I just ran across a case from California where:

• a company executive signed a letter agreement, on his company's letterhead, but with no indication of his title;

• the company backed out of the deal;

• the other side sued both the company and the executive in his personal capacity; and

• the company's D&O insurance carrier successfully denied coverage, on grounds that D&O coverage doesn't include garden-variety breaches of contract; and

• the carrier therefore didn't have to pay for the executive's defense.

See August Entertainment, Inc. v. Philadelphia Indemnity Ins. Co., 146 Cal.App.4th 565 (2007).

A software company fired a sales representative for poor performance. The same day, July  2, but after the rep had been fired, the company closed a deal on which the rep had been working. The company refused to pay the rep a commission on the sale. He sued; he won; the appeals court affirmed.

Why did the sales rep win? Because the company's sales compensation plan said that the rep would be paid on deals closed as of the date of termination, not on deals closed before termination:

If an Area Vice President’s employment with Open Solutions is terminated, either
voluntarily or involuntarily, all of the employee’s closed orders as of their
termination date will be reviewed for calculation of commission payments based on
their status as of that date. . . . Only the amount due to be paid at termination will be
paid. No additional amounts will be paid after termination

Eungard v. Open Solutions, Inc., No. 06-2380 (6th Cir. Feb. 26, 2008), at 3. The company tried to argue that the date of termination really meant the time of termination; both the trial court and appeals court disagreed.

Interestingly, the court noted that "[f]or reasons that remain unclear," the company and its customer backdated their signatures to June 30. Id. at 2. One strongly suspects that the court was being tactful; the obvious reason for backdating signatures is because the company wants to include the sale in its results for the just-ended quarter. This is a spectacularly bad idea, of course; the former CEO of Computer Associates is spending 12 years in prison for doing that. As another example, in 2003, the former CFO of Media Vision Technology was sentenced to three and a half years in prison, and the former CEO (who cooperated with authorities) to 30 months, in part for falsely reporting sales numbers based on backdated contracts.

I just finished the final touches on a Riders document. The idea is that, in drafting a given contract form, the user shouldn't be forced to choose between a short form and a long form. With the Riders document, the user can:

• start with a short-form document that covers "the basics";
• check the boxes to include selected riders with expanded provisions on various subjects, and
• hide the unused riders, for a more-compact document

I hope to have a beta version posted Real Soon Now.

Dallas lawyer Michael Maslanka writes in Texas Lawyer about how to manage layoffs, including suggestions for drafting litigatable releases (hint: simpler is better, and no release is better than a spurned one).

Public-company execs who want to sell stock or exercise stock options can reduce the chances of being sued for insider trading by using a Rule 10b5-1 stock trading plan, which is sort of a programmed-trading arrangement. The theory is that if you've programmed your trades well in advance, you're less likely to be using inside information when your trades actually happen. An article in the January-February issue of the ABA's Business Law Today, however, says that the SEC is giving increased scrutiny to these plans, because there are cases in which executives have made programmed stock trades whose timing, in retrospect, appears to have been suspiciously good. The question is whether these execs have traded outside their plans.

Ken Adams has posted a useful annotated essay about the distinction between "promptly" and "immediately." I agree with his conclusion:

Because immediately seems to promise more than it can deliver, you should omit it from your contracts. Use promptly instead. If you want a standard more demanding than promptly, specify a limit in days. Or combine the two standards—promptly, but in no event later than X days after ….

Ken Adams, proprietor of Adams Drafting, writes today about the problems with using terms like "best efforts" and "reasonable efforts." Let me add to the possible confusion by proposing the term "responsible efforts."

Attached to this post is a beta-test version of an interactive, highly-configurable Nondisclosure Agreement form, in Adobe PDF format. It contains both short-form and long-form versions.

Your lawyer can save time (and thus your money) by configuring either the short-form or long-form version, by checking boxes and filling in blanks.

Save time reviewing the other side's contract by getting them to use this Pactix form, so that you can focus on their changes to language you've already seen.

The form automatically generates a summary page of key terms and conditions, for handy future reference.

See Advantages of using Pactix fill-in contract forms.

Attached to this post is a beta-test version of an interactive, highly-configurable Master Services Agreement form, in Adobe PDF format. It contains both short-form and long-form versions.

Your lawyer can save time (and thus your money) by configuring either the short-form or long-form version, by checking boxes and filling in blanks.

Save time reviewing the other side's contract by getting them to use this Pactix form, so that you can focus on their changes to language you've already seen.

The form automatically generates a summary page of key terms and conditions, for handy future reference.

See Advantages of using Pactix fill-in contract forms.

