Contract Drafting syllabus (Toedt - Fall 2017)

Updated 2017‑09-18 18:53

1 Preface

Welcome. This Web page contains important information about my Contract Drafting course. Update Sept. 6: This syllabus is being adjusted to take into account the disruption of Hurricane Harvey, including the Law School's week-long shutdown; more changes might be necessary as the semester unfolds. Please see the email that I sent to students on September 3.

IMPORTANT NOTE: By popular demand, I'm in the process of consolidating this course's various written materials into a downloadable online document (working title: On Contract Drafting). I'm also trying to reduce the reading- and homework load (although by just a bit); this is also in response to student feedback. All this is taking longer than I expected, so unfortunately as of today this syllabus goes only through the end of September. I'll be continuing the consolidation as the semester progresses and will update this syllabus accordingly. Apologies for the inconvenience of having to jump around in different documents, and thanks in advance for your patience.

(If you're really desperate to get a head start, the complete syllabus from spring 2017, with links to the un-consolidated materials, is still available at http://toedtclassnotes.site44.com/Spring2017.html.)

Please see:

3 Class plans

3.1 Class plan: Mon. Aug. 21

3.1.1 Reading for today

Look over the general course information.

in On Contract Drafting, read sections 1.1 and 1.2 and briefly look over the remainder of Chapter 1.

I encourage you to email me (dc@toedt.com) with any questions you might have about anything you found confusing or difficult in the reading.

3.1.2 Initial small-group assignments

These groups will be reshuffled twice during the semester, on the dates of the second and fourth quizzes, so that students will have an opportunity to work with different people.

4:00 P.M. SECTION:

Binford Caberto Dryden
Fisher Herrera Hively
Jin Kellam Kepadia
Montes Niedzwiedz Sullivan

7:30 P.M. SECTION:

Clawson del Villar Harrall
Li Mathews McCormick
McKnight Nguyen Oliver
Pohl Thal Waterwall

3.1.3 Housekeeping

  1. Introduce selves
  2. Go over the general course information
  3. Possibility of Webinar-style remote meeting if DCT will be absent
  4. Use Workflowy page to collect email addresses for a Google Group mailing list, which I use to send out all-hands emails
  5. Overview of this course's approach:
    • In-class exercises, often in small groups (sort of like in-class study groups)
    • "Enhanced Socratic method" – lots of small-group discussion before answering
    • Homework assignments – many of them relatively short
    • Lots of in-class review (a.k.a. "spaced repetition") to help with long-term retention

3.1.4 First exercise

It's a good idea to look up the people on the other side of a contract negotiation — or for that matter, anyone else you'll be dealing with. Google and LinkedIn are extremely useful for that purpose.

As an illustration:

  • Where did I go to law school?
  • What did I do between college and law school?

3.1.5 Blackboard practice run: Quiz on general course info

This is a zero-points quiz to make sure everyone can get onto Blackboard.

3.1.6 Ambiguity exercise: Hillary's email server

SOURCE: A Politico piece titled FBI could leak Clinton email investigation, Grassley warns.

TEXT: "A hypothetical leak could occur, he said, if officials believed Clinton was not being prosecuted for political reasons." (Emphasis added.)

EXERCISE: There are two possible meanings of the italicized portion of the above sentence.

  1. Go to your small group's Workflowy page.
  2. Each student is to rewrite the sentence twice, once for each meaning, to make that meaning clear. (Don't put your names on the rewrites; see #4 below.)
  3. Then, within your small groups, critique your rewrites.
  4. Finally, the whole class will briefly look at each small group's rewrites.

3.1.7 In-class exercise: Shall, will, must, etc.

QUESTION: In your small groups, discuss which of the following Professor Toedt thinks is not a good choice:
A. Bob will pay Alice $1,000 no later than December 24.
B. Bob shall pay Alice $1,000 no later than December 24.
C. Bob must pay Alice $1,000 no later than December 24.
D. Bob is to pay Alice $1,000 no later than December 24.

3.1.8 In-class exercise: Responsibility for building permits

Discuss in your small groups: TRUE OR FALSE: In a contract to remodel a kitchen in a house, the following would be an acceptable drafting style: All building permits are to be timely obtained.

3.2 Class plan: Wed. Aug. 23

3.2.1 Reading for today

In On Contract Drafting, read:

  • 2.1 A hypothetical example
  • 2.2 The title
  • 2.3 The preamble

and look over:

  • the rest of Chapter 2 (recitals, defined terms, alternatives)
  • Chapter 3 (signature blocks)

In the Supplement, briefly look through "A Somewhat-Barebones Contract," including the annotations (page 1). In Adobe Acrobat or Reader, you can open the Bookmarks bar in the left-side navigation pane.

I encourage you to email me (dc@toedt.com) with any questions you might have about anything you found confusing or difficult in the reading.

3.2.2 Ambiguity exercise: Costly medical care

• FIX THIS: "The [health-insurance] companies wanted to minimize the risk of losing money by paying for costly medical care for too many of their customers." (From Reed Abelson, Trump’s Vow to Repeal Health Law Revives Talk of High-Risk Pools, NYTimes.com).

  1. Go to your small group's Workflowy page.
  2. Each student is to rewrite the sentence to make the meaning clear. (Don't put your names on the rewrites; see #4 below.)
  3. Then, within your small groups, critique your rewrites.
  4. Finally, the whole class will briefly look at selected rewrites.

3.2.3 In-class exercise: Selling a used computer (part 1)

SETTING UP: Groups 1 and 2 will represent Sarah Seller; Groups 3 and 4 will represent Billy Buyer.

FACTS:

  • Sarah Seller owns a three-year-old laptop computer. She wants to sell it so that she can buy the latest and greatest model.
  • Billy Buyer is interested in buying Sarah's computer. Billy is wealthy, so he wants the actual purchase to be made by his family office, Buyer Investments L.P.

ASSIGNMENT:

  1. In your three-person groups, and using your group's Workflowy page, each group is to think of a list of provisions that you would want to see in a "minimum viable contract," that is, a contract that you think would:

    • survive a motion to dismiss for failure to state a claim;
    • cover the likely risks for your client; and
    • get signed reasonably quickly so that Sarah and Billy can go on their way and get on with their lives.

    Feel free to ask me questions.

  2. Groups 1 and 4: Compare your lists and see what if any consensus you can reach. Groups 2 and 4 do the same.
  3. Finally, the entire class will briefly look at each group's list.

3.2.4 Ambiguity exercise: The burglars and the bystander

From the Houston Chronicle, Aug. 22, 2016 "Police apprehended two men accused of burglarizing two homes on the North Side with the help of a civilian who chased them Monday afternoon."

QUESTION: Did the citizen help the police, or the burglars?

QUESTION: Did the citizen chase the burglars, or the police?

EXERCISE: Each student is to rewrite this to clarify it (in your small group's Workflowy page as above).

3.2.5 Class discussion: A Somewhat-Barebones Contract (Part 1)

We will spend some time discussing "A Somewhat-Barebones Contract" in the Supplement to get an overview of some important issues that might confront a contract drafter or reviewer.

In your small groups, discuss the following and be prepared to "report out" to the class as a whole.

1. Title: Why not just have the title be “Agreement”?

A: If the title were just "Agreement," then* the title wouldn't be as informative when the title is listed in an index or other referring document.

*  Notice how I used the word "then" as a separator — this helps the reader see more quickly where the "if" clause ends and the "then" clause begins.

2. First paragraph: What is a one-word name by which this first, unnumbered paragraph is typically called?

A: That paragraph is referred to as the preamble.

3. First paragraph: The words “Agreement,” “Buyer,” and “Seller” are in bold-faced type and surrounded by quotation marks and parentheses. Why?

A: This flags the definitions of those defined terms; when the first instance of a defined term is eye-catching in this way, it helps the reader to find the term's definition more quickly.

4. First paragraph: Why does this paragraph state (i) the type of organization of Betty's Used Computers, LLC ("BUCL") and (ii) the state in which BUCL is organized?

A:

  1. If Seller were ever to have to sue Buyer, it would be important for the complaint (in federal court and some state courts) or original petition (in Texas state courts) and subsequent documents to identify Buyer precisely.
  2. One reason to state the type of entity is to inform future trial counsel, because that could affect whether a federal court can exercise diversity jurisdiction. That's because for diversity-jurisdiction purposes, courts generally treat LLCs as having the citizenships of its members, in contrast to a corporation having its own citizenship. See generally, e.g., Sevan Ogulluk and Jason Lissy, How to Determine the Citizenship of LLCs (Hint: Keep Digging!) (BNA.com 2014).

5. First paragraph: Why does this paragraph state Buyer’s principal place of business?

A: To establish at least one permissible location for (i) personal jurisdiction, and (ii) venue — which are two different things (albeit related).

6. First paragraph: Why does this paragraph state Buyer’s initial address for notice? Why not just put that information in the Notices provision (if there is one)?

A: It's convenient to have that information on the front page, so that future readers don't have to go paging through the document looking for it.

7. First paragraph: Why state Sam’s place of residence (which is not necessarily the same as his initial address for notice)?

A: To establish one permissible location in which Sam could be sued if necessary.

3.2.6 Ambiguity exercise: Making babies

TEXT (forwarded by a spring-2016 student): Mice Breeding Chinese Scientists Say Making Babies in Space Is Possible (Inverse.com). The student's comment: "TL;DR: Hyphens are important, yo."

EXERCISE: Each student is to rewrite this to clarify it (in your small group's Workflowy page as above).

