns, you think that in Dave's case it's likely an acceptable risk to omit those issues from the letter agreement.

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

Remember: Our job as lawyers is to point out (i) possible what-if events; (ii) potential consequences; and (iii) sometimes, our assessment of the likely overall business risk.

Here are some comments I've made to student drafts in previous semesters.

There's a lot of material here, so I've bold-faced selected text.

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." QUESTION: Does "this employment agreement" work for a letter agreement?

3.  TEXT: "For the term of your employment, MathWhiz agrees to employ you in the position of Director of Business Development." QUESTION: Does the italicized part cause any concern? Hint: Could an aggressive trial counsel, representing Dave, try to argue that there's an implied covenant here?

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 only an option, exercisable at Buyer's discretion, without committing Buyer to Buy.

5.  TEXT: "You will report to Mary Marvel (the “CEO”)." QUESTION: If Mary is the one signing the letter, does it "sound right" for her to refer to herself by her name?

6.  TEXT: "Your employment shall be is [or, will be] “at will,” …." COMMENT: I'm not fond of "shall be," especially in letter agreements — use "is" or "will be" or (if imperative) "is to be" or "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." QUESTION: How many potentially-negotiable topics are being addressed in this one paragraph? Is there a better way to do it?

8.  TEXT: "Your annual salary will be [ADD: at a gross annual rate of] $[INSERT SALARY AMOUNT] …." COMMENT: We want to roadblock any claim by the employee to that s/he was entitled to a full year's pay — without deductions — 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. QUESTION: To the greatest extent not prohibit by what? By law? By some other agreement? Do we even need the "To the greatest extent" preamble? How could this be fixed?

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.  Omitted

12.  TEXT: "The Company may unilaterally amend this Agreement by providing at least five days’ notice to the you." QUESTION: What do you think Dave's reaction would be? QUESTION: Is this even necessary? (Keep in mind it's at-will employment.)

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, a post-term noncompetition covenant if there is one (see the course materials); that would like make your client MathWhiz quite unhappy.

14.  TEXT: "Dear Mr. Dave Doright" QUESTION: Does this look right for a business letter? How could it be fixed?

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 in a letter from Mary.

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 [in a countersignature block]: "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 corroborate his testimony 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's shown 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 [sic] the following terms and conditions (this 'Agreement')."

QUESTION: Who is obligated by this sentence?

QUESTION: Is there a "dangling participial phrase" problem here – see, e.g., this article.

COMMENT: "… shall be in compliance by the following" would not be the correct preposition; it'd be "shall be in compliance with the following …."

27.  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?

28.  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.

29.  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, a nonsolicitation covenant might be invalid. (See the RPM discussion.)

30.  One student created a formal employment agreement and used the defined term "You" for Dave Doright.

• COMMENT: The assignment specifically said to do a letter agreement.
• 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.

31.  If using the term "You" (capitalized), be consistent about capitalization — inconsistency on that score has caused costly problems for companies, as discussed in the RPM book.

32.  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.

33.  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.

34.  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: For an executive, 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.

35.  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. See the RPM discussion.

36.  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."

37.  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.

38.  TEXT (in student's draft email to Mary): "While your employment agreement with Mr. Doright is legally binding, I’ve spotted a few omissions that I believe to be prudent to address at this time." COMMENT: I'd avoid making any pronouncements about "legally binding" — that likely would be construed as a legal opinion, and you don't want to be doing that with a client unless you're being very explicit about it, and going into a lot more detail about what it takes to be legally binding, and noting any assumptions and exceptions.

In a Word document that you upload to Canvas, simplify the following provision.

Assume that all capitalized defined terms (e.g., "Earn-Out Year") are defined elsewhere:—

See the tips immediately following the provision to revise.

[START OF TEXT TO EDIT]

(c)     Within sixty (60) days after the end of an applicable Earn-Out Year, Purchaser shall (i) prepare or cause to be prepared a statement setting forth: (A) following Year One, the calculation of the Annual Earn-Out Payment applicable to Year One; (B) following Year Two, the calculation of the Annual Earn-Out Payment applicable to Year Two; (C) following Year Three, the calculation of the Annual Earn-Out Payment applicable to Year Three; (D) following Year Four, the calculation of the Annual Earn-Out Payment applicable to Year Four and (E) following Year Five, the calculation of the Annual Earn-Out Payment applicable to Year Five (with respect to each Earn-Out Year, an “Earn-Out Calculation”) and (ii) deliver the applicable Earn-Out Calculation to Seller, together with (A) reasonable supporting documents and (B) payment to Seller, by wire transfer of immediately available funds to an account designated in writing by Seller, of the Annual Earn-Out Payment, if any, calculated by Purchaser to be payable based on such Earn-Out Calculation. Seller shall have a period of thirty (30) days after receipt of the applicable Earn-Out Calculation with respect to the applicable Earn-Out Year to notify Purchaser in writing of Seller’s election to accept or reject such Earn-Out Calculation as prepared by Purchaser. In the event Seller rejects in writing such Earn-Out Calculation as prepared by Purchaser, such rejection notice (the “Rejection Notice”) shall contain the reasons for such rejection in reasonable detail and set forth the amount of the requested adjustment. In the event no Rejection Notice is received by Purchaser during such thirty (30)-day period, the Annual Earn-Out Payment for such Earn-Out Year (as set forth in Purchaser’s Earn-Out Calculation) shall be deemed to have been accepted and shall be final, conclusive and binding on the Parties hereto. In the event that Seller shall timely reject an Earn-Out Calculation, Purchaser and Seller shall promptly (and in any event within thirty (30) days following the date upon which Purchaser received the applicable Rejection Notice from Seller rejecting such Earn-Out Calculation) attempt in good faith to make a joint determination of the Annual Earn-Out Payment for the applicable Earn-Out Year, and such determination and any required adjustments resulting therefrom shall be final, conclusive and binding on the Parties hereto. In the event Seller and Purchaser are unable to agree upon the Annual Earn-Out Payment for the applicable Earn-Out Year within such thirty (30)-day period, then Purchaser and Seller shall jointly engage the Accounting Firm to resolve such dispute and promptly submit such dispute for resolution to the Accounting Firm. The Parties shall jointly instruct the Accounting Firm to make a determination within thirty (30) days after its engagement or as soon as practicable thereafter. The Accounting Firm’s determination shall be limited to resolving the disagreement set forth in the Rejection Notice. The determination of the Accounting Firm and any required adjustments resulting therefrom shall be final, conclusive and binding on all the Parties hereto. The fees and expenses of the Accounting Firm shall be allocated between and paid by Purchaser and/or Seller, respectively, based upon the percentage that the portion of the contested amount not awarded to each Party bears to the amount actually contested by such Party, as determined by the Accounting Firm.

[END OF TEXT TO EDIT]

I'll show my own rewrite in class after the submission date.

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 Seller shall timely reject If Seller timely rejects
2. Seller shall have a period of 30 days Seller 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 set forth is to set forth ….
5. The Accounting Firm will is to allocate its fees and expenses between the Parties ….
6. If Seller and Purchaser are unable to agree do not agree upon the Annual Earn-Out Payment …. COMMENT: We don't want to get into an argument over whether Seller and Purchaser were "unable" to agree; all that matters is that they didn't agree.
7. Apropos of the accounting-firm determination, consider reviewing the Audits reading material, especially the part about who pays for audits.

