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7 Deadly Sins of Confidentiality Provisions and NDAS
Although the classic Deadly Sins do not ordinarily impact the process of drafting a Confidentiality Provision, the dramatic title is appropriate since this paper will focus on seven issues that arise in negotiation and drafting of contract terms related to "confidentiality" (and to Non-Disclosure Agreements - "NDAs") that can present significant difficulties for practitioners and clients.
2023 Business Drafting Workshop: LLCs
Reps and Warranties | Breach, Remedies, and Dispute Resolution | Conditions, Discretionary Authority, & Declarations | Annotated Covenants
Contract Drafting Building Blocks: Reps and Warranties
Sample Stock and Goodwill Purchase Agreement
Contract Drafting Building Blocks: Breach, Remedies, and Dispute Resolution
I often describe contract drafting as a “creative process.” A statement that has drawn unbelieving looks from many past students. But drafting a contract presents the opportunity to create a private body of law between two or more parties. That private body of law, along with any other applicable statutes, regulations, and common law, dictate how the parties will work together to achieve some common goal. To draft that document appropriately and in a way that helps the parties reach the goal, the lawyer has to think through the process of each party’s performance – the who, what, when, where, and how of each obligation, condition, or discretionary action. Once that process is complete, the lawyer drafts those obligations, conditions, and discretionary actions in a way that memorializes the parties’ intentions. I have also often told students that a major perk of a transactional practice (for me at least)is that your clients are typically happy to be working with you. They haven’t hired you because they are fighting with someone or at the beginning stages of litigation. Instead, the client is embarking on a new deal or relationship. Very often, one that brings sought-after potential and opportunity for the client. And in this situation, they are happy to have you on board.However, while we prefer to focus on the positive aspects of the transaction, we also know that part of that creative process includes consideration of what can go wrong. It is inevitable that a percentage (hopefully a very, very small percentage) of contracts we draft will end up in some type of dispute or litigation. Relationships go south or economic circumstances change for the parties, and the contract should address those potential situations. We have to think through what constitutes a default, when is termination of the agreement allowed, what are the consequences of that termination (both monetary and nonmonetary), and what are the remedies the parties may seek– specific, common law, or both.
Contract Drafting Building Blocks: Conditions, Discretionary Authority, & Declarations
Sample Stock and Goodwill Purchase Agreement
Annotated Covenants
Set forth below is a typical covenants section that would appear in a stock purchase agreement. Note that these covenants assume that defined terms are set forth in the rest of the agreement.
Structuring Earnout Provisions
An earnout is a contractual provision stating that the seller of a business is to obtain additional compensation in the future if the business achieves certain financial goals, which are usually stated as a percentage of gross sales or earnings. For example, if an entrepreneur seeking to sell a business is asking for a price more than a buyer is willing to pay, an earnout provision can be utilized. In a simplified example, there could be a purchase price of $1 million plus 5% of gross sales over the next three years.
What to Do When Someone Comes Knocking: Non-Disclosure Agreements
When business enterprises undertake to evaluate a proposed transaction, the parties will usually begin by negotiating the terms of a non-disclosure agreement. That non-disclosure agreement will serve as the frame work that allows the parties to share confidential and proprietary information necessary to fully evaluate, negotiate, and consummate a proposed transaction, while sufficiently protecting against unauthorized disclosure. Set forth below is a discussion of a few key considerations when negotiating non-disclosure agreements in business transactions.
Simultaneous vs. Split Sign and Close: Drafting and Practical Considerations
This article describes the difference between a simultaneous and split signing and closing structure in M&A transactions and provides drafting and practical considerations and sample provisions for M&A practitioners. Practitioners have many options to address the risks posed by a delayed closing, some of which can be complex and specific to the idiosyncrasies of a transaction. Therefore, this article seeks to provide an introductory overview to some of the key provisions utilized to address the risks of a delayed closing
Contract Drafting
This paper is comprised of excerpts from Waks, Whitlock, Texas Practice Guide—Business Transactions,Chapter 1, Contracts (Thompson Reuters, 2022). Section references are to the particular section from the Chapter where the excerpted material is located.