3.2.7 Clarity exercise: The judge's daughter

BACKGROUND: The sentence below is something I typed (before revising it) in a Facebook conversation. For content, a federal judge had made his minor daughter give back a bracelet that her boyfriend had given him because the value of the bracelet exceeded the $50 maximum allowed by judicial ethics rules. (I said I thought that was a bit much, because the judge would have to recuse himself in any case involving the boyfriend anyway.)

Anyway, what I typed originally was: "I didn't know the judge, but as the father of a daughter, another possibility comes to mind: Maybe the judge just didn't like the boyfriend?"

QUESTION: What's wrong with the italicized part?

EXERCISE: Each student is to rewrite this to clarify it (in your small group's Workflowy page as above).

3.2.8 Clarity exercise: The Iranian navy

From CNN: "The Iranian vessels moved at high speed toward the [USS] Nitze, which was operating in accordance with international law in international waters and ignored maritime "rules of the road" as set out in the 1972 Convention on the International Regulations for Preventing Collisions at Sea. "

QUESTION: What's wrong with the italicized part?

EXERCISE: Each student is to rewrite this to clarify it (in your small group's Workflowy page as above).

3.3 Class plan: Wed. Sept. 6

3.3.1 Reading for this week

In On Contract Drafting:

  • Look through Chapter 4 (ten basic writing rules).
  • READ Chapter 5 (ambiguity) and Chapter 6 (Getting paid).
  • Look through Chapter 7 (reps and warranties).
  • Look through Section 12.1 (Honeywell purchase-order terms), section 16 (seller's warranties)

I encourage you to email me (dc@toedt.com) with any questions you might have about anything you found confusing or difficult in the reading.

3.3.2 In the news: An elephant takes a selfie?

From this tweet: "Man trampled to death by elephant trying to take a SELFIE"

3.3.3 Homework review

3.3.4 Class discussion: A Somewhat-Barebones Contract (Part 2)

We will continue discussing "A Somewhat-Barebones Contract" in the Supplement to get an overview of some important issues that might confront a contract drafter or reviewer.

8. What's a romanette?

A: A romanette is a lower-case Roman numeral in parentheses.

9. Section 1: What advantages might there be in including so much information about "the deal” in this paragraph?

A: To give future readers — e.g., company exectives, trial counsel, judges — a quick introduction, to help get them up to speed.

10. Section 1: This contract does not include recitals, a.k.a. "whereas" clauses, nor "words of agreement," e.g., "The parties agree as follows." Why might that be?

A: At least in U.S. jurisdictions, a contract doesn't need any of these things to be enforceable.

11. Section 1: “Seller will sell” and “Buyer will buy”: Why includes both of these?

A: Otherwise, the contract might bind only Seller or only Buyer (in which case the contract would be a call option or a put option).

12. Section 1: “Seller will sell”: Why not “Seller shall sell”?

A:

  1. "Seller shall sell" is certainly acceptable for the U.S., because here the word shall is generally understood as mandatory. That might not be the case, though, in other English-speaking countries; see the Common Draft definition of "shall" and its commentary (scroll down to the New Zealand and Australia mentions).
  2. When drafting a contract for a seller, I prefer to use, for example, "Customer will do X" instead of "Customer shall do X" because the former is arguably more respectful in tone — because after all the customer doesn't have to do the deal ….

13. Section 1: In the term "USD $800," what does the prefix "USD" mean?

A: "USD" is a standard abbreviation for U.S. dollars. Note how the usage is "USD $800."

14. Section 1.3: What’s the point of this section – as a matter of law, aren't the parties free, if they so agree, to change the Closing Time and Closing Location?

A: Yes, of course parties are free to change the Closing Time and Closing — but sometimes it doesn't hurt to throw in things like this anyway, to give some reassurance to non-lawyer readers on the other side of the deal.

15. Section 1.4: What is a "safe harbor" clause in the context of a contract (as opposed to a statute or regulation)?

A: A "safe harbor" clause says, in essence (for example), you don't have to do things this way, but if you do, you can't be attacked for having failed to do it properly. (Safe harbors are often seen in securities law and tax law.)

16. Section 1.4: What’s the significance of “for the avoidance of doubt”?

A: "For the avoidance of doubt" is a British-ism, a signal to a judge that what follows is a guide to interpretation. (Some practitioners dislike for-the-avoidance-of-doubt provisions, feeling that contract language should be clear enough not to need such interpretive guides. This is a worthy aspiration, but in practice it might not always be achieved.)

17. Section 1.4: Any danger in using “for example”?

A: Unless the term is defined, a court might treat the term as being subject to the doctrine of ejusdem generis.

18. Section 2: What types of agreement are likely to include this kind of clause?

A: Any clause for the sale of one or more assets is likely to include a clause like this, which could be referred to as a "lockdown" clause.

We see similar provisions in merger- and acquisition agreements, in wnich the seller is required to continue running the business "in the ordinary course," and thus requiring the seller to get the buyer's approval for extraordinary transactions.

19. Section 2: Note the phrasing, “Seller will not use the Computer ….” How else could that be phrased? Is there any significance to the “will not” phrasing?

A: If you wanted to be more emphatic, you could try "Seller may not use the Computer …" or "Seller must not use the Computer …."

20. Section 2.1: In the real world, would this sort of exception normally be included in a draft agreement prepared by Buyer? Contrariwise, if Seller had drafted the agreement, then would Seller have included section 2 at all?

A: No and no — but Seller might have included section 2 as a way of increasing the "curb appeal" of the total offering.

21. Section 3: “Seller will cause” a clean install of Mac OS X: Why phrase the obligation this way — why not just say that Seller will perform a clean install?

A: Seller might not be the one to actually perform the clean install (e.g., Seller might take the computer to the Apple Genius bar).

22. Section 3: What type of covenant is this?

A: An affirmative covenant (as contrasted with a "thou shalt not" negative covenant).

23. Section 4: What term might traditional contract drafters use here instead of “prerequisite”?

A: A "condition."

24. Section 4: Why include this section?

A: Because Buyer wants the right to walk away from the deal — and not be in breach of contract for doing so — if the stated prerequisites aren't met.

25. Section 4: Why cross-reference to “the obligation stated in section 3,” instead of just saying, “Seller’s obligation to do a clean install is a prerequisite ….”?

A: "D.R.Y. — don't repeat yourself." Repetition is dangerous: You might change one instance but forget to change the other. (A bank lost $693,000 that way.)

3.3.5 Questions for discussion [if time permits]

In your small groups, discuss the following, and be prepared to "report out" to the whole class:

  1. In your practice, do you expect you'll be doing more drafting of contracts, or more review of drafts that others have prepared? Explain.
  2. What do you think are the main goals of a contract drafter or reviewer?
  3. In abstract terms, what do you think is the client's overarching goal in negotiating a contract?
  4. What makes for a workable contract?
  5. What do you think is likely to be the worst bottleneck in getting a contract to signature?
  6. What kind of contract language do you think business lawyers should aspire to write?
  7. TRUE OR FALSE: A contract drafter should strive to anticipate and address all harms that might arise in the course of the parties' relationship.
  8. PREVIEW QUESTION: What is a "vague" term? What is an "ambiguous" term?

3.3.6 Experiment: The value of speed in getting to signature sooner [if time permits]

I will email a PDF of a slide deck to students; please don't distribute it because of copyright issues.* You can download a PDF of the associated paper, Getting a Workable Contract to Signature Sooner. (I'm in the process of transplanting the content of the paper into the On Contracts Drafting document.)

* The slides contain images that I copied and pasted from the Web — while I'm comfortable that use of the images in a classroom presentation is "fair use" under the copyright laws, I'm less confident about that being the case if I were to distribute copies, where they could end up who knows where.

3.4 Class plan: Mon. Sept. 11

3.4.1 More homework comments

These comments are for the Alice and Bob preamble, background, and signature-block homework that (per the post-Harvey schedule) was due Sept. 6.

BEFORE AFTER
the 30th day of August, 2017 August 30, 2017
Employer Client (or perhaps "Company")
Hirer Client (this is easier to say than "Hirer")
Recitals: Background
"Consultant has expertise and several years of experience in analyzing and marketing fashion designs …." (Consider making this an explicit representation by Consultant)
"Client and Contractor enter into this Agreement in consideration of the mutual representations, warranties, …." The parties agree as follows. (That is, unless your supervising partner prefers the "Before" version.)
"The Parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above" (Leave blank, or just use "AGREED:")
Printed name (in signature blocks) (Include the signers' actual names, since those names are known)
Date Signed Date signed (note the change in capitalization)
   

Some other notes:

  • For a contract in which an individual is a party, the individual's address for notice might not be his/her residence address; in that case, it might be especially important to recite the county of residence.
  • Also, you wouldn't use a signature block "Alice Harvey, by:" — it'd be just "Alice Harvey" under the signature line.
  • Gamesmanship: "Client wants to hire Consultant for marketing consulting services, on a temporary basis. …."
  • Avoid too much detail in the Background section (D.R.Y. to R.O.O.F.).
  • Not every contract needs a Background section.
  • "Concurrently with the execution and delivery of this Agreement, Employer and Employee, are entering into a Temporary Employee Contract-Marketing Consultant Agreement."
    1. Substantively this is redundant — the execution and delivery IS the entry into the Agreement.
    2. You wouldn't use a comma in the phrase "Employer and Employee, are entering …."
    3. We talked about "Employer" vs. "Client."

3.4.2 Clarity exercise: Donald Trump and Nigel Farange

From a tweet: "You can’t have observed Nigel Farage in recent years and not think Trump may win in November, writes @NYTimesCohen nyti.ms/2bMhUUj" (emphasis added)

QUESTION: How could this be improved?

