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Negotiating and Drafting Contract Boilerplate

edited and co-authored by Tina L. Stark

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“This book deserves to become a standard reference text in law libraries and a regular source for any lawyer implementing or litigating a commercial transaction.”
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Traditionally, “boilerplate” refers to the standardized, “one size fits all” provisions that generally appear at the end of a contract, including choice of law, notice, arbitration, force majeure and assignments. Lawyers often take these provisions for granted, forgetting that significant business and legal issues lurk within them. Prudent lawyers carefully examine and tailor these provisions to meet the needs of individual transactions.

Negotiating and Drafting Contract Boilerplate book and CD educates lawyers and business professionals on the underlying rationale and importance of boilerplate language. Each chapter tackles a different contractual provision, over twenty in all, and analyzes why it is important, what the key legal and business issues are, what is negotiable and what is not, and how best to draft the provision to suit a particular transaction. This best-selling book will give you a competitive edge—and a new understanding and appreciation of language you've seen countless times.

Book #ALM11; softcover, one volume, 675 pages and one CD-ROM; published in 2003.
ISBN: 978-1-58852-105-7

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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 0
  • Page Count: 675
  • ISBN: 978-1-58852-105-7
  • Pub#/SKU#: ALM11
  • Volume(s): 1
  • CDs: 1

Author Image
  • Tina L. Stark

Ms. Stark is a former corporate partner at Chadbourne & Parke LLP, now teaches at Emory University School of Law, where she is a Professor in the Practice of Law and the Executive Director of the school's Center for Transactional Law and Practice. In addition to teaching at Emory, Ms. Stark teaches continuing legal education seminars that emphasize the relationship between law and business. Before joining Emory, Ms. Stark taught as an adjunct at Fordham University School of Law for 14 years.

For more information about Tina Stark visit www.starklegaled.com


Chapter 1
Introduction

§ 1.01 This Book’s Thesis
§ 1.02 Boilerplate Provisions in Contracts
§ 1.03 Boilerplate Provisions and Litigation
§ 1.04 Organization of this Book
§ 1.05 The Language of Boilerplate Provisions
§ 1.06 Going Forward

Chapter 2
The Nuts and Bolts of Drafting Boilerplate Provisions

§ 2.01 Introduction
§ 2.02 Declarations
[1] Declarations Defined
[2] Drafting Declarations
§ 2.03 Covenants
[1] Introduction
[2] Active vs. Passive
§ 2.04 Clarity Through Format

Part Two
Parties, Assignees, and Third Party Beneficiaries


Chapter 3
Assignment and Delegation

§ 3.01 Introduction
§ 3.02 Definition of Terms
[1] Assignment and Delegation
§ 3.03 Historical Development of Anti-Assignment Clauses: Early Common Law
§ 3.04 Modern Common Law
[1] Assignability of Rights
[2] Delegation of Duties
[3] Delegability of Conditions
§ 3.05 Enforceability of Anti-Assignment Clauses
[1] Prohibiting the Assignment of the Contract vs. Prohibiting the Assignment of Rights Under the Contract
[2] The Power vs. The Right to Assign
[3] The Assignability of a Claim for Money Damages Arising from Breach of the Whole Contract and the Assignability of a Right Arising Out of the Assignor’s Full Performance
§ 3.06 Enforceability of Anti-Delegation Clauses
§ 3.07 Scope of the Anti-Assignment Clause
[1] Assignments by Operation of Law and by Merger
[2] Sales of Shares
§ 3.08 The Uniform Commercial Code
[1] U.C.C. § 2-210(2)
[2] Revised Article 9 of the U.C.C.
§ 3.09 Deciding Whether to Include an Assignment and Delegation Provision
§ 3.10 Problems with the Typical Assignment and Delegation Provision
§ 3.11 Negotiating and Drafting the Assignment and Delegation Provision: The Anti-Assignment Clause
[1] A Typical, But Flawed, Anti-Assignment Clause
[2] A Well-Drafted Anti-Assignment Clause
§ 3.12 Consent of the Nonassigning Party
[1] Introduction
[2] Written Consent
[3] The Consent Requirement: Covenant or Condition Precedent? Party’s Consent
[4] Good Faith and the Nonassigning Party’s Consent
[5] Pre-Consents of the Nonassigning Party
§ 3.13 Negotiating and Drafting the Assignment and Delegation Provision: The Anti-Delegation Clause
[1] A Typical, But Flawed, Anti-Delegation Clause
[2] A Well-Drafted Anti-Delegation Clause
§ 3.14 Putting It All Together

