Services agreement blank form is up
July 29, 2008
Yesterday I posted a check-the-boxes form for a generic services agreement with no pre-configured checkboxes. As time permits, I’ll add configurations tilted toward the service provider and to the customer.
Test post
July 25, 2008
This is a test post.
[hpost]This should appear for any user.[/hpost]
[hpost=2]This should appear for Gold users.[/hpost]
Eight rules for legal document design - Wayne Scheiss
July 21, 2008
I recently stumbled upon Wayne Scheiss’s legal-writing blog. He’s the legal-writing instructor at the University of Texas School of Law (my alma mater). Mr. Scheiss has posted a great short-form guide to formatting a legal document. Some of my favorites:
- Georgia font looks better than Times New Roman (I agree)
- Wider margins are better: they make the document more readable (but in writing litigation briefs, readability may not be as important to you as court-imposed page limits).
- Times New Roman 12-point type looks too crowded on the page (especially with one-inch margins).
Tax definition laundry list
July 18, 2008
Thanks to New York’s highest state court of appeals (hat tip to a Fulbright & Jaworski newsletter), I was able to add a painfully-long laundry list definition of “tax” to the Definitions-General section of the Compendium form book (see the Form book menu item at the top).
I adapted the laundry list from the opinion in Innophos, Inc. v. Rhodia, S.A.. In that case, the court of appeals upheld summary judgment that a $20 million-plus water-usage charge, assessed against a company by a Mexican government entity, was a “tax” within the meaning of the contract, because it was similar to a severance tax.
The court of appeals, quoting a lower appellate court, said that “[i]t is virtually impossible for us to imagine how two sophisticated parties could have made the language [defining 'tax'] any more sweeping than it is ….” (internal quotation marks and citation omitted).
The definition of “tax” was relevant because, not long before the water-usage charge was assessed, the relevant business operations had been sold to another party. The buyer claimed that, because of the contract language and the expansive definition of “tax,” the seller was required to indemnify the buyer for the amount of the charge. The court of appeals decision confirmed that the buyer was entitled to the indemnity.
Client finds clause compendium handy for HIPAA look-up
July 16, 2008
Yesterday an e-commerce client called to ask about HIPAA requirements, because his company was contemplating doing something with personal health information. While we were talking, I had him surf over to the the Compendium of contract clauses, where we looked up the HIPAA clause and its list of requirements (and the commentary had links to the Dept. of HHS Web site and a useful Wikipedia article). That was pretty handy.
Procurement people are shooting themselves in the foot - IACCM
July 12, 2008
The July IACCM Newsletter reports on its research results suggesting that procurement people at many companies are jamming onerous contract terms and conditions down the throats of their suppliers — but that this approach may in fact be counterproductive.
“Ironically, as so much IACCM literature explains, this approach to risk management is self-defeating. By pushing onerous terms onto suppliers, the buyer has not achieved reduced risk - in fact they have frequently increased the probability of things going wrong.”
Free clause language for drafting use was the right choice
July 12, 2008
The more I think about it, the more I’m convinced it was a good call to make the Drafter’s Choice clause language free for people to use in their actual contracts [as distinct from use in automated systems, form collections, etc.].
• Encourage user contributions: In the long term, I want this site to become accepted as a standard repository of contract language, in essence an online form file for lawyers and other contract drafters. That will require contributions of clauses and commentary from people with expertise in all kinds of different substantive fields. Folks who draft useful contract clauses, however, and who have the expertise to explain them in commentary, are generally busy. I’m going to have to provide some sort of incentive for them to make time to contribute to the repository. Freeing the repository language for all to use should be at least some incentive — contributors will know that, in the future, they can more easily find (and re-use) their work product because it will be organized, indexed, and waiting for them here.