I would change "Trump may win" to "Trump might win" or "Trump could win" — "may" is too often used to signify permission, e.g., "Alice may charge Bob interest on any past-due amount."

3.4.3 Grammar fail: Email attachments

TEXT (from an email to DCT): "Attached are three files, the event surveys, the CLE sheet for DC and the mailing list sign up form."

QUESTION: What's wrong with this sentence? (Hint: It's the internal punctuation and spelling.)

A: The sentence should be written as: "Attached are three files: The event surveys; the CLE sheet for DC; and the mailing list sign up form."

3.4.4 In-class exercise: Payment Terms Worksheet 1

1. PROVISION: "Alice represents that she will pay Bob net 30 days." In your small groups, prepare to discuss the following:

QUESTION: What does "net 30 days" mean?

Full payment is due in 30 days (but 30 days from when?).

QUESTION: Is anything wrong with the "net 30 days" part?

It doesn't specify when the 30 days starts.

QUESTION: Is anything else wrong with this provision?

Yes — this isn't a representation, it's a covenant.

2. ASSIGNMENT: On the facts of #1 above, and in your small group's Workflowy whiteboard, each student is to draft a replacement for the quoted provision. Feel free to consult your classmates, but do your own writing.

3. FACTS: (A) Bob wants Alice to agree to the following provision: Alice will notify Bob of any dispute about a payment obligation no later than the due date of the payment. (B) Alice's lawyer objects to this provision.

QUESTION: Should Bob push hard for this provision?

Presumably so.

QUESTION: Should Bob read anything into the fact that Alice's lawyer objected to this provision?

Alice's lawyer's objection might be a clue that the lawyer, or Alice, or both, might be difficult to deal with.

3. FACTS: A contract payment provision states that past-due payments will bear interest at 8% per month beginning on the due date. Texas law applies.

QUESTION: Any problem with this provision?

Yes:

(a) 8% per month is 96% per year — that should trigger worries about usury statutes.

(b) Under Texas usury law, a safe harbor for interest rates is to have the interest start to accrue 30 days after the due date of the payment.

QUESTION: How should you respond if you see this while reviewing a contract drafted by another party — that is, if it were your client that putatively would have to pay interest on past-due amounts?

A: One possibility would be not to do anything to this provision, because under the Texas usury statute, the interest provision might very well be void as usurious. (But you'd want to make sure that the usury statute actually applied, i.e., that the late-payment charge would be properly characterized as "interest" under the statute.)

3.4.5 Preview lecture: Reps and warranties

3.4.6 Preview — whistleblowers (relevant to backdating of contracts):

  • Monsanto pays $80MM penalty to SEC for its misleading financial statements — whistleblower gets $22 million.
  • Oracle whistleblower gets $40MM after company pays $199.5MM for breaching most-favored-customer provision.

3.5 Class plan: Wed. Sept. 13

3.5.1 Quiz today [CANCELED]

3.5.2 Homework review

Students will exchange their hard-copy homework submissions so that we can review them en masse in class.

3.5.3 In the news: What if you spot an ambiguity?

This question comes from a discussion in the LinkedIn group "Drafting Contracts" — there's no need to read the discussion, but you should consider joining the group.

The question that kicked off the discussion was this:

When you review a contract and discover that a certain clause is portly [sic] drafted, do you leave it as it is with the confidence that it probably will be construed against the other side or do you amend it, trying to make it mutual with the risk of bringing attention to the clause which could then be discovered by the other side. What would you do?

3.5.4 In-class exercise: Reps and warranties

QUESTION 1: Does a representation normally relate to:
(A) a past fact?
(B) a present fact?
(C) a future fact?
(D) all of the above?
(E) none of the above?

A and B. In rare circumstances, courts will treat C, a representation of a future fact, as a covenant or warranty (in essence, bailing out the incompetent drafter), e.g., I represent that I will pay you Tuesday for a hamburger today. NOTE: For drafting purposes, treat A and B as the only correct answers.

QUESTION 2: What are the basic elements that a plaintiff generally must establish to succeed in a claim for misrepresentation?

(Each small group should collaborate to answer this question in writing in its Workflowy whiteboard.)

A: Here's a general "proof checklist" for an action for misrepresentation?

(a) A statement, made by the defendant;

(b) The statement was false or misleading when made;

(c) (With variations:) The defendant knew, or should have known, that the statement was false or misleading;

(d) (With variations:) The defendant knew, or should have known, that the plaintiff would rely on the statement;

(e) The plaintiff did in fact rely on the statement;

(f) The plaintiff's reliance was reasonable; and

(g) The plaintiff suffered damage attributable to the statement.

QUESTION 3: Should factual representations normally be included in an agreement's recitals? Why or why not?

A: This is a matter of convention – like It's not customary to include factual representations in the recitals. It might also be dangerous to do so: If memory serves, in some jurisdictions the courts might not treat the recitals as part of the contract.

The safer thing to do would be to rework the recitals as a "1. Background" section and have the parties make whatever initial representations they're willing to make.

3.5.5 In-class exercise: Warranty disclaimer

In your small group's Workflowy whiteboard, brainstorm and draft a warranty disclaimer for the computer that Sarah Seller wants to sell. Each student should do his- or her own writing, but feel free to consult your classmates.

3.5.6 In-class exercise: Preamble questions about the computer sale

1. FACTS: Billy Buyer wants the computer-sale contract to recite, not his name, but his business name, "Bravo Builders" (just that – no Inc. or LLC or anything like that).

QUESTION: Any problem with that?

2. FACTS: It turns out that Billy Buyer is 15 years old.

QUESTION: Any issues there?

Yes — as a minor, Billy probably does not have the legal capacity to enter into a contract.

3. ALTERNATE FACTS: Billy is 28 years old, a successful Internet entrepreneur who is worth $300 million. Billy wants the contract with Sarah Seller to be in the name of his new business venture, Beta-Beta Research LLC. BBR will be renting from Sarah (not buying) a custom-built supercomputer for one year, for an annual rent of $1 million.

QUESTION: Any financial issues here? How might those issues be addressed?

Yes – does Beta-Beta Research actually have the financial wherewithal to pay $1 million per year? Any concerns in this area could be addressed with, for example:

  • a personal guaranty from Billy
  • standby letter of credit from a bank or other financial institution
  • a hefty deposit, coupled with the ability to terminate and repossess the computer for failure to pay rent.

EXERCISE: As Sarah's lawyer, in your small group's Workflowy whiteboard, brainstorm and draft whatever provisions you think would be appropriate to address Sarah's financial concerns. Each student should do his- or her own writing, but feel free to consult your classmates.

3.5.7 In the news / SPP: SCA Promotions v. Yahoo!

SCA Promotions, Inc. v. Yahoo!, Inc., No. 15-11254 (5th Cir. Aug. 21, 2017):

  • Yahoo sponsors an NCAA perfect-bracket contest with a $1 billion prize [note how "billion" is spelled out] to any contestant who has a perfect bracket.
  • Yahoo contracts with SCA to pay the $1 billion if necessary and to obtain underwriting coverage for the fee (presumably from reinsurers).
  • Under the contract, Yahoo is to pay SCA a fee of $11 million.
  • The policy establishes target dates for Yahoo to cancel the contract, with stated penalty amounts:

Cancellation fees: Upon notice to SCA to be provided no later than fifteen (15) minutes to Tip-Off of the initial game, Yahoo may cancel the contract. In the event the contract is cancelled, Yahoo will be entitled to a refund of all amounts paid to SCA subject to the cancellation fees set forth in this paragraph. The parties hereto stipulate that the contract shall be signed on or before December 31, 2013. Should the signed contract be cancelled after that time and before January 15, 2014 a cancellation penalty of 25% of the fee will be paid to SCA. Should the signed contract be cancelled between January 16, 2014 and February 15, 2014, a cancellation penalty of 50% of the fee will be paid to SCA by Sponsor. Should the signed contract be cancelled after February 16, 2014, a cancellation penalty of 75% of the fee will be paid to SCA by Sponsor. [Slip op. at 3, emphasis added.]

And rewritten for easier reading:

[a] Cancellation fees: Upon notice to SCA to be provided no later than fifteen (15) minutes to Tip-Off of the initial game, Yahoo may cancel the contract.

[b] In the event the contract is cancelled, Yahoo will be entitled to a refund of all amounts paid to SCA subject to the cancellation fees set forth in this paragraph.

[c] The parties hereto stipulate that the contract shall be signed on or before December 31, 2013.

[d] Should the signed contract be cancelled after that time and before January 15, 2014 a cancellation penalty of 25% of the fee will be paid to SCA.

[e] Should the signed contract be cancelled between January 16, 2014 and February 15, 2014, a cancellation penalty of 50% of the fee will be paid to SCA by Sponsor.

[f] Should the signed contract be cancelled after February 16, 2014, a cancellation penalty of 75% of the fee will be paid to SCA by Sponsor.

  • Yahoo paid an initial $1.1 million deposit (10% of the agreed $11 million fee) on January 13, 2014.
  • On January 21, 2014, Quicken Loans Inc. reveals that it is sponsoring a similar $1 billion perfect bracket contest with Warren Buffett and Berkshire Hathaway.
  • Yahoo ditches its own contest — Yahoo and Quicken agree that Yahoo would become another co-sponsor of the Quicken contest.
  • On January 27, 2014, Yahoo cancels the SCA contract and demands repayment of the entire $1.1 million initial deposit, with no cancellation penalty.
  • SCA sues for $4.4 million, i.e., $5.5 million (50% of the $11 million fee per paragraph [e] above) less the $1.1 million deposit already paid.
  • Yahoo claims that "the fee" in paragraphs [d] through [f] refer to the $1.1 million deposit and not the $11 million fee.