This exercise concerns the agreement-termination provision below, from the agreement by which Verizon acquired Yahoo!.

FIRST: For context, look at the abomination that is subdivision (b)(i):

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) the Closing shall not have occurred by April 24, 2017 (the “Outside Date”); provided, that (A) if the SEC shall not have cleared the Proxy Statement by March 10, 2017, then either party (provided that it has complied in all material respects with its obligations under Section 4.02(a)) may, by written notice delivered to the other party, extend the Outside Date by three (3) months; and (B) if on the fifth (5th) Business Day prior to the Outside Date (including as extended one time pursuant to Section 6.01(b)(i)(A) or this Section 6.01(b)(i)(B)) the conditions set forth in Section 5.01(b) and Section 5.01(c) (solely on account of a temporary or preliminary Governmental Order) are not satisfied, but all other conditions set forth in Article V shall have been satisfied or waived (excluding conditions that, by their terms, cannot be satisfied until the Closing, which conditions would be capable of being satisfied at such time), then either Seller or Purchaser (provided that it has complied in all material respects with its obligations under Section 4.05) may, by written notice delivered to the other party hereto, extend the Outside Date by three (3) months; provided, further, that the right to terminate this Agreement under this Section 6.01(b)(i) shall not be available to a party, if any failure by such party to fulfill its obligations under this Agreement shall have been the primary cause of, or shall have resulted in, the failure of the Closing to occur on or prior to the Outside Date (as extended pursuant to clause (A) or clause (B) of this Section 6.01(b)(i)) ….

[remaining subparagraphs omitted]

Take a stab at rewriting just the following subdivision b(ii) by breaking up the "thicket clause."

Assume that all defined terms (e.g., "Governmental Authority" have been defined elsewhere:

[BEGIN]

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 - it's shown under FIRST above]

(ii) any Governmental Authority of competent jurisdiction shall have 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 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

[remaining subparagraphs omitted]

[END]

I'll show my rewrite in due course.

Consider the following comments from previous semesters:

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" does seem to appear in contracts, but it's not entirely clear what that term supposedly means — we'll cover this when we get to best efforts.
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 Terminating Party seeks to terminate this Agreement, THEN: 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: Possibly this shouldn't be imposed as a positive obligation, but instead as merely a prerequisite — as in, "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?

The following 189-word sentence is from a customer's 302-page master services agreement that I once had to review on behalf of a supplier client:

[BEGIN QUOTE]

Contractor shall pay all salaries, fees, charges, taxes and contributions of all persons who at any time are engaged in the provision of Work and/or Services under or pursuant to the Agreement and without prejudice to the generality of the foregoing Contractor shall at all times fully and effectively indemnify keep indemnified and hold harmless Buyer and its officers employees and contractors from time to time (whose loss shall be deemed to be loss suffered or incurred by Buyer and on whose behalf Contractor hereby acknowledges Buyer shall be entitled to claim) from and against all costs, losses, damages, fees, expenses and charges (including without limitation legal fees) arising from any claim howsoever and whensoever arising (and including by way of example but not limitation any law or regulation relating to the transfer of all or any part of any undertaking business or contract) by or in relation to all or any of such persons connected in any manner with their contract of employment or their contract for the provision of services (in particular but without limitation any claim of a breach of contract redundancy or unfair dismissal).

[END QUOTE]

Assume that you represent the Contractor.

1. In a Word document, turn the above into something much-more readable.
2. Use Word comment bubbles to flag any issues that you think should be discussed with the client.

1. 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.
2. Too-many students didn't read the original language carefully — their rewrites were completely open-ended about the scope of the indemnity obligation, and in the few cases where the student added a (purported) limitation further down, it wasn't at all obvious that the added language was intended to be limiting.
3. Some students seriously misread the "without prejudice" language — be sure to think about (or look up) what it means.
4. "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.
5. My guess is that 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 Buyer's employees, etc., as required.
6. The "Contractor acknowledges" term is probably superfluous.
7. It's not unreasonable for Buyer to want Contractor's indemnity obligation (for Contractor's employees) to extend to Buyer's other contractors.
8. Put fences around indemnity obligation? Time? (Buyer might agree.) Dollar cap? (Buyer will push back.)
9. What does "keep indemnified" mean? (At best, it's redundant — same with "hold harmless.")

MathWhiz wants to have a simple agreement template under which MathWhiz can pay a referral commission to individuals and/or organizations that refer business to it.

The amount of the commission will be 5% of the first sale that MathWhiz makes to a given customer.

1. Consider using this bare-bones contract template.
2. Don't necessarily include all the bells and whistles of the RPM referral provisions — remember, MathWhiz wants a simple agreement that ideally can get signed without the other side getting its lawyer(s) involved.
3. Consider putting key business details in a schedule at the beginning (as well as the signature blocks), along the lines of the Stanford-Tesla lease.

Here are some comments I've made in past semesters when grading students' referral agreements.

1. This Clause? At the beginning, "This Clause applies …" isn't appropriate — it should be: "This Agreement …." The RPM referral provisions are designed to be incorporated by reference; if you're going to copy and paste its 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.) Use "individual or organization instead if that's what you need.
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 RPM provisions become more widely recognized and adopted, it's better either:
   • to leave out a recordkeeping requirement, or
   • to include a bare-bones, standalone requirement in the body of the agreement, without referencing the RPM as an external standard. (The same is true for all RPM provisions.)
7. Numbering: For "list" subdivision paragraphs that are all part of the same grammatical sentence, it's better to use (1), (2), etc. — numbering such as "3.2.1" and "(a), (b)," etc., should be for complete sentences.
8. Numbering: For internal subdivisions in a sentence (without separate paragraphs), 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. (The same is true for other numbering.)
10. Capitalization: Be consistent about capitalizing "Company" and similar defined terms; see the readings about defined terms for cases where inconsistency in capitalization has caused problems.
11. Paragraphing: The RPM 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 commitment to just the referring party's being obligated.
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. (If
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.
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. Escalation? For any kind of agreement that will extend for a period of time, I like to include an internal-escalation clause for disputes.
19. 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 poking the bear.
20. 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.
21. 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, "MathWhiz will pay a commission if Associate refers …."
22. 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 that's being drafted IS the "if and when …."
23. CLAUSE: "Both Parties represent that they …." COMMENT: This would be better phrased as "Each Party represents that it …." That way, you reduce the (slim) possibility of someone making a (questionable) argument about joint statements or some such.
24. CLAUSE: "Both parties agree that the Referrer is an independent contractor …." COMMENT: Better to say "Each party agrees …."
25. When the signature blocks are in front, it's better to say at the end, "END OF DOCUMENT" (centered, maybe italicized), to reduce the chance that someone might try to surreptitiously slip in extra text that wasn't agreed to.
26. The introductory paragraph, "Upon the Effective Date of this Agreement, Referring Party may refer customers to MathWhiz" could be ambiguous — is it ONLY upon that date?
27. DON'T: "This section withstands termination of this Agreement." BETTER: "This section will survive termination of this Agreement." (Termination is in the future, and "survive" is a term of art that lawyers and judges know well.)
28. If you name the "Associate" in the top table, you could just have the signature block say "AGREED: Associate" instead of "AGREED: XYZ" — it'd be one less place to have to make the change.
29. DON'T: "This Agreement applies when: Company is to pay Associate commissions on Company sales …." COMMENT: This implies that some other agreement might be required for MathWhiz to be obligated to pay commissions, but this Agreement IS the agreement to pay commissions.

