Winning Contract DisputesMark P. Henriques

Vivian CoatesNovember 12, 2015

What we will cover• An Ounce of Prevention: Key issues to

address in the contract• Things are Heating Up: Responding to

claims of breach• Call to Battle: Dispute resolution

considerations

Hypothetical You are asked to help draft and negotiate a contract for a custom software solution.

Best Practice• Research the other side

Research before you sign• Check financials• Check with prior customers • On-line searches

Drafting the Contract

• Key provisions– Define work product / deliverable– Define acceptance / when payment due– Venue/Choice of Law– Dispute resolution– Ownership of work product

• Ambiguous provisions will usually be construed against the drafter

Payment Terms• Types

– Time and Materials• Payment based on hourly work at a contracted

rates– Deliverables

• Payment based on completed work product– Fixed price

• Payment not to exceed contracted price

Defining Performance• Clarity is key - if you do not understand

what is being done, neither will a jury• Use specific performance measures• Address timing issues• Anticipate problems and disputes

Use of Subcontractors• Inform Client of all subcontractors• Get contracts with all subcontractors• Clearly identify the organizational

structure to client and subcontractors

Change Management• Document deviations

Managing Change

• Get it in writing• Save all correspondence • Establish and follow contractual

language• Communicate changes with your team• Update scope documents and timelines

Dispute Resolution• Arbitration?

– AAA– JAMS– Other– 1 arbitrator or three?

• Litigation?• Business Leader meeting?• Mediation?

Forum Selection• Choice of Law

– Negligence– Statutes of Limitation

• Venue– Location– Court (Federal, State or Business)

Things are Heating UpContractor gets behind on payment and owes more than $1 million. When you attempt to discuss the invoices, they claim you have not provided any useable work-product.

Best Practice• Contact litigation counsel when

relationship becomes hostile

Role of Legal Counsel

• Possible negotiation of payment• Assist with making sure termination

provisions of contract are followed– Notices of Breach/Payment Demands

• Prepare for possible litigation

Best Practice• Contact litigation counsel when

relationship becomes hostile• Keep records and begin gathering

supporting documents

Litigation Hold• Implement a litigation hold

• Immediate stop of deletion of email and other electronic documents

– Notify employees and gather documentation

Termination Options• Review contract provisions• Pros and cons of termination• Need for clarity

Proceeding to Litigation• What form of dispute resolution?• What will it cost?• How long will it take?• What lawyers do I need?• Do I have buy-in from the business?

Early Case Assessment• What is it?• How does it work?• Using ECA to establish a case

management strategy

Possible Claims• Breach of Contract• Breach of Warranty (especially UCC)• Quantum Meruit / Unjust Enrichment• Unfair Trade Practices• Misrepresentation• Other Statutory Claims

Possible Defenses• Lack of Consideration• Lack of Privity• Statute of Frauds• Statute of Limitations• Accord and Satisfaction• Economic Loss Rule

Importance of Following these Tips

• Chances of success in litigation are improved

• Increase ability to defend claims• Increase ability to pursue affirmative

claims including collection of past due invoices

QUESTIONS?

Mark P. HenriquesVivian Coates

Womble Carlyle Sandridge & Rice, LLP