How to convince a big customer to use your contract form - and get your sales people to support you in it
November 8, 2008
At my former company, our contract form was extremely customer-friendly. Every time we made a concession in a contract negotiation, we asked ourselves whether we could incorporate the concession into our standard form, in the interest of reducing the time to signature. The result was rave reviews from our customers; as one lawyer said to me, when I first read your contract, I wondered if someone had already negotiated it for us. We might have given away some theoretical legal advantages, but nothing worth worrying about, and the business people loved the speeded-up sales cycle.
A fringe benefit of having such a customer-friendly contract was that I could enforce a policy with our sales people: We would not negotiate a customer’s contract form until the sales manager got me a five-minute phone call with the customer’s contracting people. In most cases, I was able to persuade the customer ’s contract reviewers that using our contract would get us to signature with less work for all of us. In the cases where we did end up using the customer’s form, that initial five-minute phone call helped establish a positive working relationship which, among other things, helped soften the blow if we had to do a serious markup of their paper.
Warranties versus representations - a brief overview
October 22, 2008
In developing contract formbooks, I’m running into situations where several different clauses should have essentially the same commentary. Instead of repeating the commentary (which slows the download process for users), I’m starting to post the text of the commentary in separate Web pages. That way, I can provide just a linked page for users to read. Toward that end, I just posted Warranties and representations: A very brief overview.
Warranties vs. conditional obligations: Lexical good sense bows to commercial reality
October 18, 2008
Ken Adams’s excellent Manual of Style for Contract Drafting, second edition, says that sales-contract drafters could ditch the ‘warranty’ clause. It suggests just having a repair-or-replace obligation that is triggered when the goods don’t measure up to the agreed specifications. (§ 12.438-12.440). Ken says “[t]his approach not only results in more concise prose, it allows you to avoid having to choose the lesser of two evils—represents or warrants.”
I think that’s a great idea — in principle. I tried it myself when I was an in-house counsel. In practice, however, there was a problem: I found that some procurement people insisted that the contract had to include a “warranty,” denominated as such.
I didn’t want to spend the time trying to convince these folks that legally, a warranty with limited remedies and a conditional obligation are pretty much the same thing. And my sales guys would not have been pleased that legalese was standing in the way of their getting a commission.
So in a case of lexical good sense bowing to commercial reality, I regretfully restored the “warranty” language to our standard form.
Dilbert on contract drafting
August 29, 2008
Yesterday’s Dilbert was the greatest lawyer cartoon I’ve ever seen.
Cutting the cost of contract drafting
August 10, 2008
I woke up this morning thinking about Michael Cerda’s comment that a startup company’s product “should be a pain pill, not a vitamin.” I realized that the front page of this Web site didn’t do a good job of calling attention to the pain it helps with.
In contract drafting, clients experience one very obvious pain. (When I say clients, this includes in-house counsel.) When lawyers draft a contract, it usually takes more time, and costs more money, than their clients would like. The delay and expense can be a serious pain.
And that is a pain this site can help with. With that in mind, I just redid the front page of this site to emphasize this pain pill.
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.