CLAUSE: "If internal escalation does not result in settlement, either party may submit the dispute for mediation in accordance with American Arbitration Association rules." QUESTION: Must the other party participate in the mediation? When definitions are at the end, it wouldn't hurt to say so at the beginning (maybe in bold?). CLAUSE: "This Agreement will be governed by and construed according to the laws of the State of Texas." COMMENT: Do you want it to be the internal laws of Texas? DON'T: "At the same time as this Agreement is being signed, MathWhiz and Referrer are entering into a Referral Agreement (“Agreement”)." COMMENT: This is the Referral Agreement. DON'T: Refer to the referring party as "Customer." CLAUSE: "To execute a valid Referral and be eligible to receive Referral Commission, Customer [sic] must fill out and send MathWhiz the Customer Referral Form, attached hereto as Exhibit A." COMMENT: Saying "Customer must" isn't the best idea — what if it doesn't happen? (R.O.O.F.!) Better to encourage it but not make it mandatory. "Prospect" is better than "Referred Party" (which could be confused with "Referrer"). DON'T: Say that this is between MathWhiz and Gigunda — the instructions are to draft a fill-in form. Student's signature block: "AGREED: [Associate's name]." BETTER: "AGREED: [ASSOCIATE'S NAME]." COMMENT: ALL CAPS is better for fill-in spots because they're more eye-catching for drafters. COMMENT: I can see why a drafter wouldn't include an audits provision for a referral agreement. But if this were a major revenue-producing agreement for the other party, MathWhiz likely would want to include an audits provision just to forestall having the other party propose a really-onerous one. I docked one point for not updating the running footer in the document. TEXT: "Associate will refer Prospective Customers …." COMMENT: That might not be appropriate: Normally, referral agreements don't require referrals, they just say, in effect, if you do refer a customer, then I'll pay you a commission. TEXT: "Associate's duties under this Agreement are limited exclusively to locating Prospective Customers and notifying Company." COMMENT: This limitation on "duties" doesn't preclude Associate from doing other things if it wants — and MathWhiz might well want to impose such limitations. TEXT: "Any expenses incurred by Associate in connection with carrying out its duties under this Agreement will be paid by Associate." COMMENT: This is passive voice — better to say, "Associate will pay …" or "Associate is responsible for …." (This isn't one of those cases where it doesn't matter who actually does the action.) TEXT: "Company will have no obligation to reimburse Associate for any expenses incurred …." BETTER: "Company need not reimburse Associate …." TEXT: "Non-exclusivity: During the Term of this Agreement Company may engage any other firms and/or individuals to act as an Associate with respect to the sale of any of Company’s goods or services." COMMENT: Better to just say "This Agreement is non-exclusive as to each party," because Company's right to engage others won't expire with the Term. (Here, it doesn't matter, but in other contexts, it might.) TEXT: "All non-public, confidential, or proprietary information of Company or Associate …." COMMENT: MathWhiz isn't going to want to commit to confidentiality obligations for Associate's information — there won't be any disclosed (in all likelihood), and MW won't want to open that door.

See 1.3 for the link to your initial seating assignments. Please:

• find your initial group; and
• sit where indicated in the seating diagram.

(In-the-news summaries of interesting contract-related cases are a regular feature of this course.)

Last week the Ninth Circuit published an opinion about the 70s rock group Supertramp.

1.  The band's two principal songwriters had entered into a written contract to share their publishing royalties with other band members and the group's manager.

2.  But the songwriters suddenly stopped paying their (by-now former) colleagues, asserting the right to "terminate at will" because the royalty-sharing contract didn't have a definite term — and a Los Angeles federal judge and jury had agreed. (Concerning termination at will generally, see the Contract RPM discussion, which we'll get to later in the semester.)

3.  The Ninth Circuit reversed, holding that — properly interpreted under California law — the contract had an implied term that precluded termination at will. See Thomson v. Hodgson, No. 24-2858, slip op. at 4-5 (9th Cir. Aug. 20, 2025). The appeals court remanded with instructions to render judgment for the bandmates and manager on the issue of liability.

(Judging from the song titles in the opinion's introduction, it seems that Judge Wardlaw's law clerk — or perhaps the judge herself — might be a Supertramp fan.)

4.  For your general information (which won't be tested): The opinion also mentions how copyright royalties typically work in the music business — which led to the band members' entering into the contract in suit because the two songwriting members were making a lot more money than the other members and the manager.

You'll use Canvas to submit all drafting assignments, take-home quizzes, and the final exam, and that's how I'll provide feedback on your drafting assignments.

So: Be sure you're enrolled in this course in Canvas — see here for the course number.

In your small groups you'll be doing some in-class handwriting of contract term-sheet outlines, along with a certain amount of hand-copying or sketching of diagrams in the course materials such as the "Hill of Proof" (helping keep straight the difference between "representations" and "warranties") and the "Battle of the Forms Drop-Out Rule."

/[DCT TO DO: ADD LINKS TO EXISTING DIAGRAMS]/

Reason 1: In previous semesters, I've noticed — and students commented — that their small-group "discussions" increasingly consisted of everyone typing notes into the group "whiteboards," instead of talking to each other. The students weren't keen on not talking to each other, and pedagogically it's not great. So now I lock the group whiteboards except for the specific times when we do in-class drafting exercises.

Reason 2: This semester I'll be experimenting with having each student draw simple diagrams — for example, a "ladder diagram" of a typical sale transaction between companies – _and handing them in to me for a (minimal) grade).

Reason 3: Some research indicates that writing notes and sketching diagrams by hand — as opposed to typing — can improve comprehension and retention; this is thought to be because handwriting requires more mental processing by the notetaker than passively transcribing what's being said.

Taking notes on laptops rather than in longhand is increasingly common. … The present research suggests that even when laptops are used solely to take notes, they may still be impairing learning because their use results in shallower processing.

In three studies, we found that students who took notes on laptops performed worse on conceptual questions than students who took notes longhand.

We show that whereas taking more notes can be beneficial, laptop note takers' tendency to transcribe lectures verbatim rather than processing information and reframing it in their own words is detrimental to learning.¹

A later study concluded:

Using a cross-sectional survey, the longhand note taking cohort was more likely to agree with there being fewer distractions and temptations, and having high-quality notes that other students ask to look at, while being more likely to disagree that their attention span limits their understanding.

They also reported recommending that other students attempt more frequent use of longhand note taking, even while recognizing that this modality might not be suitable for all students in all types of courses.²

Some other researchers, though, argue that handwriting's advantages over laptop typing are not statistically significant, and so students should use whatever approach works for them.³

Please tell us a little bit about yourself:

• Name (if you prefer a nickname on your name tent, please mark it up)
• Class year (3L, 2L, LLM)
• Contract-related experience?
• Something boring about yourself?

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

• I'll pose a question — usually pre-positioned on this Web page, see this example, or possibly in the Contract RPM book — and ask you to discuss the question for a minute or two in your small groups.
• Then, for that question, I'll spin the wheel to call on people. Or, I might announce, "open mike," meaning anyone can volunteer to answer.
• Generally, once I've called on you three times in a class session — it can happen, that's the nature of (pseudo)-randomness — I'll remove your name from the wheel until everyone else has been called on.