The district court granted summary judgment for Yahoo and ordered a refund of $550,000 (half the $1.1 million deposit).

The Fifth Circuit reversed and rendered in favor of SCA.

EXERCISE: In your small group's Workflowy whiteboard, redraft paragraph [e] above to try to avoid the controversy in the last bullet point above about the meaning of "the fee."

QUESTION: Does paragraph [c] above make sense? What would be another way to approach the subject?

3.6 Class plan: Mon. Sept. 18

3.6.1 Reading for this week

In On Contract Drafting, read section 8.1 (indemnities).

In the Supplement, look through the Sheryl Sandberg employment agreement (starting at page 101), including the annotations.

Glance at this example of D.R.Y. (Don't Repeat Yourself) from Bryan Garner's Twitter feed

Read the background section of an exercise we'll do on Wednesday.

I encourage you to email me (dc@toedt.com) with any questions you might have about anything you found confusing or difficult in the reading.

3.6.2 In-class exercise: Reps and warranties strategy

FACTS: You've passed a bar (exam) and are a licensed attorney. As a favor to a friend, you're helping the friend sell a car to a stranger. The friend says that s/he doesn't know of any mechanical problems with the car.

MORE FACTS: The buyer asks the seller to represent and warrant that the car has no problems.

QUESTION: how might you respond?

A: Perhaps by having the seller say simply, "so far as I'm aware, the car has no significant problems, but I'm not a mechanic and haven't had a mechanic check it out."

QUESTION: T/F: It's acceptable for the seller to phrase the statement as, "to my personal knowledge the vehicle has no problems"? [Note where the question mark is, i.e., outside the quotation mark.]

A: That'd be a bad idea — phrased that way, the statement is likely to be taken as a definitive statement that indeed there are no problems.

EXERCISE: In the small-group Workflowy whiteboards, each student is to draft a provision to propose to the buyer.

3.6.3 In-class exercise: NFL idiots?

From a comment about Tom Brady: "NFL teams passed on Brady 198 times in the 2000 draft. … They didn’t overlook him because every NFL team is run by idiots. There was no readily available reason to want him. He was scrawny, he couldn’t throw much of a deep ball and he ran like a gawky teenager." (From Adam Kilgore at WashingtonPost.com; emphasis added.)

PART 1: Each student is to rewrite the italicized part to clarify it. Use your Workflowy group whiteboards and compare notes.

PART 2: Try clarifying by changing the punctuation between the italicized sentence and the immediately-following one (if you didn't do it that way the first time).

3.6.4 SPP: K-Mart store lease termination

tl;dr: Contract says Landlord's exclusive remedy for Tenant breach is to terminate the lease; Landlord sues for money damages anyway — and gets poured out. Davenport Chester, LLC v. Abrams Properties, Inc., No. 16-3228 (8th Cir. Sept. 5, 2017) (affirming summary judgment in favor of Tenant).

3.6.5 Grammar awkwardness: Safes

From this Web page about "safes," an increasingly-used legal instrument for early-stage investment: "At the company’s discretion, you will either receive $5,000 in cash or stock." (Emphasis added.)

QUESTION: What's wrong with this? (Hint: To get an idea, try breaking up the sentence by adding romanettes.)

EXERCISE: In your group's Workflowy whiteboard, each student is to draft a revised sentence.

3.6.6 Clarity exercise: Gerrymandering and the wrong choice of words

EXCERPT: From a Vox.com article: "… gerrymandering forces the losing party to "waste" votes by placing all its voters into a small number of districts where the party gets a landslide, rather than spreading those voters out so they can have more impact."

QUESTIONS: Is it the losing party that's "placing all of its voters into a small number of districts"? Or is it gerrymandering that does so?

3.6.7 In-class study groups: Indemnities

Concerning On Contract Drafting, section 8.1 (indemnities):

  • What if anything was unclear or confusing about the reading material?
  • What would you want a newbie lawyer to know?

We'll then work our way through (most of) the questions in section 8.1.

3.7 Class plan: Wed. Sept. 20

3.7.1 In-class drafting exercise: Preamble of Rick's Cabaret – redraft

Please redraft the "Whereas" clauses below (from an actual contract). First, some background about the transaction and the contract:

  • Wire Way LLC owned land and a building, in Dallas, that was home to an "adult entertainment club" (that is to say, a strip club) known as "Platinum Club II."
  • The club was apparently operated by another company, North by East Entertainment, Ltd.; it's not clear what relationship existed between North by East and Wire Way LLC, the owner of the land and building.
  • Rick's Cabaret wanted to buy out the club; under the agreement, it would do so with a semi-complicated transaction:
    • In a related transaction, North by East (the operator of the club) would sell the assets of the club business to RCI Entertainment (Northwest Highway) Inc. ("RCI Entertainment"), which was [and is] a subsidiary of Rick's Cabaret International ("Rick's") [now named RCI Hospitality Holdings Inc.];
    • In another related transaction, Wire Way LLC would lease the land and building to RCI Entertainment; and
    • In the agreement of interest now, Wire Way LLC would sell the land and building to RCI Holdings, Inc., which also was [and is] a subsidiary of Rick's.

ASSIGNMENT: Rewrite the "Whereas" provisions below as a "Background" section in plain English. Tell the story — not too informally, but not in a stilted, legalesey manner either.

WHEREAS, Seller is the owner of a certain real property consisting of approximately 4.637± acres of land, together with all rights, (excepting for mineral rights as set forth below), title and interests of Seller in and to any and all improvements and appurtenances exclusively belonging or pertaining thereto (the "Property") located at 10557 Wire Way, Dallas (the "City"), Dallas County, Texas, which Property is more particularly described on Exhibit A attached hereto and incorporated herein by reference; and

WHEREAS, contemporaneously with the execution of this Agreement, North by East Entertainment, Ltd., a Texas limited partnership ("North by East"), is entering into an agreement with RCI Entertainment (Northwest Highway), Inc., a Texas corporation ("RCI Entertainment"), a wholly owned subsidiary of Rick's Cabaret International, Inc., a Texas corporation ("Rick's") for the sale and purchase of the assets of the business more commonly known as "Platinum Club II" that operates from and at the Property ("Asset Purchase Agreement"); and

WHEREAS, subject to and simultaneously with the closing of the Asset Purchase Agreement, Seller will enter into a lease with RCI Entertainment, as Tenant, for the Property, dated to be effective as of the closing date, as defined in the Asset Purchase Agreement (the "Lease") attached hereto as Exhibit B and incorporated herein by reference; and

WHEREAS, subject to the closing of the Asset Purchase Agreement, the execution and acceptance by Seller of the Lease, and pursuant to the terms and provisions contained herein, Seller desires to sell and convey to Purchaser and Purchaser desires to purchase the Property.

NOW, THEREFORE, for and in consideration of the premises and mutual covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

DCT REDRAFT:

3.8 Class plan: Mon. Sept. 25

3.8.1 Reading for this week

Be prepared to discuss the questions in:

3.8.2 In-class exercise: Sheryl Sandberg employment agreement (1)

These questions relate to the Sheryl Sandberg employment agreement in the Supplement, starting at page 101.

For purposes of the following questions, assume that you represent Facebook in negotiating this agreement (unless stated otherwise below).

1. When might a drafter want to do an amended and restated agreement instead of just amending the agreement?

A: Two reasons come to mind:

  1. An amended and restated agreement is compact, with everything in one document instead of having an original document and then one or more separate amendment documents.
  2. SEC regulations required Facebook to publicly file Sandberg's employment agreement. If the parties had merely done an amendment document, then Facebook would have had to file both the amendment document and the original agreement that was being amended — and one or both parties might have wanted to keep the original agreement confidential.

2. What are some other ways of amending an agreement?

3. Sandberg's lawyer asks that you change all the instances of the second person ("you") to third person ("the Executive"). How do you advise Facebook about the pros and cons of her request?

A: Fine, but it's not something Sandberg's lawyer would likely have requested — it takes time; it creates the risk of overlooking a change; and it doesn't add a lot of value.

4. Lines 30-40: The letter goes into great detail about Sandberg's duties. Facebook's HR vice president wants to know if you can eliminate all that, because from the title "Chief Operating Officer" it should be obvious what Sandberg's duties will be. QUESTION: What do you advise the HR VP about the possible concerns here — for Sandberg and FB? (Hint: See lines 174-80 (vesting acceleration) and lines 273-75 (definition of Involuntary Termination — material adverse change in responsibilities).)

5. Lines 72-73 ("your Employment will not infringe the rights of any other person"): From a drafting-technique perspective, what's wrong with this provision?

A: Is this a representation by Sandberg? Or is it a commitment by Facebook?

6. Lines 74-78 (return of prior employers' confidential information): Facebooks' HR VP wants to know why this provision has Sandberg both representing and warranting these things. What do you say?

A: Because the beneficiary of a rep or warranty will always want to ask for both a rep and a warranty. (Whether the beneficiary will insist on both is another matter.)

7. Lines 81-82 (salary): The provision refers to Sandberg's salary as the "gross annual rate" of $300K per year (emphasis added). Sandberg's lawyer wants Facebook to change the provision to "an annual salary of $300,000 per year." What do you advise Facebook, and why?

A: Salary numbers should be expressed as an annual rate to be clear that, if the employee gets fired partway through the year, the employee is not entitled to be paid for the rest of the year. If Facebook were to make the change requested by Sandberg's lawyer, then that change would give Sandberg ammunition to argue the opposite, namely that she was entitled to be paid for the rest of the year.