In NCR Corp. v. Korala Assoc., Ltd., No. 06-3685 (6th Cir. Jan. 16, 2008), a U.S. appeals court dealt with the question whether a claim that was only tangentially related to a contract was required to be arbitrated because of the contract's arbitration clause. The court's answer was no, because adjudicating the tangential claim did not require reference to the contract:

The January issue of California Lawyer has a useful overview of the law governing best-efforts clauses, and how they can give parties fits in litigation. See Divining the Meaning of "Best Efforts," by Jonathan Pink, California Lawyer, Jan. 2008, p. 39 (accessed Jan. 20, 2008).

A Massachusetts appeals court has held that Amazon.com was bound by an exchange of emails that agreed to the essential points of a dispute settlement with Basis Technology Corp. The decision is summarized on the law.com Web site. "Thomas J. Gallitano, a lawyer for Basis, said a statement in the e-mail exchange confirming that six different points in the e-mails contained the essential business terms of the settlement agreement was pivotal to the court's decision. 'Had that language not been in there, the case may have turned out differently, said Gallitano of Boston's Conn Kavanaugh Rosenthal Peisch & Ford."

The January 2008 issue of Inside Counsel has a useful overview of international arbitration ("Foreign Feuds," by Mary Swanton, at p.43).

Excerpt:

“There is no such thing as a one-size-fits-all arbitration clause,” says Christopher Tahbaz, partner in Debevoise & Plimpton. “A well-drafted clause requires some attention, but it is well worth the effort.”

Among the variables you should define: the venue for the arbitration; the arbitration institution, if any, that will administer it; the law that governs the contract; the language in which the proceedings will be conducted; and the number of arbitrators who will decide the matter.

(The Pactix arbitration clause allows the user to address all these issues.)

I just posted an update to the open-source page, listing some tools that are available for finding and inventorying open-source software in your code.

"... export prosecutions increased by 50 percent in fiscal year 2007. A review of some of these export prosecutions exemplifies the aggressiveness with which export violations are now being prosecuted and fined. One recent case involved a leading manufacturer of military night vision equipment, which was fined $100 million for illegally exporting restricted night vision data to China, Singapore and the United Kingdom. Another recent case involved a New York company that was fined $470,000 because the mine-safety equipment it exported to the United Arab Emirates ended up in Iran."

From Beware of Export Law Violations, by By Margaret M. Gatti and David M. Laigaie, The Legal Intelligencer,, December 27, 2007. The article usefully lists ten specific things that businesses need to keep in mind about export-controls law.

Software entrepreneur Marc Andreessen, of Netscape fame, blogs that as a result of the writers' strike, Hollywood studios are starting to exercise force-majeure clauses in their contracts. He says, "Quite a few people argue that the studios are not sad to see the writer's strike at all because it's allowing the studios to cancel contracts that they signed at one point but now would rather be without."

Here's an interactive PDF form document with what I think is a decent set of "general provisions," the ones that customarily go at the back of a contract. Feel free to use this document as follows:

• open the PDF document in Adobe Acrobat Reader (version 7.0 and up);
• check the boxes, fill in the blanks, etc., for the provisions you want, in collaboration with your legal counsel;
• print out the form document (the commentary in the right-hand margin, denoted by icons symbolizing yellow sticky notes and red keys, can be seen on the screen but won't print);
• attach the printout to, and incorporate it by reference in, your contract.  (The form document should not be relied on as a substitute for legal advice, of course; ask your lawyer if it's right for you.)

Here's an interactive PDF form document containing a fairly standard (but streamlined) set of insurance provisions. Feel free to use this document as follows:

• open the PDF document in Adobe Acrobat Reader (version 7.0 and up);
• check the boxes, fill in the blanks, etc., for the provisions you want, in collaboration with your legal counsel;
• print out the form document (the commentary in the right-hand margin, denoted by icons symbolizing yellow sticky notes and red keys, can be seen on the screen but won't print);
• attach the printout to, and incorporate it by reference in, your contract.  (The form document should not be relied on as a substitute for legal advice, of course; ask your lawyer if it's right for you.)

Here's an interactive PDF form document containing a stripped-down arbitration clause, entitled "Arbitration provisions rider," version Adrian (I'm basing the version names on those of hurricanes). Feel free to use this document as follows:

• open the PDF document in Adobe Acrobat Reader (version 7.0 and up);
• check the boxes, fill in the blanks, etc., for the provisions you want, in collaboration with your legal counsel;
• print out the form document (the commentary in the right-hand margin, denoted by icons symbolizing yellow sticky notes and red keys, can be seen on the screen but won't print);
• attach the printout to, and incorporate it by reference in, your contract.  (The form document should not be relied on as a substitute for legal advice, of course; ask your lawyer if it's right for you.)