Day-by-Day Class Plans: Contract Drafting Spring 2025

Be sure you're enrolled in this course in Canvas; see the top of this page for the course numbers.

See this Google Docs page for your initial seating assignments. Please:

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

The initial group assignments are alphabetical by first name. The assignments will be shuffled three times during the semester.

In your small groups you'll be doing a lot of 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" and the "Battle of the Forms Drop-Out Rule."

[DCT TO DO: ADD LINKS TO DIAGRAMS]

Reason 1: Last semester, I 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 this semester, I'll experiment with locking the group whiteboards except for the specific times when we do in-class drafting exercises.

Reason 2: 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)
• Undergrad school and major
• Work experience?
• 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 from today's class plan — 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 "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 regard it as a mixed blessing (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 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. Also 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.' The group dynamic Professor Toedt facilitated puts all students on the same level and 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)
• Class year (3L, 2L, LLM)
• Undergrad school and major
• Work experience?
• Contract-related experience?
• Something boring about yourself?

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)
• Undergrad school and major
• Work experience?
• Contract-related experience?
• Something boring about yourself?

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?

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)
• Undergrad school and major
• Work experience?
• Contract-related experience?
• Something boring about yourself?

I'll talk through chapter 

BE SURE TO READ these materials early in the semester.

[From a PowerPoint slide deck]

See this tweet thread

I'll 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?

Today (Jan. 15, 2025) is her 100th birthday — she has all her marbles and can still play!

:

In the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6, DCT to show a useful way of rewriting the following, from this real-estate lease:

• to break up the "spaghetti 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.

See Setting up the contract's "framing"

See CDL discussion.

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).

See Setting up the contract's "framing"

See Drafting tips

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?

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:

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.)

For next week's reading, discuss in your groups:

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

In your groups:

1. 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.
2. On pages 1 through 4, look through the parts that are accompanied by yellow-highlighted comments.
3. 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.
4. 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.

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).

In this exercise:

• Odd-numbered groups represent MathWhiz
• Even-numbered groups represent Gigunda.

Use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6 — in groups: Draft a short letter of intent between MathWhiz and Gigunda, including the following:

1. Title
2. Preamble
3. Statement that the parties are negotiating for MathWhiz and Gigunda to enter into a ten-year (!) consulting agreement but haven't agreed on all the terms yet.
4. A brief statement in abbreviated bullet points of:
   • what part of the LOI is binding
   • what's not binding but the parties are going in that direction — feel free to be creative from your client's point of view
   • what it would take for the final agreement to be binding
5. Include a list of items that the parties expect to discuss but that aren't yet agreed to.

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

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

Just for grins, here's what ChatGPT came up with (but DON'T assume that's enough):

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?

Five minutes tops: Negotiate the basic terms of the LOI, odd-numbered groups with the next-up even-numbered group (Group 1 with Group 2, etc.).

See this Piled Higher and Deeper comic.

See this post.

To distinguish this document from the coursebook, I changed the highlight color in this document to Cougar Red.

I'm experimenting with putting the reading assignments directly in the coursebook.

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

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 "not for all the others" ambiguous?

What's your preference — and what do you think others would prefer — between:

•  Clause notes directly after the section (definition of "Affiliate"), versus

•  Footnotes (the Background Checks protocol); feel free to try out clicking on the footnotes.

Comments?

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, 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.

An AP headline today: "… 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'm heiping a client (the prospective buyer) to put together on fairly-short notice.
2. On pages 5 through 7, repeat what we did last time.

"Are you not entertained?"

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. Pull up this annotated markup of The Other Side's contract form that I recently 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 four things to mention and/or question — these could be things that:
   • caught your attention; or
   • surprised you; or
   • confused you.
4. 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.

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?

From a Facebook post by Stanford law professor Mark Lemley:

Things I appear to like more than my Facebook friends:

1. Pants

EXERCISE: What are the two possible meanings here?

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6

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

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 …."

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

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

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 turn spaghetti clauses into macaroni (breaking up wall-of-words clauses into outlines); and • check cross-references.