How to Negotiate Cloud Contracts to Avoid Cyber and Privacy Disasters
As the use of Computer Computing continues to expand it is likely that there will be litigation if there are data breaches, cyber intrusions, and loss of data. So, it is critical that all lawyers help client negotiate important Cloud Computing contracts to protect client as well as their law practices.
Drafting the Bullet Proof Non-Compete
The basic principle of non-compete law is reasonableness, and that’s a pretty fuzzy concept. That means there will almost always be some argument that no matter how well the non-compete is drafted, it is unreasonable. Still, there are ways to draft a non-compete to maximize the chance that a court will enforce it later. So here are the key questions that come up when you’re drafting a typical Texas non-compete.
Ethics of Contract Drafting and Negotiation
Any time a lawyer negotiates or drafts a contract there are at least six ethical concepts in play which apply to your duties to the client under the Texas Disciplinary Rules of Professional Conduct. The attorney's duty to read the draft contract is excused when there is fraud or mistake. Nevertheless. as a matter of preventive law, the attorney should review the contract- perhaps with the help of a computer program- before it is signed. Also, the attorney should provide the client with an opportunity to review it. Not only can review by a second set of eyes be helpful in detecting problems, but if the attorney victimized by these situations faces a client's malpractice claim, it will be helpful if the attorney gave the client an adequate opportunity to review the contract, for most of the problems could be detected (or at least questioned) by the review of a layperson.
A Litigator's Perspective on Contract Provisions in Commercial Transactions
This article should serve as a reminder of the types of issues that can develop if things go south after your clients have signed on the dotted line. Every time you draft a contract, you are potentially drafting Exhibit Number 1 in a litigation (or arbitration if you thoughtfully crafted an arbitration provision). Make it easy for your client and its litigation counsel to convince a court and jury that the contract clearly says what they claim it says by making the contract easy to follow, stripping away the legalese, and eliminating the need to reference multiple pages to understand the parties’ obligations. Also, resist the temptation to skim over those miscellaneous clauses at the end of your otherwise perfectly drafted contract. These clauses can have a tremendous impact if a dispute arises. Pay as close attention to the miscellaneous provisions as you do to the substantive provisions of the contract.
The Risks of Cloud Computing
Although storing and manipulating data on remote servers via the Internet is not a new technology, it has recently been refashioned into a new service offering, generally referred to as “cloud computing.” The pervasive use of cloud computing presents new challenges to lawyers, their clients, and to forensic examiners. For lawyers and clients alike, cloud computing offers many economic benefits. However, recent state legislation and current disciplinary rules impose a duty on the lawyer to maintain the security and the integrity of information stored on the cloud. Lawyers also need to counsel their clients to ensure that their contracts for cloud-based services do not unnecessarily put the client at risk. For forensic examiners, new tools and procedures are needed to identify, collect, preserve, analyze and present electronically stored information (“ESI”) that is not within the control of the data custodian. This paper presents identifies various issues related to cloud computing, such as benefits, security, e-discovery, forensics, service contracting and the like.
Letters of Intent
It is important for an attorney to understand the legal and other ramifications of negotiating and drafting an LOI, and to counsel his or her clients on the impact of those ramifications on the transaction.
Boilerplate Provisions
Black’s Law Dictionary defines “Boilerplate” as: Language which is used commonly in documents having the same meaning; used to describe standard language in a legal document that is identical in instruments of a like nature. (9th ed. 2009). Boilerplate language certainly serves a purpose to reduce transaction costs and avoid protracted negotiation over what, in many instances, are standard terms. But, too often, lawyers rely on this common usage of the term “boilerplate” when examining, or rather glossing over, relatively customary contractual provisions such as recitals, statements of consideration and the ever-dangerous miscellaneous section. Like other contractual provisions, mere reliance on form boilerplate provisions can yield unintended and often unfavorable results. Therefore, attorneys are cautioned to review these provisions with the same care as they would review the remaining terms of a given contract.