8. Lines 83-84 (salary per company's standard payroll procedures): If Sandberg wanted to lock in her pay periods at, say, weekly, how would you advise Facebook to respond?

A: Facebook would probably respond that it did not want to have to separately manage the mechanics of paying Sandberg, which would be at least modestly burdensome to the company's payroll department.

3.9 Class plan: Wed. Sept. 27

3.9.1 In-class clarity exercise: A family of persecutors

FACTS: This is adapted from an Easter Sunday service booklet at my church (with the family's name changed):

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

EXERCISE: Discuss in your small groups how to fix this.
(Hint: How could this be fixed with just one additional character?)

3.9.2 In-class exercise: Sandberg employment agreement (continued)

These questions relate to the Sheryl Sandberg employment agreement in the Supplement, which starts at page 101.

For purposes of the following questions, assume that you represent Facebook in negotiating this agreement (unless stated otherwise below).

  1. Lines 130-35 (no other rights upon termination): Sandberg's lawyer would like to delete this provision. What is your recommendation, and why?
  2. Lines 141-43 (general release): Facebook's HR VP wonders why you're drafting a form of general release to include as an exhibit — it seems like an unnecessary expenditure of legal fees when a release might never be necessary. How do you advise the HR VP?
  3. Lines 141-43 (general release): Is there any way you could recommend to the HR VP to defer having to draft a general release at this juncture?
  4. The FB HR VP wants to know why Sandberg's employment agreement specifies that she'll work out of Facebook's Menlo Park office. What do you tell her? (Hint: See lines 174-80 (vesting acceleration) and 261-62 (definition of Involuntary Termination) of the agreement.)
  5. Lines 294-98 (confidentiality agreement): The FB HR VP wonders why this provision doesn't incorporate the confidentiality agreement of Exhibit B by reference. How do you respond? (Hint: See lines 494-95.)
  6. Lines 100-01 (vacation time, etc.): This provision states that Sandberg will get vacation time and PTO "at the rate equal to other similarly situated executives." Sandberg's lawyer would like to lock in that she will get at least 20 business days per year. How do you advise the HR VP?
  7. Lines 110-16 (expense reimbursement): This provision requires Sandberg to provide supporting documentation for any requested expense reimbursements. Her lawyer says this would be too burdensome. How do you advise the HR VP?

3.9.3 In-class exercise: Stanford-Tesla lease agreement worksheet 1

These questions relate to the Stanford-Tesla lease agreement in the Supplement.

  1. Lines 16-18 (Basic Lease Terms in Article I are subordinate to other provisions): What could go wrong? How could this be fixed?
  2. Lines 19-21 (Glossary) – DCT comments
  3. Line 26 (addresses for notice): What could go wrong? How could this be fixed?
  4. Lines 30-40 (premises): Is there any ambiguity in line 38? Is the ambiguity worth taking time to fix?
  5. Lines 47-49 (Tenant inspection): Does it matter that this doesn't say "Tenant represents [or /represents and warrants/] that it has made a thorough inspection …."? Why might a drafter choose to leave out those particular terms?
  6. Line 57 (disclaimer of Landlord warranties about structural components): Given the Premises' location (very near the San Andreas Fault), might the Landlord's drafter want to say any more as "cheap insurance"? Why or why not?
  7. Lines 83-85: Why attach a specific Acceptance Form? Could anything go wrong here? How else could this be approached?
  8. Line 89 (Term): Note what this is the "term" of.
  9. Lines 103-11 (Landlord can't deliver premises): Does this clause cause any problems for enforceability of the lease agreement? Would you recommend any changes?
  10. Lines 116-17 (no further rights): Would you advise either side to sign this? Would you recommend any changes?
  11. Line 119: Why is this called an "extension" option and not a "renewal" option?
  12. Lines 164-77 (relating to early termination): Can you think of a better way to present the information? Why might that be useful someday? (Hint: Consider who the future readers might be.)

3.9.4 In-class clarity exercise: Changing children

Fix the italicized segment of following, from a sign at a local swimming pool: "All children must be changed in a locker or changing room." (Are children really supposed to be changed in a locker?)

3.10 Class plan: Mon. Oct. 2

3.10.1 Reading for this week

In On Contract Drafting, read Chapter 12 (assignment of agreement).

Review again the Sandberg employment agreement and the Stanford-Tesla lease agreement in the Supplement, especially the annotations. We will continue working through them and examining some of the doctrinal background and drafting issues presented.

Skim the headings in the text (not just the table of contents) of the Verizon-Yahoo stock purchase agreement to see what issues those drafters addressed. You don't need to read the full text.

3.10.2 In-class discussion / lecture

• From a client contract I helped to negotiate (sanitized): "Within thirty (60) days of the close of previous quarter term, ABC shall provide XYZ with a revenue report that provides a total amount of Data Revenue and Software Revenue obtained by ABC during the referenced quarter term, minus any associated costs or expenses and customer returns or refunds ('Revenue Report')." QUESTION: Any drafting problem with this?

• From the same client contract: "Subject to the terms and conditions of this Agreement, ABC shall pay, on a quarterly basis, to XYZ twenty percent (20%) of Data Revenue (net of all associated costs and expenses) for Licensed Transactions for the Term of this Agreement …." QUESTION: Should XYZ have any business concerns about the "net of all associated costs and expenses" term? (Hint: Ever heard of "Hollywood accounting"?)

• From the same client contract: "XYZ represents and warrants that XYZ's software and its use will not infringe any patent, copyright, or trade secret of any third party." QUESTION: Which of "patent, copyright, or trade secret" might XYZ want to represent and not warrant? (Students with no IP background probably can't answer this one; it requires some basic substantive knowledge but is still a useful exercise.)

3.10.3 In-class exercise: A Somewhat-Barebones Contract (part 3)

This exercise relates (again) to "A Somewhat-Barebones Contract" in the Supplement (at page 1). The question numbering below continues the previous sequence.

26. Section 5: If Seller fails to remove the Grateful Dead decals: Would Seller be in breach? Would Buyer be able to walk away?

A: Seller has no obligation to remove the Grateful Dead decals, and thus won't be in breach of contract if the decals aren't removed. BUT: Buyer can walk away from the deal if the decals are left on the computer.

27. Section 6: (i) Why use the phrase, “so far as he knows, without any particular investigation”? (ii) Why not simply say "to Seller's knowledge"? [Note how in this paragraph the question marks are outside the quotation marks because the question marks aren't part of the text that's being quoted.]

A: "To Seller's knowledge" is ambiguous: It could mean:

  • Seller knows for a fact; or
  • Seller doesn't have any knowledge one way or another.

Under contra proferentem, if Seller drafted the agreement (which will usually be the case for a small transaction like this), other things being equal, the ambiguity would be construed against Seller.

28. Section 7: What options does Buyer have if Seller doesn’t allow Buyer to inspect the Computer before Closing?

A: Buyer can walk away from the deal, without being in breach of contract.

29. Section 7: Why use the term “commercially reasonable” in this section?

A: To "kick the can down the road" in lieu of drafting a more-specific standard of performance. (Note how "more-specific" is hyphenated.)

30. Section 8.1: Why not use active voice here?

A: Because we care more about whether the action gets done (Seller gets paid) than about who, exactly, is performing the action.

(In some circumstances, though, we might care greatly about just who is performing the action.)

31. Section 8.1: This provision uses “must be paid” for emphasis — what are some other possibilities for phrasing this term?

A: "Is to be paid" could work.

32. Section 8.1: Any dangers in payment by cashier’s check? What are some possible alternative forms of payment?

A: A cashier's check could be counterfeit, in which case the bank would have no obligation to honor the check.

33. Section 9: This section uses the term "notarized." Does that likely refer to an acknowledgement, or to a jurat?

A: An acknowledgement.

34. Signature blocks: Is there any danger in having the signature blocks on a separate page for easier signing and FAXing of just the signature pages instead of the whole agreement?

A:

  1. The other side might add text to the bottom of the page just before the signature page. QUESTION: How could this concern be addressed?
  2. A question might arise as to whether the individual who signed the signature page was using the signature page from (let's say Draft #10 of the contract or Draft #11. QUESTION: How could this concern be addressed?

35. Signature blocks: Why does the date line say "Date signed" instead of just "Date"?

A: To make it clear when the contract is actually being signed — this is important in transactions involving public companies, which must report their earnings quarterly, because the date of actual signature is important for determining when earnings (or expenses) are permitted to be "recognized" under generally-accepted accounting principles. See generally the discussion of the dangers of backdating for deceptive purposes in [BROKEN LINK: CABackdating][BROKEN LINK: CABackdating] of On Contract Drafting.

3.11 Class plan: Wed. Oct. 4

3.11.1 New small-group assignments

4:00 p.m. section:

1 Binford 1 Niedzwiedz 1 Kepadia
2 Fisher 2 Caberto 2 Sullivan
3 Jin 3 Herrera 3 Dryden
4 Montes 4 Kellam 4 Hively

7:30 p.m. section:

1 Clawson 4 Thal 1 Oliver
2 Li 1 del Villar 2 Waterwall
3 McKnight 2 Mathews 3 Harrall
4 Pohl 3 Nguyen 4 McCormick

3.11.2 Quiz today (30 points)

The second first in-class online quiz is today. You're responsible for all flashcard questions whose general subjects we've covered so far in:

  • the reading material — both the "read" portions and the "look through" portions; and
  • the in-class exercises and discussions in this syllabus.

3.12 Class plan: Mon. Oct. 9

3.12.1 Reading for this week

See the reading assignment.

Also read the in-class exercises for today.