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

In your groups:

1. Pull up this annotated markup of The Other Side's contract form that I recently did 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.

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.

Apropos of (what I've seen referred to as) the upcoming "TaylorBowl 2.0," here's one from The New Yorker: Listening to Taylor Swift in Prison

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

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?

From a student:

As Wednesday Addams is unavailable to sign the agreement on March 31st 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?

My response:

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 — 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.

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

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)

EXERCISE: From part 1, rewrite just part below to be much more reader-friendly — as though you were talking to a lay jury. (Hint: BLUF: Bottom Line Up Front.)

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

Here's the part to rewrite:

If any such obligation (other than one arising (i) with respect to taxes based on or measured by the net income or profits of the Lender, or (ii) with respect to any withholding tax to the extent that such withholding tax would have been imposed on the relevant payment to the Lender under the laws and treaties in effect at the time such Lender first became a party to this Agreement or otherwise became entitled to any rights hereunder) is imposed upon the Guarantor with respect to any amount payable by it hereunder, the Guarantor will pay to the Lender, on the date on which such amount is due and payable hereunder, such additional amount in U.S. dollars as shall be necessary to enable the Lender to receive the same net amount which the Lender would have received on such due date had no such obligation been imposed upon the Guarantor.

DCT REWRITE: [to be shown in class]

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.

See the comic.

For the employment agreements due next week, here are some comments that I've harvested in previous semesters.

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 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?

4.  TEXT: "MathWhiz agrees to employ you in the position of Director of Business Developer [sic; Development]." COMMENT: If this were a purchase-and-sale agreement, you'd want to say (in effect) BOTH that Seller agrees to sell AND Buyer agrees to buy — otherwise it'd be an option, exercisable at Buyer's discretion.

5.  TEXT: "You will report to Mary Marvel (the “CEO”)." QUESTION: What if Mary is the one signing the letter?

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) "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 rule out the employee claiming 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?

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 prove up a claim that there was a (supposedly-binding) oral agreement that (according to Dave) differed from what's stated in the offer letter.

22.  TEXT: "In consideration of your excellent qualifications and references, I look forward to you joining the MathWhiz team and have full confidence that you will make a significant contribution to our business development efforts." COMMENT: I wouldn't say "In consideration of your excellent qualifications and references" — if litigation were ever to ensue between MathWhiz and Dave, the inclusion of "In consideration …" could be offered into evidence by Dave's lawyer as evidence that MathWhiz had an opportunity to check Dave's references and hired him after doing so.

23.  TEXT: "If these terms are agreeable, please countersign the enclosed copy of this letter and return it to me." COMMENT: The "enclosed copy" bit is really old-school (as in, creakily geriatric); it's what'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 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, it might be invalid.

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 problems, as discussed in the course materials.

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: 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.

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.

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; I'll post the reshuffled group memberships before class.

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

I previously mentioned CrossCheck365, a Microsoft Word add-in that will • use an "Expando" feature to turn spaghetti clauses into macaroni (breaking up wall-of-words clauses into outlines); and • check cross-references. Out of the blue I heard from Steve Gullion, who I guess is the founder — many years ago I knew him briefly when my firm's managing partner and I had lunch with him to talk about possibly licensing contract-assembly software from his first company.

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

What if anything was new to you or surprised you, or struck you as important to know, from the Common business transactions 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.

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.

I'll spin the wheel to pick people; don't forget [BROKEN LINK: spin-2].

1. QUESTION: What do you think about including tables, charts, drawings, etc., in a contract?
2. QUESTION: Did Conan O'Brien's lawyers screw up when negotiating his NBC contract? Why or why not?
3. QUESTION: What are the "Three Rs of Notice"?
4. QUESTION: Should the "Mailbox Rule" be used for notices in a "B2B" (business-to-business) contract? Why or why not?
5. QUESTION: If Gigunda wants its MathWhiz contract to require compliance with Gigunda's expense-reimbursement policy, should MathWhiz push back? (From Week 2 reading.)
6. QUESTION: What's better: To say that a contract was signed, or that it was executed? Why?
7. QUESTION: If Gigunda's contract form asks MathWhiz to "acknowledge" that MathWhiz has offices in Gigunda's headquarters city in California (even though that's not the case), is that safe for MathWhiz to agree to? Why or why not?
8. QUESTION: What's one clause to consider including in a contract that could help the parties stay out of court?
9. QUESTION: If a contract says that the contract can only be amended by a signed writing, will a court enforce that requirement?