That way:

• Neither you nor I know who I'll be calling on to answer a question.
• You have to be ready to answer each question — but you get to discuss the question with your group before I call on anyone.
• You can't mentally "check out" after I've called on you — because I might call on you again ….

This is a form of what pedagogy researchers call "active learning." Research has shown that this improves learning outcomes, even though some students dislike it (think of it as like going to the gym):

Comparing passive lectures with active learning using a randomized experimental approach and identical course materials, we find that students in the active classroom learn more, but they feel like they learn less.

We show that this negative correlation is caused in part by the increased cognitive effort required during active learning.

[DCT translation: You have to work harder in class, but it's worth it.]

(Emphasis and extra paragraphing added.)

At the end of the day, students in our course seem to come around concerning this approach. This is pretty clearly shown by course feedback, from Law Center end-of-course reviews except as otherwise noted:

•  "One thing that worked really well for me was being in groups. Sometimes I wouldn't really 'get' something from the readings, and talking with my group is what helped the material click."

•  "Knowing that the other people in your group still need you to stay engaged helped with people not checking out after their name was called on."

•  "We liked [written questions for small-group discussion in class]. Makes it less stressful than cold calling and its [sic; it's] like the real world to ask for help. Get to benefit from smart teammates! :)" (From in-class "group whiteboard" comments on the last day of the semester, with me out of the room.)

•  "Throughout undergraduate and graduate school I have never enjoyed group work during lecture but in this course it really was beneficial. Talking with my peers during each course made me feel confident and less worried about whether someone else was 'smarter than me.' [This] not only forces us to teach each other and learn together but also helped me create better

•  "Definitely facilitated group discussion." "Allowed us to work together and share ideas."

•  "The discussion-based class format combined with spaced repitition [sic] and the homework quizzes helped make the material more concrete."

Please tell us a little bit about yourself:

• Name (if you prefer a nickname on your name tent, please mark it up)
• Contract-related experience?
• Something boring about yourself?

In everyday life, ambiguities are often amusing; in contracts, they can be costly and even catastrophic. So we'll spend a fair amount of time spotting and fixing real-life ambiguities.

(Fixing an ambiguity is very often not a big deal — once you've spotted the ambiguity ….)

Silly stuff from Reels.

I'll talk through some key points of the syllabus.

Please tell us a little bit about yourself:

• Name (if you prefer a nickname on your name tent, please mark it up)
• Class year (3L, 2L, LLM)
• Contract-related experience?
• Something boring about yourself?

1.  In August 2020 — during the COVID-19 lockdown — a Minnesota law firm was approached by a prospective client about filing a lawsuit — three days before the statute of limitations would have expired for the prospective client's claim.

2.  The client engaged the law firm on August 31, 2020 — the day that the limitation period expired.

3.  The law firm tried to effect service of process personally at the defendant's office that day, but couldn't because no one was there. (It was the lockdown, remember.)

4.  The law firm tried again the next day by alternative service. But it was too late: The lawsuit was dismissed as barred by limitations; an appeals court affirmed, and the state supreme court denied review.

5.  The client sued the law firm for malpractice — and the firm's insurance carrier denied coverage because the firm had waited too long to notify the carrier, in violation of the stated deadline in the policy terms.

See Smith Jadin Johnson, PLLC v. Minn. Lawyers Mutual Ins. Co., No. A24-1152, slip op. (Minn. App. Jun. 16, 2025) (nonprecedential: reversing district court's interpretaton of policy language but remanding to resolve remaining factual issues).

The case is still ongoing, but two street-smarts lessons jump out:

Lessons:

1.  Be really careful about taking on a new client that's in a big hurry to meet a deadline — especially if the big hurry might be due to the client's own neglectfulness.

2.  Be really conservative about notifying your own malpractice carrier as soon as you have any hint that your work might be subject to a claim.

From Twitter: "Elon Musk predicts he will rocket people to Mars in less than 10 years"

QUESTION 1: Does that mean people will depart for Mars in less than ten years, or that it will take them less than ten years to get there?

QUESTION 2: How could this be rewritten to clarify?

I'll talk through chapter [TBD]

BE SURE TO READ these materials early in the semester.

[From a PowerPoint slide deck]

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

From a Facebook post shared by one of my former law partners: "I made it through the day without needing an AR-15 again!"

QUESTION: Does "again" relate:

• to "made it through the day"? or
• to "needing an AR-15"?

QUESTION: How could we fix this to specify which of these two we're talking about — maybe by moving just one word to different spots?

In my whiteboard, I'll show a useful way of rewriting the following, from this real-estate lease:

• to break up the "thicket clause"
• to be more reader-friendly, as though you were talking to a lay jury; and
• to correct drafting-type "issues" such as:
  • passive voice;
  • D.R.Y. issues;
  • run-on sentences,

following the Style Rules.

6.5 Tenant’s Audit Rights. Landlord shall keep reasonably detailed records of all Operating Expenses and Real Estate Taxes for a period of at least two (2) years. Not more frequently than once in every 12-month period and after at least twenty (20) days’ prior written notice to Landlord, Tenant together with any representative of Tenant shall be permitted to audit the records of the Operating Expenses and Real Estate Taxes. If Tenant exercises its audit rights as provided above, Tenant shall 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 shall be for the sole purpose of verifying the Operating Expenses and/or Real Estate Taxes. Tenant shall hold any information obtained during any such inspection in confidence, except that 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. Any shortfall or excess revealed and verified by Tenant’s audit shall be paid to the applicable party within thirty (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. If Tenant’s inspection of the records 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%), Tenant paid such overage and such overage was not otherwise adjusted pursuant to the terms of this Lease, Landlord shall reimburse Tenant for its reasonable, third party costs of the audit, up to an amount not to exceed $5,000.

In your small groups — Group 1 talking to Group 2, Group 3 talking to Group 4, Group 5 talking to Group 6 — "negotiate" the Uncle-Ed short contract for sale and see if you can reach some kind of agreement on basics.

(Just what the agreement ends up being is not of concern: This exercise aims to start identifying possible risks and coming up with cost-effective ways to avoid them, or at least eliminate mitigate [or: reduce] their potential impact.)

Reminder:

• Odd-numbered groups: You represent Uncle Ed, the seller.
• Even-numbered groups: For this exercise, you represent Dale, the buyer (even though the facts say otherwise).

I'll show a quick drafting of signature blocks using the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6.

See this blog entry (reproduced in this RPM footnote).

See Bryan Garner's piece. TL;DR:

BUT: If you see this in a draft prepared by a peer (e.g., The Other Side) or "superior" (e.g., the partner you're working for), then don't change it.

See the reading.

See the RPM discussion of conventional preambles.

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?

(CAUTION: Do we know enough to say?)

Perdue Farms (Ind. 2024): A truck driver, making a chemical delivery to a Perdue Farms poultry-processing plant, told the plant's gate guards (who worked for a security company) that he was delivering bleach. But the driver was seriously mistaken: The bill of lading said, correctly, that the delivery was of aluminum chloride, a corrosive hazardous. The gate guards told the driver to put the "bleach" in the bleach tank; the resulting chemical reaction caused significant damage to the facility.

Perdue sued the trucking company; the security company; and the driver and three gate guards personally. Perdue apparently did so to try to escape a forum-selection clause in the security-company's contract with Perdue, which designated the federal district court in Maryland — where Perdue was incorporated and had its headquarters — as the exclusive forum for any disputes relating to that contract.