3.12.2 In-class exercise: Assignment of port operating agreement

FACTS:

(A) You represent Port Operations, Inc., which operates the Port of Bayou City under a contract with Harris County.

(B) The contract states that the contract may not be assigned without the County's prior written consent.

(C) Port Operations receives a buy-out offer from a Saudi shipping magnate who wants to do a "roll-up" of port-operating companies throughout the world.

(D) The County demands a $10 million fee in return for its consent to assignment of the contract.

QUESTION 1. If the contract didn't have an assignment-consent requirement, would the County's consent be required?

A: That might be a litigatable question — the County might take the position that the contracted-for services were sufficiently unique that consent was required for any assignment by Port Operations.

Also, a given state might have a statute like that of New York, which prohibits contracts with state agencies from being assigned.

QUESTION 2. How much does it matter whether the "roll-up" would take the form of (i) an asset purchase, or (ii) a merger?

A: That might depend on the applicable state law — in many jurisdictions, a merger is deemed to cause a transfer of assets to the surviving company, which would trigger the consent requirement.

QUESTION 3. Name at least two ways in which, during the contract negotiation with the County, Port Operations could have protected its ability to agree to the Saudi buy-out.

A: In negotiating the contract, Port Operations might have asked:

  1. for the assignment-consent provision to be deleted;
  2. for an exception in the case of an all-asset transfer;
  3. for a requirement that the County's consent not be unreasonably withheld, together with a fast-track arbitration provision.

QUESTION 4. In your Workflowy whiteboards, draft a provision that would protect Port Operations's ability to agree to the Saudi buy-out.

3.12.3 In-class exercise: Defense against indemnified claims

3.12.3.1 Facts

(A) Alice's contract with Bob obligates her to reimburse Bob for his attorney fees and expenses in defending against certain third-party claims.

(B) A third party, Carol, brings such a claim against Bob — who hires Skadden Arps (a top NYC firm) to defend him against Carol's claim.

(C) Alice has plenty of money to pay legal bills.

3.12.3.2 Questions

Work in your small groups to answer these questions, but each student is to handwrite answers on his or her own piece of paper. (We'll exchange papers among groups.)

1. Handwrite a list of what incentives might motivate Skadden to do things, or not do things, when it conducts Bob's defense.

2. Handwrite a list of two ways that Alice, during negotiation of her contract with Bob, could have limited her financial exposure to Bob's cost of defending against Carol's claim.

3.12.3.3 More facts

(D) Alice's contract with Bob also requires her to indemnify Bob against any monetary awards resulting from such third-party claims.

(E) Bob neglects to mention to either Alice or Skadden that Carol had filed her third-party claim weeks before, and that when Bob failed to file a timely answer, Carol moved for and obtained a default judgment for a large amount of money.

3.12.3.4 Another question

Handwrite a list of two ways that Alice, during negotiation of her contract with Bob, could have limited her exposure to Bob's screw-up.

3.12.3.5 Alternate facts

(F) Alice's contract with Bob requires her to provide Bob with a defense, as opposed to reimbursing Bob for his defense expenses.

(G) Alice engages her regular lawyer, Andy, to conduct Bob's defense against Carol's claim.

(H) Bob finds that he and Andy don't get along so well.

3.12.3.6 Question

During negotiation of the contract, what sort of clause could Bob have asked to be included in the contract to protect him against this uncomfortable situation?

3.12.3.7 More alternative facts

(I) It turns out that Alice can't afford to pay Bob's legal bills for defending against Carol's claim.

3.12.3.8 Another question

What if anything might Bob have done during contract negotiation to mitigate this problem?

3.12.4 In-class ambiguity exercise: Olivia Pope

TEXT: "Wait for me to do what I do best." (Spoken by Kerry Washington as Olivia Pope in an episode of Scandal aired April 7, 2016.)

QUESTION: What are the two possible meanings of this sentence?

EXERCISE: Rewrite the line of dialogue to be clear which version you think Olivia meant — and try to make it sound "natural" and not lawyer-like.

3.12.5 In-class ambiguity exercise: The gift to the married couple

TEXT: I will give you and your husband $1 million.

QUESTION: How much total will the married couple get — $1 million, or $2 million?

EXERCISE: Handwrite a revision to clarify.

3.12.6 In-class ambiguity exercise: The electric chair

TEXT: The judge sentenced the killer to die in the electric chair for the second time.

EXERCISE: Handwrite a revision to clarify.

  1. Takeaways review: Assignments of the Agreement (first: diagram differences between assignment and subcontract)

3.12.7 Lecture: Lessons from 2017 Academy Awards "Best Picture"

  1. R.O.O.F.: "Simply put the name of the category in large letters on each envelope: Best Movie, Best Actress, Best Cinematography, etc." (WSJ.com commenter Felix Kapron)
  2. You get what you inspect, not what you expect; having someone else second-check things — even tiny details — can pay off.
  3. Warren Beatty could have put the brakes on, if he hadn't been a deer in the headlights.
  4. It took two full minutes for the CPAs and telecast producers to step in to fix the problem. (Did they train for that problem?)
  5. Note the energetic, classy response by La La Land's executive producer Jordan Horowitz: Acknowledge, accept, enjoy, act.

(The remaining class plans will be posted later)

3.13 Class plan: Wed. Oct. 11

3.13.1 In-class ambiguity exercise: The bid deadline

TEXT: Bids may be submitted until March 1.

FACTS: A bidder submits a bid at 4:59 p.m. on March 1. QUESTION: Is the bid timely?

3.13.2 In-class ambiguity exercise: The midnight hour

TEXT: "Tenant will vacate the Premises no later than 12 midnight on December 15, 2020; Tenant's failure to do so will be a material breach of this Agreement."

FACTS: At 10:00 a.m. on December 15, Tenant is still occupying the Premises.

QUESTION: Is Tenant in material breach?

EXERCISE: On a piece of paper, each student is to handwrite a more-clear version of the italicized text; then we'll exchange papers.

3.13.3 In-class ambiguity exercise: Ambiguity and early retirement

TEXT: From this headline: "Houston Technology Center CEO To Retire Early Next Year" (He retired Feb. 1, 2017 after serving for ten years.)

QUESTION: Was the CEO to retire, and the retirement was to take place early in 2017? Or was he to retire in 2017, but his retirement was to be earlier than had been expected?

EXERCISE: On a piece of paper, each student is to handwrite a more-clear version of the headline; then we'll exchange papers.

3.13.4 Exercise: The spontaneously-combusting widgets

FACTS:

  1. Alice manufactures electronic widgets. Each widget has a battery that is sealed into the widget and not replaceable.
  2. Bob manufactures electronic gadgets that include electronic widgets.
  3. Bob enters into a contract with Alice to buy electronic widgets from her.
  4. The contract includes, among other provisions:
    • a warranty that the widgets do not contain any defects in design or manufacture;
    • a provision requiring Alice to indemnify Bob against any harm Bob suffers from defects in the widgets; and
    • an exclusion of incidental- and consequential damages.
  5. Bob takes delivery of a large quantity of Alice's widgets and stores them in an appropriate storage room.
  6. In the storage room, the batteries in several of Alice's widgets spontaneously catch fire, resulting in major damage and causing significant "down time" for Bob's gadget-manufacturing operations. (Think: Hoverboards.)
  7. Citing the indemnity provision, Bob demands that Alice reimburse him for the cost of:
    • repairs;
    • replacement of the damaged contents of the storage room;
    • the travel expenses that Bob incurred in going to China and India to check out alternative sources of widgets;
    • the profits that Bob lost from the manufacturing down time.

QUESTIONS:

  1. EXPLAIN IF FALSE: Alice need not reimburse Bob because an indemnity provision covers claims by third parties against the protected party, not direct claims by the protected party against the indemnifying party.
  2. EXPLAIN IF FALSE: If Bob sues Alice for breach of her indemnity obligation, Alice can probably get Bob's claim for lost profits thrown out early (by moving for partial summary judgment) as barred by the contract's exclusion of consequential damages.
  3. EXPLAIN IF FALSE: If Alice had negotiated the indemnity provision to cover only third-party claims, the provision likely would be enforceable.
  4. EXPLAIN IF FALSE: Alice can probably get Bob's claim for travel expenses dismissed on partial summary judgment as barred by the contract's exclusion of incidental damages.
  1. Review the master comment document for the Indemnity for the spontaneously-combusting widgets exercise

3.13.5 In-class exercise: Sheryl Sandberg employment agreement (1)

These questions relate to the Sheryl Sandberg employment agreement in the Supplement, starting at page 101.

For purposes of the following questions, assume that you represent Facebook in negotiating this agreement (unless stated otherwise below).