I'll spin the wheel to call on people.

FACTS: You have graduated and are working as an associate for the law firm representing MathWhiz; you've just taken the bar exam. You've been asked to review a MathWhiz contract draft that has been prepared by a rising-2L summer associate.

The draft says: "Gigunda represents that it shall arrange to pay MathWhiz a deposit in the sum-total amount of $10 thousand dollars ($10,000.00) no later than 10 days after this Agreement has been executed." (Emphasis added as "helper language.")

• QUESTION 1: Could the wording of this provision be improved? How?

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

• QUESTION 2: This is an example of what? (Two words — and the words are not "passive voice," although it is indeed an example of passive voice; I'm looking for two other words.)
• QUESTION 3: Is this an example of acceptable drafting? Why or why not?

FACTS: Same as the previous question.

• QUESTION 4: Are there any circumstances in which the above-quoted apartment lease provision might be sort-of acceptable, in the sense of "hold your nose and go along with it"? (Hint: Consider the role that context plays in interpreting contract language.)

FACTS: Mary Marvel asks you to add, in the background of the MathWhiz agreement with Gigunda, the following sentence: "Gigunda acknowledges that MathWhiz's data-processing algorithms are unique and MathWhiz's extremely-valuable trade secret."

• QUESTION 5: What's your response to Mary, and why?

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.

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 this week's reading) you'll want to consider whether you could be wiping out a provision that your client might later want to rely on. Here's a real-world example:

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

–  The merchant agreement, drafted by the payment processor, included a personal guaranty 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

Question: What did you find useful to you in class today?

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6

6 p.m. groups

Group 1: Michael, Neha, Connor
Group 2: Saxton, Zahan, Adam
Group 3: Haleigh, Julio, Yohan
Group 4: Arianna, Ben P., Nadin
Group 5: Katelynn, Sarah, Tres
Group 6: Rachel, Reid, Arthur, Ben W.

7:30 p.m. groups

Group 1: Dillon, Joshua, Paola
Group 2: Dustin, Hayden
Group 3: Blake, Sirisha, Corbin
Group 4: Brian, Austin

I realized that I hadn't included interest charges and usury-savings clauses in the reading, so I added that to the list for next week.

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

Don't use an AI for this — the idea here is to develop the mental skill of your own (not least because an AI might not be available when you need one).

See this guaranty:

1.  Guaranty. [START FRAG 1:] The Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all existing and future indebtedness and liabilities of every kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or involuntary and whether for principal, interest, premiums, fees indemnities, damages, costs, expenses or otherwise, of the Borrower to the Lender, which [sic; that] arise from or are in connection with that certain Credit Agreement dated as of March 24, 2009, among the Borrower, Heald Capital, LLC and the Lender (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein and not defined herein shall have the meanings ascribed such terms in the Credit Agreement) and/or the other Loans Documents (including, without limitation, any Secured Hedge Agreement), whether associated with any credit or other financial accommodation made to or for the benefit of the Borrower by the Lender or otherwise and whenever created, arising, evidenced or acquired (including all renewals, extensions, amendments, refinancings and other modifications thereof and all out-of-pocket costs, reasonable attorneys’ fees and expenses incurred by the Lender in connection with the collection or enforcement thereof), and whether recovery upon such indebtedness and liabilities under the Credit Agreement and the other Loan Documents may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against the Guarantor or the Borrower under the Bankruptcy Code (Title 11, United States Code), any successor statute or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally (collectively, “Debtor Relief Laws”), and including interest that accrues after the commencement by or against the Borrower of any proceeding under any Debtor Relief Laws (collectively, the “Guaranteed Obligations”). [END FRAG 1] The Lender’s books and records showing the amount of the Guaranteed Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantor and conclusive, absent manifest error, for the purpose of establishing the amount of the Guaranteed Obligations. [START FRAG 2:] This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense to the obligations of the Guarantor under this Guaranty, and the Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing (other than the defense of final payment in full in cash and performance in full of the Guaranteed Obligations, except for contingent indemnification obligations for which no claim has been asserted). [END FRAG₂] Anything contained herein to the contrary notwithstanding, the obligations of the Guarantor hereunder at any time shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code (Title 11, United States Code) or any comparable provisions of any similar federal or state law

