Beyond the Boilerplate

Presented by: Jay LeMoine and Christian Petersen

March 20, 2012

Overview

• Drafting Strategies

• Contractual Terms

• Remedies

• Survival

Aspects of Contract and Terminology

C• Clear

• Comprehensible

• Correct

Aspects of Contract and Terminology

C• Critical

• Cool?...

Dreams Gone Wrong

Clarity

• Understanding:

• context

• intent

• user/reader

Comprehensible

• Standard Language

• respecting complex concepts

• clear and comprehensible ≠ “simple”

• standard usage rather than legalese

Comprehensible

• Loaded Language

• what do the “fancy” words mean?

• does the reader understand them?

• is there another way to say it?

Comprehensible

• The Myths

• “tried and true”

Correct

• Getting It Right

• precision of language

• the “too hard” pile

• does the right have a remedy?

• do you need a remedy?

Correct

• Getting It Wrong

• the problem with precedents

• the tyranny of time

• the conundrum of cost

Key

Contractual Concepts

Term and Termination

• After full performance of terms

• In accordance with its terms

• Agreement between the parties

• Reasons outside the contract

• Breach

Types of Contractual Terms

Three types of terms:

• conditions

• warranties

• innominate (or intermediate) terms

Types of Contractual Terms

• Characterization depends on the true construction of the contract

• Type of term determines remedy

Conditions

• Most important type of term

• Not conditions precedent or subsequent

• Does it go to the root of the contract?

• Breach gives right to terminate

Warranties

• The lesser promises in the contract

• Breach does not permit termination

• must continue performing

• Innocent party has right to sue for damages

Innominate Terms

• Classification of term cannot be done in advance

• Remedy should correspond with consequences

• Did the breach deprive of substantially the whole benefit?

Identifying Conditions

• Legislatively imposed

• Expressed in contract

• Intention of parties

The End of Fundamental Breach

• Created to address unfairness of exclusion and limitation of liability clauses

• Divorced from the intention of parties

• Created confusion

• Tercon

Repudiation

• “words or conduct evincing an intention not to be bound by the contract”

• Election to treat contract at end• Must communicate election

• Need not communicate reason/can be wrong

• Parties obligations are at an end

Anticipatory Repudiation

• Not every anticipatory breach gives election

• Must elect soon but not immediately

• Must give notice

• May change mind - right to terminate vanishes

Remedies for Breach of Condition

• Innocent party may:

• Accept repudiation

• obligations at end; • sue for damages; or • restitution but not specific performance

Remedies for Breach of Condition

• Affirm contract

• obligations continue;• can sue for damages and/or specific performance

• Waive breach

Affirmation vs. Waiver

• Waiver excuses the breach

• Estoppel arguments

• Affirmation:• preserves the rights and obligations

• must be ready, willing and able to perform

Restitution

• Innocent party can claim value of benefits conferred on breaching party

• non profitable contracts

• damages are unprovable

• recovery of non-monetary benefits

• Old rule: required “total failure of consideration”

Rescission

• Rescission • voids contract

• restores parties to the position in which they stood before the contract was entered into often result of misrepresentation but can be available for breach of contract

Terms that Survive the Breach

• Liquidated damages

• Entire agreement Limitation clauses

• Non-solicitation/non-competition clauses

• Confidentiality clauses

• Enforceable if contract not rescinded