Reading notes

by D. C. Toedt on February 8, 2010

  • Athletes’ Scandals Spark Interest in Endorsement Insurance – NYTimes.com
    "[T]he stock prices of the seven publicly held companies that have or had sponsorship deals with [Tiger Woods] lost $12 billion in market value in the month after Woods’s statement in December that he was taking a leave from golf …." Companies are increasingly seeking to buy insurance to cover potential lost sales when this happens; the insurance gets more expensive as the morals clause gets more specific.  (HT:  Contract Alchemy http://bit.ly/bulDjb)

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Minor warranty breaches can add up to a material breach, says UK court

February 8, 2010

I’ve sometimes written into contracts that multiple non-material breaches of a contract, even if cured, can add up to a material breach. A UK court held that this was the case in a lawsuit by British Gas against global consulting-firm Accenture (formerly Andersen Consulting) over alleged defects in a customer-billing system. See this article [...]

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Reading notes

February 6, 2010

Dell arbitration agreement in box not enforceable because customer had no opportunity to return product | Morrison Foerster

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Cramming down a killer contract might give you a wounded tiger to deal with later on

February 4, 2010

Something else we discussed in class yesterday: Suppose a customer company has a lot of bargaining power. And suppose the customer uses that power to force a vendor to make some tough concessions in a contract negotiation.
The customer’s negotiators might well regard those concessions as an entitlement: We’re the big dog; [...]

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Reading notes

February 4, 2010

Software Reseller Agreements | Wahab & Medenica

Answering When Your Guaranty Is Called – Farella Braun & Martel
A useful survey of guaranty issues, including some of the whys and whens as well as tips on dangerous boilerplate.

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Contracts aren’t computer programs: they’re just one type of tool for motivating fallible humans

February 4, 2010

During a discussion yesterday in my contract-drafting class, I pointed out that —

Contracts are not computer programs that will be carried out, exactly as written, by mindless, disinterested robots. Quite the opposite: contracts try to encourage human beings. We generally aren’t mindless, and often we’re anything but disinterested;
Legal obligations are just one type [...]

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Misstatements during contract talks might cost EDS an extra $270 million

February 2, 2010

I plan on spending some time in my contract-drafting class talking about this case:

British Sky Broadcasting contracted with EDS to develop a customer relationship management (CRM) software system, and eventually filed suit when things didn’t go as planned.
The judge concluded that EDS made fraudulent misrepresentations when one of its senior UK executives lied [...]

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Reading notes

January 30, 2010

Global Arbitration Review
I just discovered this collection of arbitration articles; the ones I glanced at were by name-brand law firms.

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Attorney’s-fees clauses automatically become “loser pays” under California law

January 29, 2010

Suppose a contract contains a one-way attorneys’ fees provision — for example, a provision in a technology license agreement that the licensor can recover attorneys’ fees incurred in enforcing the license agreement.
And suppose the contract is governed by California law.
It appears that, under California Civil Code § 1717(a), that contract provision is automatically and [...]

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Capitalize IF and THEN for easier reading

January 27, 2010

Something I’ve been doing for awhile is to capitalize IF and THEN in a complex sentence, and to use colons and semi-colons to set them off. For example:

IF: A Product includes computer software, including for example software embedded in hardware; THEN: Reseller may not copy, disassemble, decompile, or reverse engineer the software, nor assist [...]

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Business discretion: A defined term that might be more palatable than “sole and unfettered discretion”

January 26, 2010

It can be jarring to read in a contract draft that the other side may do X “in its sole and unfettered discretion.” To soften the blow (for when I want my clients to have sole and unfettered discretion), I coined a new term, business discretion:
Business discretion: IF: This Agreement commits a decision, [...]

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