EXERCISE 1: Break up just Fragment 1 — use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6. (Fragment 1 is one sentence!)

I'll show my rewrite in a few minutes.

This afternoon, for my "MathWhiz" client:

• for a new project, one existing MathWhiz customer sent an "update" to a previously-negotiated master agreement. I did a Compare Documents function in Microsoft Word, and ….
• for a new customer, the in-house lawyer (finally) acknowledged receipt of my redline of the customer's master agreement. His comment was (paraphrasing) "there are a number of requested changes; I'll make time tomorrow."

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

FACTS: You represent a supplier, ABC Corporation, whose customer, XYZ Inc., wants XYZ's "affiliates" to be listed in the preamble as parties to a master purchasing agreement with the following language: "This Master Purchasing Agreement is between ABC Corporation ('Supplier') and XYZ Inc. and its affiliates ('Customer')."

QUESTION 1: As ABC's lawyer:

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

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

FACTS: You're a new associate at a law firm. One of the partners wants you to draft a contract for one of her clients. She says that the deal is basically like one that another firm client just signed.

QUESTION: On these facts alone, what don't you know that might be relevant?

In a recent California case:

• A worker signed an employment agreement that included a mandatory arbitration provision that included a prohibition of class-action arbitration.
• At the end of the document, the agreement form said, "The parties acknowledge and agree [sic] that each has read this

agreement carefully and understand that by signing it, each is waiving all rights to a trial or hearing before a judge or jury of any and all disputes and claims subject to arbitration under this agreement."

• The company never signed the worker's agreement.
• After leaving the company, the worker filed a class-action lawsuit alleging wage-and-hour violations .
• The company move to compel arbitration and to strike the class-action claims.

The district court ruled that the arbitraiton agreement was not binding on the worker because the company hadn't signed the agreement; the appeals court affirmed.

See Pich v. LaserAway, LLC, No. B331219, slip op. at 5-7 & n.4 (Cal. App. Jan 28, 2025) (unpublished; affirming denial of motion to compel arbitration, citing cases).

See this Red & Rover comic strip.

From the "you get what you INspect, not what you EXpect" desk: Last week the Justice Department announced: North Carolina Auto Parts Seller and Its Owner to Pay $10M for Making, Selling and Installing Emissions Defeat Devices on Motor Vehicles

(Or: Some people sometimes lie, cheat, and steal, so it'd be naïve to blindly assume that your client's contract counterparties will always perform as they've agreed.)

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

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

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

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

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

* * * 

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

(Emphasis added.)

From The Economist:

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

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

* * * 

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

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

This means the difference between life and death.

(Emphasis added.)

In your groups:

1. Pull up this annotated markup of The Other Side's contract form that I recently did for my real-life MathWhiz client.
2. On pages 6 through 16: 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. As usual, pick out two spokespeople — we'll go around the room twice; each time, a group spokesperson is to mention one of the group's four 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.

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

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

See this Facebook post.

Question: What did you find useful to you in class this week?

Since students seem to find it useful to see me edit a spaghetti clause in real time, I'll do a quick demo using my whiteboard (which you shouldn't be able to see) to break up just Fragment 2 from the above wall-of-words guaranty:

[START:]

This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense to the obligations of the Guarantor under this Guaranty, and the Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing (other than the defense of final payment in full in cash and performance in full of the Guaranteed Obligations, except for contingent indemnification obligations for which no claim has been asserted).