The Indiana supreme court would have none of it:

[W]e reject [Perdue's] strategic pleading to avoid the forum-selection clause by suing the [security-contractor] defendant's Indiana-based employees individually.

Second, we decline to apply the forum-selection clause to the plaintiff's claims against the individual employees. These employees (unlike their employer) are not parties to the forum-selection clause, and they are not in privity with their employer.

Perdue Farms, Inc. v. L&B Transport, LLC, 239 N E.3d 842, 844-45 (Ind. 2024) (extra paragraphing added).

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

QUESTION: What are TWO ways this could be clarified, to have two different respective meanings?

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."

From a NY Times obituary of a burlesque dancer, who died at age 106: "Outside the tribal world of burlesque, Ms. Rowland was perhaps not as famous — or as well paid — as other headliners like Tempest Storm, another redheaded queen, who dallied with John F. Kennedy and Elvis Presley, whose breasts were said to be insured by Lloyd's of London …."

Wow. I'd read that Elvis could sometimes be … unusual, but I never knew that about him …. (Let alone JFK!)

QUESTION: How could we fix this?

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

In the ongoing process of editing the coursebook,

See also the "new" (i.e., moved):

• § 1.4, "Trust: Is it worth trying to build it?"
• § 2.8, "Contract styles you'll see in practice."

You don't need to worry about reading either of these; you'll pick up the contents by osmosis in the next few weeks.

Over the weekend I'll be reviewing and commenting on each of your homework assignments so far.

In the Quick tour: An apartment lease,

• discuss questions 1 through 6 in your groups — then stop and I'll call on people to answer the questions;
• ditto for question 7 through 12.

I'll spin the wheel to call on people.

Copied from the plan for the canceled class on {{{DAY02.}}}

See below for an example of a signature block. Note that this signature block is designed to go at the beginning of the contract — if it was at the end of the contract, then you wouldn't duplicate the "a [STATE] limited liability company" nor the addresses for notice:

DISCUSS IN YOUR GROUPS: Which of the following do you think might be the most likely to cause trouble later if screwed up by the drafter?

1. MathWhiz is a limited liability company ("LLC"), not a corporation.
2. We don't know Gigunda's legal name — "Gigunda Energy" could be a trade name of some kind, the way the corporate name of KFC (and Taco Bell and Pizza Hut) is Yum! Brands.
3. Nor do we know Gigunda's type of organization — is it a corporation? An LLC? A limited partnership?
4. We don't know that MathWhiz and Gigunda are organized in Texas and California, respectively — one or both of them could be organized somewhere such as Delaware.
5. When you say "MathWhiz LLC, a [STATE] Limited Liability Company" (the bracketed part is the correct way to do it when you don't know which state), you wouldn't capitalize "limited liability company" — in that particular context, the words are used as a common-noun phrase, so they wouldn't be capitalized.
6. If we know that Mary Marvel will be signing for MathWhiz, we could include her name and title in a two-blank-line signature block (Signature and Date signed).
7. If you don't know who Gigunda's signer will be, then you want to use the four-blank-line signature block, not the two-blank-line version.
8. If you're using a "conventional" preamble, and you've identified MathWhiz there as a limited liability company, then you wouldn't want to repeat "a limited liability company" in the signature block. (That's an example of the D.R.Y. Principle: You don't want to risk changing it in one place, but not in another place, during negotiation.)

Copied from the plan for the canceled class on {{{DAY02.}}}

In my whiteboard, DCT to show a useful way of rewriting the following, from this real-estate lease:

• to break up the "thicket clause"
• to be more reader-friendly, as though you were talking to a lay jury; and
• to correct drafting-type "issues" such as:
  • passive voice;
  • D.R.Y. issues;
  • run-on sentences,

following the Style Rules.

6.5 Tenant’s Audit Rights. Landlord shall keep reasonably detailed records of all Operating Expenses and Real Estate Taxes for a period of at least two (2) years. Not more frequently than once in every 12-month period and after at least twenty (20) days’ prior written notice to Landlord, Tenant together with any representative of Tenant shall be permitted to audit the records of the Operating Expenses and Real Estate Taxes. If Tenant exercises its audit rights as provided above, Tenant shall 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 shall be for the sole purpose of verifying the Operating Expenses and/or Real Estate Taxes. Tenant shall hold any information obtained during any such inspection in confidence, except that 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. Any shortfall or excess revealed and verified by Tenant’s audit shall be paid to the applicable party within thirty (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. If Tenant’s inspection of the records 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%), Tenant paid such overage and such overage was not otherwise adjusted pursuant to the terms of this Lease, Landlord shall reimburse Tenant for its reasonable, third party costs of the audit, up to an amount not to exceed $5,000.

From D&M Roofing & Siding, Inc. v. Distribution, Inc., 319 Neb. 707 (Aug. 22, 2025):

• The defendant distributor's warehouse was damaged in a storm.
• The plaintiff roofing company ("roofer") inspected the warehouse.
• The parties' contract says that:
  • The distributor will hire the roofer for any work approved by the insurance carrier; but
  • If the distributor hires anyone else instead, then the distributor will pay the roofer a cancellation fee of 20% of the amount paid by the insurance carrier to the roofer.
• The distributor does indeed hire someone else to do the work; the roofer gets paid nothing.
• The roofer sues for its 20% cancellation fee, but gets "poured out" on summary judgment — a phrase used by Texas litigators — because of the clear language of the contract.

In the Quick tour: An apartment lease, discuss questions 13 through 18 in your groups — then stop and I'll call on people to answer the questions.

I'll spin the wheel to call on people.

Here's an archive.org "Wayback Machine" link. (It'll take a few seconds to load.)

In the Quick tour: An apartment lease, we'll do the same as before for questions 19 through 21.

I'll spin the wheel to call on people.

Lesson for contract drafters: When dealing with corporate "families," consider thinking ahead to which member of the "family" you might want to be a party to related litigation — and where the lawsuit might be desired.

Background: To make a long story short:

1. A Czech company enters into a contract with a Minnesota company.
2. The MN company allegedly breaches the contract.
3. A few months before the statute of limitation is about to expire for the breach, the Czech company's Kansas-based U.S. subsidiary files suit for breach, in Kansas, against the MN company.
4. Problem:
   • The Czech company's U.S. subsidiary isn't a party to the contract, nor is it an intended third-party beneficiary.
   • So: The Czech company's U.S. subsidiary has no Article III standing to sue the MN company — thus, the Kansas district court has no subject-matter jurisdiction over the case.
5. It gets even weirder: In the Kansas lawsuit, the Czech parent company files a motion:
   • to amend the complaint to substitute itself in as the sole plaintiff; and
   • to transfer the case to MN — because without the Czech company's U.S. subsidiary, there was neither personal jurisdiction nor venue in Kansas.
6. The Kansas court dismisses the Czech parent company's lawsuit on standing grounds.
7. The Czech parent company re-files in MN — where the MN company moves to dismiss on limitation grounds.
8. The MN court — which is in the 8th Circuit — stays the motion pending the outcome of the 10th Circuit appeal.
9. The 10th Circuit affirms the Kansas district court's dismissal:

We affirm.

As a non-party, CZ Czech could not amend CZ USA’s complaint. Only a party may amend its complaint under Rule 15.

And because the only party—CZ USA—lacked an injury under the contract, it lacked standing to sue.