  1. When might a drafter want to do an amended and restated agreement instead of just amending the agreement?
  2. What are some other ways of amending an agreement?
  3. Sandberg's lawyer asks that you change all the instances of the second person ("you") to third person ("the Executive"). How do you advise Facebook about the pros and cons of her request?
  4. Lines 30-40: The letter goes into great detail about Sandberg's duties. Facebook's HR vice president wants to know if you can eliminate all that, because from the title "Chief Operating Officer" it should be obvious what Sandberg's duties will be. QUESTION: What do you advise the HR VP about the possible concerns here — for Sandberg and FB? (Hint: See lines 174-80 (vesting acceleration) and lines 273-75 (definition of Involuntary Termination — material adverse change in responsibilities).)
  5. Lines 72-73 ("your Employment will not infringe the rights of any other person"): From a drafting-technique perspective, what's wrong with this provision?
  6. Lines 74-78 (return of prior employers' confidential information): Facebooks' HR VP wants to know why this provision has Sandberg both representing and warranting these things. What do you say?
  7. Lines 81-82 (salary): The provision refers to Sandberg's salary as the "gross annual rate" of $300K per year (emphasis added). Sandberg's lawyer wants Facebook to change the provision to "an annual salary of $300,000 per year." What do advise Facebook, and why?
  8. Lines 83-84 (salary per company's standard payroll procedures): If Sandberg wanted to lock in her pay periods at, say, weekly, how would you advise Facebook to respond? [MW1600 stopped here]
  9. Lines 130-35 (no other rights upon termination): Sandberg's lawyer would like to delete this provision. What is your recommendation, and why?
  10. Lines 141-43 (general release): Facebook's HR VP wonders why you're drafting a form of general release to include as an exhibit — it seems like an unnecessary expenditure of legal fees when a release might never be necessary. How do you advise the HR VP?
  11. Lines 141-43 (general release): Is there any way you could recommend to the HR VP to defer having to draft a general release at this juncture?
  12. The FB HR VP wants to know why Sandberg's employment agreement specifies that she'll work out of Facebook's Menlo Park office. What do you tell her? (Hint: See lines 174-80 (vesting acceleration) and 261-62 (definition of Involuntary Termination) of the agreement.)
  13. Lines 294-98 (confidentiality agreement): The FB HR VP wonders why this provision doesn't incorporate the confidentiality agreement of Exhibit B by reference. How do you respond? (Hint: See lines 494-95.)
  14. Lines 100-01 (vacation time, etc.): This provision states that Sandberg will get vacation time and PTO "at the rate equal to other similarly situated executives." Sandberg's lawyer would like to lock in that she will get at least 20 business days per year. How do you advise the HR VP?
  15. Lines 110-16 (expense reimbursement): This provision requires Sandberg to provide supporting documentation for any requested expense reimbursements. Her lawyer says this would be too burdensome. How do you advise the HR VP?

4 Homework assignments

See the Word document containing homework assignments and instructions; the assignments are due on the following dates:

Wed. Sept. 6
Wed. Sept. 13
Wed. Sept. 20
Wed. Sept. 27
Wed. Oct. 11
Wed. Oct. 18
Wed. Oct. 25
Wed. Nov. 1
Wed. Nov. 8
Wed. Nov. 15

We will go over each homework assignment in class, usually on the due date.

[Updated post-Harvey:] For the entire semester, homework may be turned in up to one month late (or, if sooner, December 4, i.e., the date of the final exam) without penalty, no questions asked. Please do try to keep up with the homework, though, because the spacing of the homework is important for helping you to absorb the course material.

Homework assignments submitted after the due date after that will be docked 20% of the possible points. This will help to discourage gaming the system by submitting an assignment after we've already reviewed the assignment in class.

For some homework assignments I will not necessarily mark up each student's assignment individually, because we will be discussing the correct answer(s) in class.

See also § 5.6.5 below for more information.

5 General course information

5.1 This course's approach

5.1.1 An analogy: Baseball spring training

In spring training, while baseball teams do play a few actual games, they spend most of their time practicing basic skills and rehearsing game tactics and strategies — over, and over, and over. In this course, we will do much the same things: We will spend most of our time working on:

  • drafting and/or reviewing lots of specific contract provisions, as opposed to lots of complete contracts;
  • exploring recurring themes such as how to be sure your client gets paid (or gets what it paid for); verifying that the other side is telling the truth; and the like;
  • discussing various points of law and business and how they fit into different negotiation strategies; and
  • occasionally doing short mock negotiations.

One student summarized his or her view of this approach in the course feedback from spring 2017, quoted verbatim below:

At first, I was disappointed that the amount of writing was small. I took the course to learn how to write a contract.

What I could not see at the time, I was learning the fundamental building blocks individually. By the end of the course, all that was left was to put it together and step back. Outstanding professor and methodology.

(Extra paragraphing added.)

5.1.2 Rooting out ambiguity

We will do a lot of short practice exercises in spotting and fixing ambiguities. This is because ambiguity might well be the #1 source of contract disputes. Many of these exercises will be drawn from non-legal sources.

5.1.3 Repetition, repetition, repetition — and jumping around

Let's continue the spring-training analogy: Some of the short exercises and quizzes will seem repetitive, and also that they will seem to jump around from topic to topic. This is a feature, not a bug: It mirrors what you'll almost certainly see in practice, and pedagogically it's been shown to be more effective at promoting long-term memory than lecture and repetitive reading. See generally Spaced retrieval (Wikipedia: https://goo.gl/4PRZTy).

Some students might well hate this approach, because it will strike them as disorganized or even chaotic. Over the years, though, most students seemed to have appreciated the value; please try to "go with it."

You can do your own spaced-retrieval practice by using the online flashcards, to which I will be adding on a regular basis. The mid-term quizzes and final exam will be drawn very largely from these flashcard questions.

5.1.4 A variation on Socratic method, with in-class study groups

We will do a lot of in-class exercises that presuppose that each student has already done the reading. This approach (known as "flipping the classroom") is all the rage in educational circles, but it's no more than a combination of (i) casebook reading, (ii) Socratic method, and (iii) in-class study groups.

NOTE: In a flipped classroom:

  • before class, students watch lecture videos or read written materials, the latter of which should ring a bell;
  • class time is used, not for lecture, but for homework-style problem solving, often in small groups; class discussion; debates; and the like.

Flipping the classroom is gaining popularity in non-law disciplines because it has been shown to be more effective than the traditional lecture format. See, e.g., Cyn­thia J. Brame, Flipping the Classroom (Vanderbilt.edu 2013: https://goo.gl/trS6e4).

The flipped classroom was pioneered by Harvard physics professor Eric Mazur, but he himself cites the law-school case study method as "one of the first implementations of the flipped classroom." The flipped classroom will redefine the role of educators (an interview with Eric Mazur) (Harvard.edu 2013: https://goo.gl/bSdh55).

5.1.5 Real-world practice: More contract reviewing than contract drafting

We can extend the baseball analogy even further: In actual baseball games, players spends far less time batting than in fielding. Apart from the pitcher and catcher, baseball players spend most of their time waiting for, and then dealing with, the other team's grounders, fly balls, and foul balls.

Likewise, in the real world, contract drafters spend far less time drafting contracts than they do in reviewing and revising others' drafts. Even when you're the one who must prepare the first draft, you'll almost always find a previous form (when in doubt, ask your partner or another associate) and modify it, instead of starting from scratch with a blank screen. Our approach in this course reflects that fact as well.

5.1.6 (Experimental:) Handwritten Socratic method

It's been documented that students learn more by handwriting their notes than by typing them.* With that in mind, we will experiment with having students answer some in-class questions by handwriting their answers on paper, then exchanging papers for review.

* It's thought that the act of handwriting causes the brain to process and digest the information more effectively than typing, which can often devolve into mere transcription without comprehension.

5.2 Course materials

5.2.1 On Contract Drafting (on the Web)

By student request, this online document consolidates many of my past writings that I've assigned as readings in past semesters. The working title is On Contract Drafting (sometimes OCD for short; you may read into that what you will). I intend to keep making it available at no charge; I'm trying to set it up to print out nicely for those who prefer hard copy.

On Contract Drafting is still a work in progress. I had hoped to finish consolidating the previous materials during this past summer (2017), but compiling and editing it has required a lot more work than I had anticipated. Students are encouraged to make suggestions and comments as the semester progresses.

To help those who want to print out a hard copy: As I complete a chapter, I will lock it down for the semester and mark it as such. If I feel the need to revise part of a locked-down chapter during the semester:

  • I'll create each revision as a dated, "pocket part" section of the course book that can be separately printed out if desired; and
  • in the online version, I'll put a link to the pocket part.

Then for next semester I'll consolidate the revisions into the main document.

5.2.2 The Supplement: Annotated real-world contracts

The Supplement to the On Contract Drafting document consists of several real-world contracts that I've annotated and printed to PDF. We'll study selected portions of these contracts.

5.3 Extra class time (for possible makeup-class use)

I'm a practicing attorney and arbitrator; I normally don't have to miss class, but it has been known to happen, e.g., when I've had out-of-town commitments. There have also been times when class has been canceled due to weather, usually flooding after heavy rainfall.

Our official makeup days for missed classes are all on Fridays at the same time as the regular class period:

  • For Monday missed classes, the available makeup days are Friday September 1, September 29, and October 27.
  • For Wednesday missed classes, the available makeup dates are Friday Septem­ber 15, October 13, and November 10.

Few students want to come to a makeup class late on a Friday afternoon or on Friday evening. So, as recommended by the Law Center's administration, we will end each class session at 5:20 p.m. and 8:50 p.m., respectively. Between that and the "asynchronous" instruction we will do (e.g., by email), that will let us accummulate one extra class session's worth of time. If it turns out that we don't have to cancel any classes, then we'll just skip the last class meeting. (In the previous sentence, notice how I used the word "then" to help break up the sentence into shorter chunks.)

5.4 Course goals

The goal of this course is to help students prepare for a type of assignment they will likely see throughout their careers: that of (sometimes) drafting, (very often) reviewing, analyzing, explaining, and negotiating contracts.

Students will:

  • explore various legal- and business issues that might need to be addressed in various types of contract (see the list below);
  • study principles of plain-English drafting for contracts and other legal documents;
  • review the etiquette and ethics of contract negotiations;
  • survey some legal pitfalls that could lead to jail time for both clients and lawyers, such as backdating contracts; doing secret side letters; violating antitrust laws; paying off foreign officials; etc.;
  • discuss how to tactfully advise clients (and supervising lawyers) about their options, so as to earn a reputation as a deal-maker, not a deal-breaker;
  • compare and contrast the roles of outside- versus in-house counsel in contract negotiations;
  • consider ways of positioning the client for future litigation, just in case.