[END]

Then: Do likewise; use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6.

Again: Don't use an AI for this — the idea here is to develop the mental skill of your own (not least because an AI might not be available when you need one).

Suggestion: Separate out the distinct potentially-negotiable ideas into separate paragraphs — possibly using a question-and-answer format as a drafting aid.

To show what I mean, here's an example from Fragment 1:

Here's the text of Fragment 2 to break up:

This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense to the obligations of the Guarantor under this Guaranty, and the Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing (other than the defense of final payment in full in cash and performance in full of the Guaranteed Obligations, except for contingent indemnification obligations for which no claim has been asserted).

I'll show my rewrite in a few minutes.

Was someone thinking ahead? What if NRG Energy hadn't wanted to let "its" stadium name be covered up during the World Cup? That's where SWOT analysis can come in handy: Strenths; Weaknesses; Opportunities; Threats.

From Why NRG Stadium will have a different name during the 2026 FIFA World Cup (BizJournals.com):

Houston-based NRG Energy Inc. (NYSE: NRG) has inked a sponsorship deal for the 2026 FIFA World Cup. However, its namesake Houston stadium — which will host seven matches for the tournament — will go by a different name during the event.

The 2026 World Cup will use the name “Houston Stadium,” as FIFA guidelines prevent any of the host venues from being referred to by their corporate-sponsored names. That’s despite NRG becoming an official supporter of the FIFA World Cup 26 Houston Host Committee, the company announced Feb. 10. The host committee can sell certain rights and assets to its sponsors — but not stadium naming rights.

During the matches, signage referring to NRG Stadium will be covered up, and broadcasters will refer to the venue by its FIFA-mandated title.

NRG’s sponsorship is for the host committee, but even if the company inked a sponsorship deal with FIFA itself, NRG Stadium would still be named Houston Stadium for the duration of the World Cup.

Each of the other 16 host stadiums will follow the same rules: Mercedes-Benz Stadium will be named Atlanta Stadium, Gillette Stadium will be referred to as Boston Stadium, AT&T Stadium — located in Arlington — will be named Dallas Stadium, and so on.

(In the course book, see T O P  S P I N: Identifying threats and opportunities.)

From a law firm, this made me chuckle.

(See here for a compilation of similar Artist-to-Legalese reels.)

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

EXERCISE: Spot the issues, including those from prior weeks' reading.

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

In the reading: Resale Channel

BASIC FACTS:

• MathWhiz has developed a software package, "GeeWhiz," that will let customers do a lot of the data-analytics that MathWhiz does in its consulting business.
• Because MathWhiz doesn't yet have much of an internal sales force, MathWhiz asks you to develop a form of reseller agreement.
• Under the reseller agreement as MathWhiz envisions it:
  • The reseller will buy licenses to use the new GeeWhiz software at a stated discount from MathWhiz's list price.
  • The reseller will try to resell the GeeWhiz licenses to customers identified by the reseller, at whatever price the reseller chooses.

1.  MORE FACTS: Mary Marvel asks you if MathWhiz can specify a minimum price at which the reseller may resell the GeeWhiz licenses.

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

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

QUESTION: What if any legal and/or business issues does that raise in your mind? (Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6)

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

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6:

I'll spin the wheel to call on people.

FACTS:

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

QUESTION 1: What advice do you have for Mary?

FACTS: Gigunda's services agreement template also says that MathWhiz must submit its invoices no later than 15 days after the end of a calendar quarter.

QUESTION 2: What do you think Gigunda's motivation is?

• Will MathWhiz even care? Why or why not?
• What do you advise Mary Marvel?

FACTS:

• MathWhiz wants to include, in its services agreement template, a provision for charging interest.
• Mary says that she's heard of something called a "usury-savings clause," and asks whether such a clause should be included in the MathWhiz template.

QUESTION 3: From a purely-business perspective, what do we not know, that we might want to find out, before trying to advise Mary?