Accordingly, the district court lacked subject-matter jurisdiction and correctly dismissed the lawsuit.

Česká Zbrojovka Defence SE ("CZ") v. Vista Outdoor, Inc., 79 F.4th 1255, 1257 (10th Cir. 2023) (extra paragraphing added).

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 was siding with whom?

2.  How could this be clarified?

Let's try again: "PRESS RELEASE: Chairman @HinojosaTX Releases Statement on about Texas Federal Judge in Texas Judge's Siding with AG Paxton, Against Texas Women"

Here's the Houston Chronicle headline for an op-ed by former Secretary of Labor Robert Reich: "Private investments are destroying things we do out of love and passion" (emphasis added).

So: Private equity's destructiveness is a result of the private-equity owners' love and passion?

See this Piled Higher and Deeper comic.

See this post.

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

See the Canvas calendar. Don't forget: You have two chances — for this quiz, but not necessarily 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.

† Is the phrase "not for all the others" ambiguous?

Gigunda's principal place of business ("PPB") might be different than its initial address for notice — for the PPB, you could just say, "with its principal place of business in [FILL IN CITY/STATE] and an initial address for notice at …."

For those interested in intellectual-property law, this could be a good chance to meet some lawyers in big- and small firms; registration is free.

Caution: A contract said that the vendor's liability for damages was limited to amounts paid — which turned out to be nothing. That happened in an Eighth Circuit case decided under Delaware law:

• A customer paid a software provider an initial fee — and was supposed to pay more in the future.
• But the customer unilaterally terminated the contract, because reasons. (As often happens in such cases, the customer and the software provider couldn't agree on matters such as the scope of the work.)
• The provider sued for damages in the amount of the unpaid future payments.
• The court granted summary judgment for the customer because the contract limited the rejected each party's liability to the fees paid, not those amount payable.

See Baldwin Hacket & Meeks, Inc. v. Early Warning Services, LLC, No. 23-3502, slip op. at 4 (8th Cir. Aug. 29, 2025) (affirming summary judgment in favor of customer).

See this new section (added this morning).

Now for a variation on our Uncle Ed hypothetical:

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., in the Harris County part of Houston) 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       • Group 5       • Group 6:

1. Put together a skeleton for a contract, with a title, (short) preamble, and signature blocks.

   (Don't worry about formatting the signature blocks, just put the necessary information in.)

2. Draft 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 — the bare-bones requirements to make a contract. (Make up whatever information you think you need that isn't provided.)
4. Then add whatever "representations and warranties" you think might be useful — but remember, one of your goals is to get Jane to sign the agreement quickly.

Afterwards, I'll do one in real time in my whiteboard.

An AP headline: "… Trump says he plans to send migrants in US illegally to Guantanamo"

Question: Technically, are there two possible meanings here? (To reiterate: In a headline, ambiguity likely won't matter; in a contract, it very well could — especially if there's money at stake!)

In your groups:

1.  Pull up this annotated draft term sheet for the potential acquisition of an AI company that I helped a client (the prospective buyer) to put together on fairly-short notice last spring. I worked from a Google Doc prepared by the client's CEO.

!2. On pages 1 through 4, look through the parts that are accompanied by yellow-highlighted comments.

1. From those pages, pick out four things to mention and/or question — these could be things that:
   • caught your attention; or
   • surprised you; or
   • confused you.
2. Pick out three spokespeople — we'll go around the room three times; each time, a group spokesperson is to mention one of the group's four items. (The fourth item will serve as an extra, in case another group beats you to the punch on an item you would have mentioned.

This will provide:

• a drink-from-a-firehose overview of some of the things we'll be covering this semester; and
• an introduction to the contract-negotiation process.

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.

DEMO: In my whiteboard I'll break up and simplify just the second sentence, quoted again here: "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."

• QUESTION: Given the bold-faced heading of the "BEFORE" version, does the first sentence really belong in this provision?

In your groups:

1.  Pull up this annotated markup of The Other Side's contract form that I did earlier this year for my real-life "MathWhiz" client.

2.  On pages 1 through 5: look through the parts that are accompanied by Word comment bubbles.

1. From those pages, pick out four things to mention and/or question — these could be things that:
   • caught your attention; or
   • surprised you; or
   • confused you.
2. Pick out three spokespeople — if time permits, we'll go around the room three times (but more likely just twice); each time, a group spokesperson is to mention one of the group's four items. (The fourth item will serve as an extra, in case another group beats you to the punch on an item you would have mentioned.

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?

Ambiguous: See this sign.

More clear: This sign

In your groups:

1.  Again, pull up this annotated draft term sheet for the potential acquisition of an AI company that I'm heiping a client (the prospective buyer) to put together on fairly-short notice.

1. On pages 5 through 7, repeat what we did last time.

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?

"Are you not entertained?"

In the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6:

Take a shot at rewriting the tenant audit clause that I broke up "live" last week.

Then we'll go around the room by groups:

QUESTION 1: Point out two changes your group made.

QUESTION 2: What do you think of "will" vs. "must" vs. "shall" vs. "is to"?

What if anything was new to you or surprised you, or struck you as important to know, from the NDAs reading assignment?

In the Group 1 whiteboard (see the link above):

• Please type your FIRST name.
• If anyone in your group is missing tonight, please type his/her name.

This will save me having to recreate the group assignments, and make it easy for me to populate the cold-calling wheel, now that "adds & drops" are over (as of today).

This morning's NY Times (regional home edition) has this example of how even short "garden path" sentences can be confusing:

"One of my goals is to play until I’m 40," said Perez, who was a big fan of Yadi Molina, who played until he was 39, when he was young.

Ken Rosenthal, Eleven years ago, Salvador Perez hit a line drive off Aroldis Chapman’s face. It sparked a lifelong bond. (Emphasis added.)

The problem has been fixed in the Times on-line version:

"One of my goals is to play until I’m 40," Perez said. "I want to be like Yadi Molina. He was the guy I followed when I was young. He played until he was 39."

We'll do NDA review exercise 1.

In your groups:

1. Pull up this annotated markup of The Other Side's contract form that I did earlier this year for my real-life MathWhiz client.
2. On pages 1 through 5: look through the parts that are accompanied by Word comment bubbles.
3. From those pages, pick out three things to mention and/or question — these could be things that:
   • caught your attention; or
   • surprised you; or
   • confused you.
4. Pick out two spokespeople — we'll go around the room twice; each time, a group spokesperson is to mention one of the group's three items. (The third item you pick will serve as an extra, in case another group beats you to the punch on an item you would have mentioned.

When you start working at a law firm (whether this summer or after graduation), you'll probably find that the firm uses contract- and document-management software of some sort. I've started collecting references, so that with any luck you'll at least have heard of your firm's software when you show up.

I've not used any of these products, so YMMV (Your Mileage May Vary).

•  Contract Companion by Litera – looks for cross-referencing errors, among other things. The company seems to have a lot of related products.

•  CrossCheck365 appears to be a Microsoft Word add-in that will • use an "Expando" feature to break up thicket clauses into outlines; and • check cross-references. As it happens, the founder, Steve Gullion (whom I knew briefly when I was at my law firm years ago) said that "if anyone in your class would like a free trial for the duration of the class, just have them email me and mention your [DCT's] name." Steve is at his first and last name at The Big G (you can guess what that is) with a dot between his first and last names; his first name is spelled with a "v" not a "ph."