5.5 Contact information; computer use; email addresses

  • I can be reached at dc@toedt.com or (713) 364-6545 (which forwards to my cell); see also my About page.
  • Computer use in class is not just encouraged but required; you will need in-class Web access for some of the exercises (we will do some in-class drafting via an on-line chat room and/or a "virtual whiteboard"). If this will be a problem, be sure to contact me well in advance.
  • On the first class day I will be asking for your email addresses so that I can include it in a class Google Group. Please provide an email address that you check regularly.

5.6 Grading

5.6.1 Final grade based on 400 total points

Your course grade will be based on how many points you earn out of 400 total possible points, as explained below.

5.6.2 School-required average

As required by law school policy for a writing class, grades will be adjusted pro­por­tion­al­ly to the extent necessary to make the average of the final class grades fall between 3.0 and 3.4.

5.6.3 Final exam: 110 points, Mon. Dec. 4, 6:00 to 7:00 p.m. (both sections)

[Updated post-Harvey:] This semester, the final exam will be worth 110 points vice 100 points, due to the cancellation of the first mid-term quiz.

The final exam will:

  • consist mainly of true-false and multiple-choice questions, administered by Scantron sheet, drawn from the online flashcards at https://goo.gl/o5gG5M (I will be adding to these flashcards as the semester progresses);
  • include a few short-answer questions, such as "Explain if false," to be administered by blue book (electronic or hard copy);
  • take place in the designated final-exam room; and
  • be closed-book, closed-notes.

What's fair game? Anything:

  • in the assigned sections of On Contract Drafting and the Supplement (both the "read" and "look through" assignments); and
  • in the homework, quizzes, and in-class exercises.

The honor code will of course apply.

5.6.4 Three midterm quizzes: 90 points total (30 points per quiz)

We will have four, in-class, mid-term quizzes, all on Wednesdays: Sept. 6; Sept. 27; Oct. 18; and Nov. 8.

Notice how the previous sentence uses commas to separate the interchangeable adjectival phrases, namely "four, in-class, midterm quizzes." See Comma Rule 2 at GrammarBook.com.

Each mid-term quiz will:

  • be timed, probably for ten minutes;
  • be closed-book, closed-notes; and
  • contain more questions than most people can answer in the allotted time.

The questions in the mid-term quizzes will be drawn from the online flashcards at https://goo.gl/o5gG5M corresponding to the material we cover in the reading and in class. (I will be adding to these flashcards as the semester progresses.)

That way, the quizzes themselves will serve as a reinforcing review that takes advantage of the testing effect.

Bonus 1: The section that gets the higher average score on the second quiz won't need to turn in the homework due Wed. Oct. 18; we'll just do that one in class.

Bonus 2: The section that gets the higher average score on the fourth quiz will get pizza at the next class period.

5.6.5 Homework: 150 points

See § 4. WARNING: In one past semester, a student failed the course — even though the student had received a (very-low) passing grade on the final exam — and therefore didn't graduate that semester as planned, because the student had turned in almost none of the homework assignments.

5.6.6 Class attendance: 50 point "starting bonus" (which can also be lost for non-attendance)

Because we will be doing a significant amount* of in-class discussion and a significant number* of in-class exercises, in two- to four-person teams, it's important for each student to attend each class, not just for his or her own benefit, but so that his or her team won't be shorthanded.

* Notice how it’s a significant amount of discussion (because “discussion” is an uncountable noun) versus a significant number of exercises (because “exercises” is a countable noun); see the Grammarist.com discussion.

[The following discussion has been updated post-Hurricane Harvey.]

ABA accreditation rules and school policy require attendance at 80% of the class meetings for each course. Because of Hurricane Harvey, we have 24 scheduled class meetings (not counting the makeup day on the last official class-meeting day of the semester, if needed). Rounding to the nearest whole number of classes, a student therefore must attend at least 19 class periods to comply with the 80% rule.

Every student starts out with 50 "freebie" points for class attendance, but can lose points for missing class, as follows:

TOTAL CLASSES MISSED TOTAL POINTS LOST
2 0
3 5
4 15
5 or more all 50

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

Attendance exceptions:

  • I don't count absences for "official" law school travel, e.g., for moot-court competitions, etc., as long as I'm informed in advance.
  • I also don't count a reasonable number of absences for illness. Please email me if this will be the case; I'll take your word for it without a doctor's note. (If you're ill, please don't come to class and infect the rest of us.)
  • Absences for job interviews, office visits, work trips, etc., will be counted as missed classes and will lose points as set forth above.
  • [Updated post-Harvey:] I will consider factors of Harvey-related good cause if a student must miss more classes than the two freebies. If you can't attend class in person, we can make arrangements for students to participate remotely via Zoom.us, but please do keep trying to attend as many classes in person as possible, because the small-group discussion is a crucial aspect of the course.

If I see that one or more students are missing, I will circulate an attendance sign-in sheet (but if I see that everyone is present, I normally won't bother).

5.6.7 Class participation bump-up

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

  • to award discretionary increases in student grades by one-third of a grade level for excellent class participation, e.g., from a B to a B-plus, assuming that this doesn't cause the class average to exceed the maximum permitted; and
  • to reduce grades for sub-standard class participation. In the past I said I would not do that; in recent semesters, though, I've had a couple of students for whom it was like pulling teeth to get them to participate even minimally.

5.6.8 Office hours

I'm happy to do office hours by appointment by Skype or Zoom.us video or by phone. I’m also very responsive to email questions.

Before: If I think your email question might be of general interest, I'm very likely not to respond directly to you, but instead to email the question (without your name), and my response, to the whole class.

In the "Before" version above, notice how I used parentheses and commas for clarity in the last part of the previous sentence — but also notice how long the sentence is.

After: I might conclude that your email question is likely to be of general interest to the class. If so, I probably won't respond to you — instead, I'll email the question (without your name, of course), along with my response, to the whole class and possibly to both sections of the course.

In the "After" version, notice how this version has two shorter sentences, and the second sentence is broken up by an em-dash; I also substituted "along with" as a mid-sentence guide phrase to help the reader navigate the wording.

5.6.9 Recording my lectures

I don't make audio recordings of my lectures, but I have no objection to students doing so and sharing the recordings with other UHLC students.

5.7 Counseling available

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

5.8 Microsoft Word: Crucial things to know

1. The safest way to format a paragraph without corrupting the document and crashing the Word program is to format the style of the paragraph, not the individual paragraph itself. See generally, e.g., The Styles advantage in Word (support.microsoft.com: https://goo.gl/v8Jbej); Item 3 in the 2013 list of tips to avoid crashing Word, by John McGhie (answers.microsoft.com: https://goo.gl/VxqJKs). NOTE: McGhie's tip no. 2 is to avoid Track Changes, but I've never had a problem with it — at least so far as I know.

2. To create a heading, use Heading styles: Heading 1, Heading 2, etc.

The following apply mainly to the formatting of styles, but can be used with caution to format individual paragraphs:

3. On rare occasions, to adjust the line spacing within a specific paragraph, use the menu sequence: Format | Paragraph | Indents and Spacing | Spacing (almost smack in the middle of the dialog box on a Mac).

4. To adjust the spacing between paragraphs, use the menu sequence: Format | Paragraph | Indents and Spacing menu. Don’t use a blank line to separate paragraphs — adjust the spacing instead.) See generally Practical Typography: Spacing Between Paragraphs (PracticalTypography.com: https://goo.gl/vNjeKF).

5. To keep one paragraph on the same page with the following paragraph (which is sometimes useful), use the menu sequence Format | Paragraph | Line and Page Breaks | Keep with Next.

Here are some other tips:

6. A table of contents can be useful in a long contract. To create a table of contents, in the References tab, use the Table of Contents dropdown box and select Custom Table of Contents.

7. Tables can sometimes be useful in contracts. To remove the borders from a table (the way Word normally creates them), first use the menu sequence: Table | Select | Table. Then use the menu sequence: Format | Borders & Shading | Borders | None.

8. To copy and paste a short snippet from a Web page into a Microsoft Word document without messing up the formatting of the paragraph into which you’re pasting the snippet, use the menu sequence: Edit | Paste Special | Unformatted text. (Alternatively: Edit | Paste and Match Formatting.)

5.9 Potential quiz questions

1. QUESTION: How many points on your final grade can you earn for turning in all homework?

A: 150 points.

2. QUESTION: According to the syllabus, what could happen if you didn’t turn in any homework?
(a) You could still pass the course, but you'd have to make up the missing points.
(b) Your grade will be dropped by one letter, e.g., A- to B- etc.
(c) No adverse consequences, other than not getting the benefit of the work.
(d) You will not be able to accumulate enough points to pass the course.

A: A.

3. QUESTION: According to the syllabus, to what extent are you allowed to collaborate with classmates in doing homework, and what are you supposed to do if you do collaborate? Mutual consultation on homework is encouraged, but each student must do his or her own work.

A: Mutual consultation on homework is encouraged, but each student must do his or her own work.

4. QUESTION: Which is worth the most to your final grade:
(a) The homework.
(b) The mid-term quizzes, collectively.
(c) The final exam.
(d) Attendance.

A: A.

5. QUESTION: In Microsoft Word, what's the best way to put space between paragraphs for improved readability?
(a) Format the individual paragraph.
(b) Format the style of the paragraph.
(c) Include an extra blank paragraph.
(d) Indent the first line.

A: B.