Business Law

Understanding Contract Terms (Post 12): The Waiver Clause

We continue the Understanding Contract Terms series by explaining waiver clauses. Most contracts include some form of a waiver clause. Waiver clauses are important to understanding when contract provisions can be enforced and when certain actions may forfeit your rights under the contract.

What is a waiver clause?

In basic terms, the word “waive” means to give up a right or interest by choosing (intentionally or not) to let the opportunity to enforce the right or interest pass. Simply put, to waive something means to not enforce it.

Waiver clauses, then, are clauses in a contract that govern (1) how a party to the contract can waive a right and (2) what happens when a party to the contract waives the right.

To highlight how a...

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Contracts

5 Contract Clauses to Help You More Quickly Resolve Contract Disputes

The purpose of executing written business contracts instead of relying on oral agreements is to manage risks and expectations. When I draft contracts, my job is to state clearly the parties’ responsibilities under an agreement. My  job is also to prepare my clients for the possibility that things take a turn for the worse and the other party fails to fulfill their promises. A major benefit of having a contract is to help you more quickly and easily resolve a dispute if it arises. Quickly and easily resolving disputes means your business will spend substantially less money dealing with dispute resolution, so it is important for your bottom line that you ensure your contracts are well drafted to prepare you for...

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Contracts

Alternative Dispute Resolution Series: Arbitration

In our last post in the Alternative Dispute Resolution Series, we discussed the growing ADR industry and the basics of mediation. In this post, we’ll discuss the other very popular ADR method, arbitration.

In arbitration, a third-party neutral (arbitrator) hears both sides of a dispute and decides on a specific issue or award. Often, an arbitration is very similar to a trial, because the parties will present opening statements, evidence, witnesses, and closing statements. Witnesses are also generally subject to direct and cross examination. However, the biggest difference is that the arbitrator takes the place of the decision maker in a trial. After the arbitrator reviews the evidence and hears the case from both sides, he or she will issue a...

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Business Startup

Contingent Contracts: a Valuable Tool When Negotiating Agreements

When you are negotiating an agreement, there are all sorts of ways contract discussions can break down. Often when negotiations become difficult, a contingent contract is a compromise that can lead to a mutually beneficial resolution.

What Is a Contingent Contract?

A contingent contract is an agreement in which the parties to the contract agree to different obligations depending on a future event. A common example is a non-discretionary performance bonus for an employee or manager. A simple provision awarding a non-discretionary bonus might look something like:

If Company Sells X number of units or more of Product Y in 2014, Employee will receive an additional $100,000 in compensation, payable on March 1st, 2015.

In this example, the Company agrees to provide the Employee...

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Contracts

Understanding Contract Terms (Post 11): Counterparts

We continue the Understanding Contract Terms series by explaining counterparts clauses. Most contracts include some form of counterparts clause. Counterparts clauses are important to understand when you need to determine how a contract can be executed and when it is enforceable.

What is a “Counterpart”?

Counterparts, in contract law, are one of several written papers that constitute a contract, such as a written offer and a written acceptance, both of which are separate documents, or counterparts, that together form a contract. In the internet age, it is common for two parties to execute a contract without sitting down in the same room to sign the same piece of paper. Often a contract is executed in several counterparts, each signed by a different...

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Contracts

Understanding Contract Terms (Post 10): Limitation of Liability

We continue the Understanding Contract Terms series by explaining limitation of liability (sometimes called “limitation on liability”) clauses. Many contracts include some form of limitation of liability clause, and they are important to understand to determine your potential liability exposure under your business’ contracts.

Limiting Your Liability A limitation of liability clause allows parties to reduce or, in some cases, eliminate the potential for damages, including direct, consequential, special, incidental, or indirect liability. The limitation clauses can also include a cap on damages should damages flow from a breach of the contract. Often you will see these clauses in boldface type, underlined, or in larger font to make sure both parties are aware of the limitation on liability and damages, and many...

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Business Startup

Understanding Contract Terms (Post 9): Amendments

We continue the Understanding Contract Terms series by explaining amendment clauses. Most contracts include some form of amendment clause. Amendment clauses are important to understand when determining your rights and liabilities under almost any contract and how those rights and liabilities can be amended.

When it Matters to Have a Well-drafted Amendments Clause

There are often times when circumstances change and the terms of a contract no longer accomplish the objectives of the parties. In those situations, it’s important to follow the process outlined in your amendments clause in order to modify the existing contract. An amendment does not replace the entire original contract, just the part that is being modified. Having a clear amendments clause in your contract will help reduce...

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Business Startup

Understanding Contract Terms (post 8): Assignments

We continue the Understanding Contract Terms series by explaining assignment clauses. Most contracts include some form of assignment clause. Assignment clauses are important to understand when determining your rights and liabilities under almost any contract.

Assigning a Contract

To understand why this clause is included in the contract it is important to first understand what it means to assign a contract. An assignment of a contract occurs when one party to the contract transfers to another party their  obligations, benefits, or obligations and benefits, of the contract.

In general, assignments are permitted unless there is an express prohibition against assignment in the contract. But this is a very general statement. Certain types of contracts, including “personal service contracts,” are by default unassignable. Also, contracts...

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Contracts

Understanding Contract Terms (post 7): Choice of Law and Venue

We continue the Understanding Contract Terms series by explaining choice of law and venue clauses, also called “forum selection” clauses.  You see choice of law and venue terms in many contracts, because they can be important terms worth significant money. You will often see choice of law clauses and choice of venue clauses grouped together in a single paragraph. Here is an example of a typical choice of law and venue clause:

Section ____ Governing Law; Jurisdiction. To the maximum extent permitted by applicable law, the provisions of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of ___________, without regard to principles of conflicts of law. Each of the parties hereto...

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Contracts

How Can A Simple Noncompete Agreement Benefit Your Business?

Two of the most valuable assets of your business are the goodwill and the intellectual property that you’ve developed. A noncompete agreement can be instrumental in protecting these aspects of your business from a wide range of problems with departing employees, including the spread of trade secrets and other confidential information to your competitors. Today’s post will discuss the legal requirements you should keep in mind in order for your noncompete to be enforceable, and some of the potential benefits of using a noncompete agreement in your business.

Setting the Stage At some point during the life of your business, you will likely need to recruit, train, and rely on employees to help grow (or simply maintain) your business. You’ll have to...

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