Steve also said, "Regarding [thicket] clauses, we have a two-minute video that's just about the Expando feature: https://www.youtube.com/watch?v=26N-SZ605kw"

•  Grammerly has been around awhile; I've reviewed documents processed by it.

A quote from a retired Australian army general: "'He [Ukrainian President Volodymyr Zelenskyy] saw that only one actor can change the status quo,' said Mick Ryan, a military strategist and retired major general in the Australian Army. 'It’s risky but audacious.'

We can see two possible meanings of the bold-faced passage:

• Even a single actor could change the status quo; or
• One actor — and only that actor — could change the status quo. (Cf. President Trump's "I alone can fix it" comment in his 2016 RNC acceptance speech.)

Talk to your neighbors:

1. True or false: An email can provide evidence to corroborate the existence of a binding oral contract even if the email doesn't itself constitute a binding written contract.
2. True or false: For an email contract to be binding, each party's email must include the specific word "Signed" to make it clear that the party is assenting to the terms.
3. True or false: An "agreement to agree" will generally be enforceable in the U.S. — the court will weigh expert testimony to determine what reasonable parties likely would have agreed to.
4. True or false: An agreement to negotiate in good faith is enforceable.

Apropos of what I saw referred to as "TaylorBowl 2.0" (i.e., the 2025 Super Bowl) here's one from The New Yorker: Listening to Taylor Swift in Prison

1. Talk amongst yourselves.
2. Pick two spokespeople.
3. We'll go around the room twice

As mentioned at the start of the semester: So that students will get a chance to work with others, this Wednesday we'll reshuffle the groups (pseudo)randomly, as follows (there's some overlap with prior group assignments):

6:00 p.m. section:
Group 1: Finn, Trevor, SarahAnne
Group 2: Haley B., My-Linh, Colin
Group 3: Rhea, Rajya, Cam, Grace
Group 4: Haleigh, Colby, Patrick
Group 5: Ryan, Asad, Paige
Group 6: Celeste, Kaleick, Cole, Theodora

7:30 p.m. section:
Group 1: Patrick, Aleksandar, Joseph
Group 2: Sadaf, Kamran, Zac
Group 3: Leila, Madison, Caitlyn, Maddie
Group 4: Haley, Lauren, Tuscan
Group 5: Hayden, Alex, Sarah
Group 6: Logan, Cori, Ava, Jordan

(We'll do one more reshuffling during the semester in late-ish October.)

• Letters of intent
• Ambiguity: A major source of contract disputes
• Some drafting [foul]-ups

1.  I normally wouldn't include "of Operations" in Wednesday's "President …" title line, because it's implied. But no harm done here — as long as we don't have a D.R.Y. problem later if changes are made. 

2.  I wouldn't include "Ms." (or "Dr." or "Mr." — although physicians do love to use "M.D." as postnominal letters, so I'll typically include that for them.

3.  Relatedly: It's considered bad form for lawyers to use, e.g., "John Doe, Esq." in their own signature lines. BITD we used to address hard-copy letters to other lawyers as, e.g., "Jane Doe, Esq." but that's less and less common these days.

PART 1: From an ExxonMobil terms-of-sale form, break up the following — and consider whether there's anything that might make it more readable — using the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6:

4.  PAYMENT:
Unless otherwise agreed, full payment will be made without discount, withholding, or deduction to Seller via electronic funds transfer at the time of delivery for each delivery made hereunder, including all applicable duties, taxes, fees, charges, and impositions. Payment will be made to Seller (or its assignee) in United States Dollars and, except to the extent credit is extended, in which case, the terms of payment are net thirty (30) days from date of invoice if not otherwise specified. If credit is extended and Buyer’s payment history is not consistent with the agreed credit terms or if, in Seller’s sole discretion there has been a change in Buyer’s credit worthiness, then the terms of payment may be changed by Seller at any time in its sole discretion by giving notice to Buyer, which will be effective immediately unless otherwise specified. Without prejudice to the other rights of Seller, if customer does not pay in full by the due date, then Seller reserves the right to charge interest on the outstanding amount at the lesser rate of (i) the Reference Rate plus ten (10) percent per annum or (ii) the maximum rate allowed under applicable law. The interest charge will be calculated daily from the due date until Seller receives the full payment. In this clause, "Reference Rate" means the corresponding rate effective on the first working day in June of each year and in the case of products sold in United States Dollar, US Prime Rate as published in WSJ Seller reserves the right to use an alternative reference rate in the event that the Reference Rate is not published/ available, and/or to revise the Reference Rate at annual intervals or at any other time should the seller determine, in its absolute discretion, that there is a material change in local market conditions. Payment of such interest by Buyer shall be made free and clear of and without deduction for any present or future taxes, levies, imposts, deductions, charges, or witholdings, and all liabilities in respect thereof.

Payments will be remitted to Seller via wire transfer.

If it is not possible to remit payments electronically, Buyer will remit payments to Seller at the following address:

ExxonMobil Oil Corporation
P.O. Box 8500 K-120
Philadelphia, PA 19178-0120
United States of America

5.  CREDIT AND SECURITY; RIGHT OF SET-OFF:
Credit and Security. At Seller’s request, in its sole discretion, and at any time during the term of any contract of which these General Terms and Conditions are a part, Buyer will (i) sign and deliver to Seller a security agreement (meaning a bank-type security instrument), financing statement(s), and such other documents as may be necessary to grant, establish, attach, or perfect a security interest in favor of Seller in such collateral and in such form as is satisfactory to Seller in its sole discretion, and (ii) provide Seller copies of Buyer’s most recent financial statements (audited if available) or such other financial information as shall be satisfactory to Seller in its sole discretion. Buyer will also execute and deliver such other documents, instruments, or agreements in connection with any security agreement as Seller may reasonably require. Seller’s rights under this section are in addition to any similar or related rights in the Supply Agreement.

In its sole discretion, and at any time, Seller may (i) revoke credit; (ii) modify any and all terms and conditions of credit; (iii) require payment in advance; (iv) require security in an amount and type satisfactory to Seller; and/or (v) withhold Product shipments until receipt of any due and owing payment or requested security. Seller may accomplish any or all of the foregoing at any time, in its sole discretion, by giving written notice to Buyer, which notice may be provided by mail or by any other means specified herein, and which will be effective immediately upon receipt unless otherwise specified by Seller. No such action by Seller constitutes a change in payment terms hereunder. When Buyer takes delivery of any Product(s) sold hereunder, Buyer represents to Seller that Buyer is solvent and able to pay for such Product(s).

[END]

PART 2: Questions — I'll spin the wheel to call on people.:

1. Would all sales by XOM be net-30 payment terms?
2. What's the current prime rate? (Google is your friend here.) Does the prime-plus-10-points interest rate raise any concerns?
3. What are the basic differences between a wire transfer and an electronic Automated Clearing House payment? (See Investopedia.)
4. What's a "security agreement"? What does it mean to "perfect" a security agreement? [Don't spend a lot of time on this if you don't know the answer.]
5. Consider this sentence: "No such action by Seller constitutes a change in payment terms hereunder." Does that make sense?
6. Consider this sentence: "When Buyer takes delivery of any Product(s) sold hereunder, Buyer represents to Seller that Buyer is solvent and able to pay for such Product(s)." Why do you think XOM has included this?