The Seven Deadly Sins of Boilerplate: "Cut and Paste Can Get You Sued"
The focus of this article will be upon seven boilerplate provisions that can present significant difficulties for the practitioner. Those “standard” sections at the end of a contract may look like the same provisions you have seen in hundreds of contracts, but those tried and true, cut and pasted provisions often create, rather than resolve, problems. The fallout from improperly drafted (and typically neglected) boilerplate provisions, can determine the enforceability of a contract, the value to be received, and the remedies available to the parties.
Before the Cloud Turns Dark and It Begins to Rain
This paper begins with an identification of the ethical issues that require greater awareness and operating skill for attorneys. This requirement then leads to both real and hypothetical examples of technology’s impact on legal ethics and business practices in the legal industry. An overview of the Cloud computing industry follows with discussion of the range of services available through the Cloud. This paper then explores statutory protections and failings, contractual provisions, and case law uncertainty in identifying and protecting interests of Cloud providers, landlords to Cloud providers, lenders to every enterprise associated with the location and equipment used in the Cloud, Cloud consumers, Cloud consumer’s clients, software vendors, and the role attorneys take in representing these parties. This paper concludes with an examination of ethical issues facing attorneys and other professionals in their representation of clients and their firms’ own use of the Cloud.
Drafting and Enforcing Complex Indemnificaion Provisions
The purpose of this article is to assist transactional and litigation attorneys negotiate and draft customized, and therefore more effective, indemnification provisions in a wide range of situations, and also to spot certain litigation issues that may arise out of indemnification provisions. This article will identify issues and provide the strategies and suggested language that can act as a starting point to protect the client’s interests in the area of the duty to defend, advancement of defense expenses and indemnification in complex transactions and litigation. This is not a survey of the substantive law of indemnification in every state and federal jurisdiction. While selected published opinions will be mentioned and occasionally discussed, this article will not focus on case law. Instead, the article is intended to be a practical guide that illustrates real-world strategies, tactics and techniques to be used when negotiating and enforcing defense, advancement and indemnification provisions.
Non-Compete Non-Solicit Breach of Fiduciary Duties
This article is a set of cases that examine various aspects of non-competition clauses in agreements, non-solicitation, and breaches of fiduciary duties.
Spring, 2013
This issue includes articles entitled: "Legislation Update on Article 4A Amendment" by Roger Bartlett; "Potential Impact of the Canning Decision on CFPB Rules" by Cheryl Crandall Tangen; and "Legal Opinions Committee Update: Dodd-Frank and Swap Guarantees by and Joint and Several Liability Provisions for Entities that are not Eligible Contract Participants" by Steve Tarry.
Spring, 2013
This issue includes articles entitled: "Legislation Update on Article 4A Amendment" by Roger Bartlett; "Potential Impact of the Canning Decision on CFPB Rules" by Cheryl Crandall Tangen; and "Legal Opinions Committee Update: Dodd-Frank and Swap Guarantees by and Joint and Several Liability Provisions for Entities that are not Eligible Contract Participants" by Steve Tarry.
Drafting Contracts (and Everything Else) to Avoid Ambiguity
This paper is so brief a collection of ideas about drafting contracts that it really constitutes little more than a random collection of personal pet peeves. In applying these suggestions, remember that rules – at least many of them – were made to be broken.
7 Deadly Sins of Boilerplate: How Cut-and-Paste Can Get You Sued
Those “standard” sections at the end of a contract may look like the same provisions you have seen in hundreds of contracts. But those tried and true, cut and pasted, provisions can often create, rather than resolve, problems. The fallout from improperly drafted (and typically neglected) boilerplate provisions can determine the enforceability of a contract, the value to be received by a party, and the remedies available to the parties.