• Speed up standardization: A lack of standardized clause language of known, labeled content is doubtless one of the biggest causes of delay in contract negotiations. I want the clause language at this site eventually to evolve into that standard, so that both drafters and reviewers alike are comfortable saying, “let’s just use the Drafter’s Choice provisions.” Part of how to make that happen, I’m betting, is to make the clause language itself free for use by all comers in actual contract documents.
• Drive sales of premium features: This site is not just a hobby for me; I’ve put a good bit of time into it, and I hope to monetize it (sooner rather than later, I hope) by offering premium features for subscribers. Everything I’ve read suggests that the best way to drive premium sign-ups is to give away something for free to attract users. In this case, the clause content and associated commentary appear to be the logical candidates.
• It’d be hard to sell clause language anyway: There are a number of Web sites that offer contract language for free (much of it harvested from the SEC’s EDGAR database, it seems). Without widespread brand-name recognition, I doubt I’d have much luck selling the Drafter’s Choice clause language in competition with the free sites. Someday, of course, I hope to have widespread brand recognition; for now, though, that’s a chicken-and-egg problem. All in all, I don’t think I’m losing anything by giving the clause language away, and I might achieve the benefits listed above.
Software maintenance provisions have been posted
July 11, 2008
Yesterday I posted a set of provisions for software maintenance, including what might be thought of as “service level agreement” provisions with response times for various severity levels. See the Compendium (also accessible via the Form books menu option above) and use the index window to find the clauses you’re interested in.
Negotiating a customer’s code-of-conduct compliance request in a contract
July 9, 2008
Last week I helped a software-company client negotiate a software license agreement with a global corporation. The customer’s standard contract form included a requirement that the provider comply with the customer’s code of conduct.
The customer’s code of conduct was some 84 pages long. My client has other customers, of course; purely as an administrative matter, it would have been difficult for them to monitor compliance with X different codes of conduct for X different customers. And we certainly didn’t want to take the time to try negotiate the code-of-contract requirements, even if that were possible (which it very likely wasn’t).
I had a feeling I knew what the customer really wanted from the code-of-conduct requirement. Several years ago, I was helping another software-company client negotiate a contract with another company. The company’s negotiator told me that their main interest in the code-of-conduct requirement was in case my client got itself into trouble of some kind. In that case, the negotiator said, they wanted to be able to minimize any spatter from bad publicity. Toward that end, they wanted the right to terminate the contract and disassociate themselves from my client.
We proposed, therefore, in last week’s negotiation, that my client would agree to comply in material respects with the customer’s code of conduct, but with an important limitation: If the provider’s uncured noncompliance with the code of conduct did not otherwise constitute a breach of the agreement, then termination of the agreement would be the customer’s exclusive remedy. The customer agreed to this. I was able to splice in some of the Drafter’s Choice code-of-conduct clause, the current version of which I’m reproducing below:
(1) The provider will comply in material respects with any code of conduct timely furnished by the acquiring party, so long as: • the other party prescribes the code of conduct for its suppliers generally; • compliance does not require violating applicable law; and • the code of conduct does not deviate unreasonably from standard business practices.
(2) IF: The provider does not cure a material noncompliance with the acquiring party’s code of conduct, after notice and opportunity to cure (in the same manner as set forth in the breach provisions of this Agreement); THEN: The acquiring party may terminate this Agreement by following the same procedures as set forth in the termination-for-breach provisions of this Agreement.
(3) IF: The provider has not otherwise breached this Agreement in a manner that would give the acquiring party the right to terminate for breach; THEN: Termination under this clause will be the acquiring party’s EXCLUSIVE REMEDY for the provider’s noncompliance with the customer’s code of conduct.
Some might say that there are too many “material” and “reasonable” qualifiers in this clause, leaving too many matters open for interpretation. This subject, however, is one where leaving things open for interpretation, and for case-by-case negotiation in the actual event, may well be an acceptable business risk.
Compliance clauses added
July 8, 2008
I just added a Compliance section to the Compendium formbook. It addresses compliance with:
- Applicable law;
- Safety practices;
- Site rules;
- Network policies.