Which do you think most readers — both lawyers and non-lawyers — would prefer:

1.  The declarative, executive-summary format of the RPM letter-of-intent clause; or

2.  The Q&A format of the RPM payment-terms clause?

BEFORE: "The board held a meeting to give consideration to the issue."
AFTER: "The board considered the issue."
QUESTION: Is this "streamlining" safe? If not, why not?

What if anything was new to you or surprised you, or struck you as important to know, from the Drafting style rules reading assignment?

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.)

Note how the numbers "$3.5 million" and "$700,000" are written above.

[I'm adding this write-up to the coursebook:]

Lawyers are (in)famous for making arguments about contract meaning that are just utter BS. And only seldom do courts ever call them on such arguments — probably because lawyers' ethical duty of zealous advocacy gets inflated into an excuse for bad behavior.

Example: A federal court in New Jersey held that the term "reasonable attorney fees" in an indemnification provision was not indefinite, rejecting the defendant's contrary argument:

Instead, [the defendants] argue the entire indemnification provision must be held unenforceable due to vagueness or ambiguity because "reasonable attorneys' fees" is not explicitly defined, and that the entire License Agreement becomes null and void as a result of this undefined essential term.

However, such a holding is neither supported by case law, as courts routinely uphold similar indemnification clauses, nor do Defendants point the Court to any analogous situation where the use of "reasonable attorneys' fees," without definition, rendered such a provision unenforceable, much less an entire contract.

Days Inns Worldwide, Inc. v. 4200 Rose Hospitality LLC, No. 2:22-cv-04822, slip op. (D.N.J. Aug. 25, 2025) (granting, in part, Days Inns motion for partial summary judgment; unpublished) (cleaned up, citations omitted, extra paragraphing added).

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)."

OPEN MIKE:

QUESTION 1: When reviewing and revising the draft contract, do you change "twenty thousand dollars" to "$20,000.00"? Why or why not?

QUESTION 2: 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"?

From this CDC Web page:

BA.2.86 [an emerging COVID-19 variant] may be more capable of causing infection in people who have previously had COVID-19 or who have received COVID-19 vaccines.

QUESTION: Does this mean —

1.  that if you've had a prior COVID vaccination, or if you've previously had COVID, then you're more susceptible to catching the new BA.2.86 variant than those who've neither been vaccinated nor contracted COVID?

or:

2.  that even if you've been vaccinated or previously had COVID, you could still catch the new BA.2.86 variant, more so than the "old" variants?

EXERCISE: Think of minimal ways to rephrase the quote in each of the foregoing ways.

Here's another version of the real-time rewriting demo I did a few days ago:

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 of any audit under section 6.5.2.

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 [or, is to] 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 ["up to" and "not to exceed" are redundant], 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 in fact paid such overage the overcharge; and

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

Some discussion points:

1. Note how the paragraphs are numbered 6.5.1, 6.5.2, etc., which can be 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)

As previously announced, here are the new groups:

6:00 p.m. section:
Group 1: Finn, Trevor, SarahAnne
Group 2: Haley B., My-Linh, Colin
Group 3: Rhea, Rajya, Cam, Grace
Group 4: Haleigh, Colby, Patrick
Group 5: Ryan, Asad, Paige
Group 6: Celeste, Kaleick, Cole, Theodora

7:30 p.m. section:
Group 1: Patrick, Aleksandar, Joseph
Group 2: Sadaf, Kamran, Zac
Group 3: Leila, Madison, Caitlyn, Maddie
Group 4: Haley, Lauren, Tuscan
Group 5: Hayden, Alex, Sarah
Group 6: Logan, Cori, Ava, Jordan

TOMORROW: For those interested in intellectual-property law, this could be a good chance to meet some lawyers in big- and small firms; registration is free.

For the upcoming employment-agreement assignment: In your groups, pick one or more AI chatbots and ask for a list of issues to consider in drafting an employment agreement from both the employer's and employee's perspective. Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6

You might want to discuss how much guidance to give the chatbot.

Then: Ask the AI to draft an offer letter that takes both sides' concerns into account.

TEXT (in honor of the upcoming Rosh Hashanah, 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 some more words to avoid and safer alternatives, see this compilation.)

(L'shanah tovah to all who celebrate.)

PART 1: In your groups:

• Look over the annotated offer letter (see also the original; it doubles as an employment agreement) of one Jason Wheeler, who spent just under two years as Tesla's CFO before resigning, apparently of his own volition.
• Pick out four things you thought were noteworthy — unclear, previously-unknown, or otherwise important for newbies to know.
• Choose two spokespeople.

PART 2: We'll do two rounds of the usual go-around-the-room exercise, asking what each group thought was noteworthy.

What if anything was new to you or surprised you, or struck you as important to know, from the General provisions reading assignment?

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       • Group 5       • Group 6, take a stab at rewriting this provision to make it more readable and conform to the drafting style rules we've been reading about and discussing.

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

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

QUESTION: For long, complicated clauses such as the above: What term (epithet, really) do you think would be more quickly-grasped by lawyer- and business readers:

• "thicket clause"
• "spaghetti clause"

1. 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?
2. 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 this article:

• Buyer agrees to buy business from Seller.
• The supposedly-agreed purchase price was 1 x Seller's 2013 revenue ($513K) minus fixed payment of $275K, capped at $730K = $238K
• But the contract says the purchase price is 1 x Seller's 2013 revenue ($513K) plus fixed payment of $275K, again capped at $730K.
• Buyer pays lower price. Seller sues for difference.
• Buyer — egged on by lawyer — claims "mutual mistake" and "ambiguity," litigates the matter, and rejects a Seller settlement offer.
• Buyer's law firm's internal emails about Buyer's position are … bad
• Court grants summary judgment for Seller (as in, Buyer must pay Seller the difference).
• Buyer sues its lawyer and his firm for malpractice
• Online search didn't reveal whether Buyer's malpractice suit was ever settled. Buyer's lawyer is still with his firm.

QUESTION (discuss in small groups): How might Buyer's lawyer have reduced the chances of such a "misunderstanding" between him and Buyer?

See the BC comic for Feb. 2, 2024 (now paywalled)

Calvin: "Nothing rhymes with orange."

Hobbes: "No it doesn't."

In interpreting contracts, courts sometimes use the doctrine of expressio unius est exclusio alterius, which can be translated as, "to explicitly state one thing is to implicitly exclude another." In one of former President Trump's criminal cases, we saw the D.C. Circuit use the same doctrine (without using the Latin phrase) in affirming rejection of the former president's claim of immunity from prosecution for alleged crimes committed while he was in office:

… The Framers knew how to explicitly grant criminal immunity in the Constitution, as they did to legislators in the Speech or Debate Clause. Yet they chose not to include a similar provision granting immunity to the President. …

United States v. Trump, 91 F.4th 1173, 1201 (D.C. Cir. 2024) (cleaned up, formatting revised, emphasis in original), vacated and remanded, 603 U.S. xxx, 141 S. Ct. 2312 (2024); cf. id., 141 S. Ct. at 2357 (Sotomayor, J., dissenting) ("First, the Framers clearly knew how to provide for immunity from prosecution").

Caution: If doing an "amended-and-restated agreement" (in past 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 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, 58 F.4th 877 (6th Cir. 2023) (affirming, in part, dismissal for failure to state a claim).

Presumably apropos of Aaron Rodgers tearing his Achilles tendon on his fourth (!) play for the NY Jets: Here