FACTS: For particular MathWhiz obligations, Mary wants the MathWhiz services agreement template to require only that MathWhiz use its "best efforts" to perform its obligations.

QUESTION 4: Is this a "safe" clause to include? Why or why not?

• From a business perspective, what might a MathWhiz customer think if MathWhiz only committed to use "best efforts" to get something done?
• What might be an alternative to an "efforts" clause?

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

QUESTION 5: Why might Gigunda want this, and how might you advise MathWhiz about it?

QUESTION 6: What does "1% 15 days, net 30" mean?

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

QUESTION 7A: Should you recommend that MathWhiz ask Gigunda to establish payment security?

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

QUESTION 7B (for the same spinning-wheel "victim"): What might you advise Mary about payment security?

QUESTION 7C (ditto): Would you want the startup-company customer to be the one to confirm that it has arranged for payment security? Or would it be better for MathWhiz to get more confirmation than that?

I'll spin the wheel to pick people; don't forget [BROKEN LINK: spin-2].

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

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

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

3. QUESTION: When calling a partner's or client's attention to a problem, it's best to have a recommended [BLANK] as well.
4. QUESTION: When taking notes during a meeting, why is it useful to indicate whether one or more lawyers is participating?
5. QUESTION: What does DCT's mnemonic "S.t.R." (or "S.T.R.") stand for?
6. EXPLAIN IF FALSE: Summary judgment (i.e., without a trial) is pretty much always improper when a contract term is ambiguous.
7. TEXT: "Tenant will vacate the Premises no later than 12 midnight on December 15; Tenant's failure to do so will be a material breach of this Agreement." FACTS: Tenant moves out at 10:00 a.m on December 15. QUESTION: Is Tenant in material breach? EXPLAIN — INCLUDING coming up with a clearer version.
8. QUESTION: What does contra preferentem mean — both as an English translation of the Latin, and what it means in "our [contract-drafting] world"?
9. QUESTION: What does DCT's mnemonic "A.T.A.R.I." stand for?

See this piece:

Brain electrical activity was recorded in 36 university students as they were handwriting visually presented words using a digital pen and typewriting the words on a keyboard. Connectivity analyses were performed on EEG data recorded with a 256-channel sensor array.

When writing by hand, brain connectivity patterns were far more elaborate than when typewriting on a keyboard, as shown by widespread theta/alpha connectivity coherence patterns between network hubs and nodes in parietal and central brain regions.

Existing literature indicates that connectivity patterns in these brain areas and at such frequencies are crucial for memory formation and for encoding new information and, therefore, are beneficial for learning.

Our findings suggest that the spatiotemporal pattern from visual and proprioceptive information obtained through the precisely controlled hand movements when using a pen, contribute extensively to the brain’s connectivity patterns that promote learning.

We urge that children, from an early age, must be exposed to handwriting activities in school to establish the neuronal connectivity patterns that provide the brain with optimal conditions for learning.

Although it is vital to maintain handwriting practice at school, it is also important to keep up with continuously developing technological advances. Therefore, both teachers and students should be aware of which practice has the best learning effect in what context, for example when taking lecture notes or when writing an essay.

(Extra paragraphing added.) See also the Hacker News discussion.

In my whiteboard I'll start to break up the following, from an employment agreement for the vice-chairman of the board of The Men's Wearhouse:

[BEGIN]

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

[END]

Now: Your turn — use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6.

Illustrating the contract-negotiation advantages of using short, single-subject paragraphs, consider an analogous situation: Drafting a complaint in a lawsuit, where the defendant must review and respond to each allegation in the complaint.

1.  Background:

• In U.S. litigation, a defendant must respond to allegations made in a complaint by admitting, denying, or pleading ignorance, generally on a paragraph-by-paragraph basis. See generally Fed. R. Civ. P. 8(b) concerning complaints and answers:

(b) … (3) General and Specific Denials. A party that intends in good faith to deny all the allegations of a pleading—including the jurisdictional grounds—may do so by a general denial. A party that does not intend to deny all the allegations must either specifically deny designated allegations or generally deny all except those specifically admitted.

