Contract Drafting Class 7 Tues Feb 7 University of Houston Law Center D. C. Toedt III.
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Transcript of Contract Drafting Class 7 Tues Feb 7 University of Houston Law Center D. C. Toedt III.
Contract DraftingClass 7Tues Feb 7
University of Houston Law Center
D. C. Toedt III
In the news …
Common contract f***-ups
Common contract f***-ups
“10. The contract that is signed with an illegible signature and no information is given as to who has signed or their position within the organisation.”
[From “Top 10 howlers when preparing contracts for signature,” by the IP Draughts blog at http://goo.gl/Km6Dw.]
Drafting exercise: Stark 18-5
Microsoft NDA – general provisions
Assignment of K – Port of NY & NJ
Section 4(g) – assignment of K
QUESTION: Are most contracts ordinarily assignable if K doesn’t say otherwise?A. Yes
B. No
C. Yes, with some exceptions IP licenses Special situations (e.g., unique capabilities /
personal trust & confidence)
Assignment of K (Z&B pp. 23-26)
QUESTION: Why might a party want to restrict the other side’s assignability? (Think of both business reasons and “because I can” reasons.)
Assignment of K (Z&B pp. 23-26)
QUESTION: Why might a company wantto refuse to agree to an assignment-consent requirement in a draft contract? A. Don’t want to have to get consent to spin off a
division or other future M&A deals
B. Requirement would cause tax problems
C. Might want to move contract rights to affiliate
D. Requirement would cause antitrust problems
Assignment of K (Z&B pp. 23-26)
QUESTION: Why might a software vendor want its customers to be able to assign their license agreements? Hint: If a customer had to pay a large fee for consent to assign, what might it decide to do instead? Would the vendor’s competitors have anything to “contribute” to the customer’s thinking process?
Assignment of K (Z&B pp. 23-26)
FACTS: You’re entering into a contract with an agency of the State of New York.
QUESTION: Is there any way around the state-law assignment-consent requirement? Hint: See NY State Finance Law art. 9, § 138
Assignment of K (Z&B pp. 23-26)
CONTRACT PROVISION: “Customer may not assign this Agreement, including for example by operation of law (for example, as the result of a merger), without Vendor’s prior written consent.”
[Questions follow on subsequent slides]
Assignment of K (Z&B pp. 23-26)
CONTRACT PROVISION: “Customer may not assign this Agreement, including for example by operation of law (for example, as the result of a merger), without Vendor’s prior written consent.”
QUESTION: If Customer merges with another company without consent, is the merger void?
Assignment of K (Z&B pp. 23-26)
CONTRACT PROVISION: “Customer may not assign this Agreement, including for example by operation of law (for example, as the result of a merger), without Vendor’s prior written consent.”
QUESTION: What if the contract provision were like Microsoft NDA § 4(g) [Z&B p. 20]?
Assignment of K (Z&B pp. 23-26)
CONTRACT PROVISION: “Customer may not assign this Agreement, including for example by operation of law (for example, as the result of a merger), without Vendor’s prior written consent.”
QUESTION: What additional language might Customer want to negotiate, and why? (Hint: See the subheading “Assignment with transfer of business assets” at http://goo.gl/26MEx.)
Third-party beneficiaries (Z&B p. 20 § 4(b); pp. 27-28)
FACTS: 1. Sam signs a contract to sell Betty his car for $2,000. 2. Betty fails to pay. 3. As a result, Sam can’t pay his rent. 4. Sam’s landlord sues Betty as 3PB.
[Questions follow on subsequent slides]
Third-party beneficiaries (Z&B p. 20 § 4(b); pp. 27-28)
FACTS: 1. Sam signs a contract to sell Betty his car for $2,000. 2. Betty fails to pay. 3. As a result, Sam can’t pay his rent. 4. Sam’s landlord Larry sues Betty as 3PB.
QUESTION: Betty files MSJ - what result?
A. MSJ denied – Larry was a 3PB
B. MSJ deferred for further discovery
C. Betty wins – Larry was only incidental 3PB
Third-party beneficiaries (Z&B p. 20 § 4(b); pp. 27-28)
FACTS: 1. Sam signs a contract to sell Betty his car for $2,000. 2. Betty fails to pay. 3. As a result, Sam can’t pay his rent. 4. Sam’s landlord Larry sues Betty as 3PB.
QUESTION: What result if K said “Betty will pay $500 to Larry to take care of Sam’s back rent and the remaining $1,500 to Sam ….”?
Review: No-oral-modification provisions (Z&B pp. 70-71)QUESTION: In a contract under NY law for the sale of 1,000 widgets, will a court enforce a no-oral-modification provision?
A. No – past contract can’t prevent parties from agreeing to an amendment
B. Yes – NY statute expressly validates
C. Maybe, if no proof of estoppel
Review: Signature line
How would the signature block for Microsoft be written?
End of class