(4) Denying Part of an Allegation. A party that intends in good faith to deny only part of an allegation must admit the part that is true and deny the rest.

(5) Lacking Knowledge or Information. A party that lacks knowledge or information sufficient to form a belief about the truth of an allegation must so state, and the statement has the effect of a denial.

• A plaintiff need not prove up matters that a defendant admits. (See Fed. R. Civ. P. 36(b): "A matter admitted under this rule is conclusively established unless the court, on motion, permits the admission to be withdrawn or amended.")
• But defendants' lawyers often look for reasons to simply deny an allegation — and they might well do just that for a long, wall-of-words paragraph that contains multiple factual allegations.

2. So: Consider the following paragraph from a State of California lawsuit against Google (which Google promptly settled for $93 million):

4.  Google’s primary source of revenue is advertising. Google’s parent company Alphabet Inc. reported that in 2022 it had revenues of over $280 billion, and over $220 billion of that was attributable to Google’s advertising. A critical feature of Google’s advertising platform is location-based (or geotargeted) advertising, as advertisers greatly prefer to precisely target users in narrow geographical locations. In addition to advertising to users based directly on their location, Google also uses their location data to build behavioral profiles of users, which can determine what ads are shown to users.

The state AG's office might profitably have rewritten this paragraph (and others) to increase the odds of Google's lawyers admitting to more things — for example, thusly:

5.  To be sure: The state AG's office could readily prove up each of the above assertions, using depositions, documents, etc. But: The more of these matters that Google will admit right away, the more that will serve to pin Google down — thus simplifying matters for the AG's office as the case develops (to say nothing of reducing costs).

6.  Of course, by breaking up the factual allegations into bite-size chunks, you end up with more numbered paragraphs. Who cares?

7..  Note also how the state AG's office includes screen-grab images directly in the body of the complaint to help educate the judge and jury. Question: In a contract, could screen-grab images be judiciously used to help educate the parties' business people — and later readers such as a judge or jury? (That often won't be worth bothering with, but it's worth keeping in the back of your mind.)

Previewing the reading about arbitration: A federal district judge in Chicago has ordered consumer electronics company Samsung to pay American Arbitration Association ("AAA") arbitration fees — probably totaling around $3 million — for some 35,000 consumers who had demanded arbitration as required by their "agreements" with Samsung. The court noted that:

Alas, Samsung was hoist with its own petard. … [Samsung] made the business decision to preclude class, collective, or representative claims in its arbitration agreement with its consumers, and AAA’s fees are directly attributable to that decision.

(The Hamlet quote is part of a longer speech by Hamlet: "For 'tis the sport to have the engineer || Hoist with his own petard" — that is, for an army engineer, in charge of tunneling under an enemy fortress to plant explosives, to be blown up by his own bomb.)

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

And from a criminal case: "[W]hile water [emojis] may reference sexual relations, case law also confirms that water can also refer to methamphetamine in drug trafficking communications." United States v. Swanagan (denying motion to suppress wiretap evidence; citation omitted).

As with the contra proferentem rule, if an emoji in a notice is ambiguous — that is, the emoji could plausibly have more than one meaning — and the ambiguity can't be resolved by the usual means, then the ambiguity should be resolved against the party that used the emoji in the notice, on the theory that that party could and should have been more clear.

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

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

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

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

We're at four years since the Great Texas Blackout caused by Winter Storm Uri in February 2021, which serves as a large-scale example of the importance of incentives.

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

As has been reported and discussed at length in the ensuing two years, the incentives available to Texas power generators appear to have played a major role in the blackout:

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

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

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

And from the NY Times:

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

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

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

Question: What did you find useful to you in class today?

Feel free to use the group whiteboards (both classes):       • Group 1       • Group 2       • Group 3       • Group 4       • Group 5       • Group 6

Request: I'd like to call on someone to take notes in the Group 1 whiteboard — I'll copy and paste the notes into this class plan for future reference. I'll spin the wheel to call on people.