Chapter 4
Successors and Assigns

§ 4.01 Introduction
§ 4.02 The Common Law in the Absence of a Successors and Assigns Provision
[1] Definition of Terms
[2] Ramifications of an Assignment for an Assignee
[3] Ramifications of an Assignment for a Nonassigning Party
§ 4.03 Purposes of a Successors and Assigns Provision
[1] To Bind an Assignee to Perform
[2] To Bind a Nonassigning Party
[3] To Determine Whether Rights Are Assignable
[4] To Determine Whether Performance Is Delegable
[5] To Bind the Parties to the Contract
§ 4.04 Negotiating and Drafting a Successors and Assigns Provision
[1] A Typical Provision
[2] Provisions that Bind Only One Party and Benefit Only the Other
[3] An Alternative Provision
§ 4.05 Putting It All Together

Chapter 5
Third Party Beneficiaries

§ 5.01 Introduction
§ 5.02 History
§ 5.03 Vesting
§ 5.04 Enforceability of Third Party Beneficiary Provisions
§ 5.05 Negotiating and Drafting the Third Party Beneficiary Provision
§ 5.06 Putting It All Together

Part Three
Dispute Resolution Provisions


Chapter 6
Governing Law and Forum Selection

§ 6.01 Introduction
§ 6.02 Governing Law Provisions
[1] Overview
[2] Enforceability
[3] Negotiating and Drafting the Choice of Law Provision
§ 6.03 Forum Selection Provisions
[1] Overview
[2] Enforceability
[3] The Forum Non Conveniens Defense
[4] Negotiating and Drafting Forum Selection Provisions
[5] Service of Process
§ 6.04 Putting It All Together

Chapter 7
Waiver of Jury Trial

§ 7.01 Introduction
§ 7.02 The Nature of, and Right to, a Jury Trial
§ 7.03 Rationale for Waiving Right to a Jury Trial
§ 7.04 Overview of Enforceability of Jury Waiver Provisions
§ 7.05 Negotiating and Drafting an Enforceable Jury Waiver Provision
[1] The Basic Waiver of Jury Trial
[2] Persons to Whom the Waiver Applies
[3] Knowing, Intentional, and Voluntary Waivers
[4] Prominence of Language
[5] Placement in the Contract
[6] Subject Matter of the Waiver
§ 7.06 Due Diligence Considerations
§ 7.07 Putting It All Together

Chapter 8
Arbitration

§ 8.01 Introduction
§ 8.02 History of Arbitration
[1] Early Hostility
[2] Federal Arbitration Act
[3] State Legislation
§ 8.03 Subjects that May Be Arbitrated
[1] Federal Law
[2] State Law
§ 8.04 Contract Interpretation
§ 8.05 Overview of the Arbitration Process
§ 8.06 Deciding Whether to Arbitrate
[1] Speed
[2] Independence of the Arbitrator
[3] Selection of Arbitrators
[4] Expense
[5] Privacy
§ 8.07 The Elements of an Arbitration Provision
[1] Introduction
[2] The Scope of the Arbitration Provision
[3] Administered vs. Self-Administered Arbitration
[4] Appointment of Arbitrators
[5] Scope of the Arbitrator’s Authority
[6] Choice of Law and Venue
[7] Enforcement and Appeals
§ 8.08 Nonbinding Dispute Resolution Provisions
§ 8.09 Putting It All Together
[1] Long-Form Provision
[2] Short-Form Provision

Chapter 9
Cumulative Remedies and Election of Remedies

§ 9.01 The Remedies Universe
[1] Introduction: The Fundamental Questions to Ask a Client
[2] Types of Remedies
§ 9.02 Limitation of Remedies, Election of Remedies, and the Cumulative Remedies Provision
[1] Historical Context
[2] Modern Default Rule
[3] Drafting Considerations: When to Include a Cumulative Remedies Provision
[4] Examples of Cumulative Remedies Provisions
[5] Do Cumulative Remedies Provisions Work?
§ 9.03 Limitation of Remedies and Damages
[1] Remedies vs. Damages
[2] Limitation of Remedies
[3] Limitation of Damages
§ 9.04 Warranties
[1] Distinction Between Disclaimer and Limitation
[2] What to Disclaim
[3] Limiting the Way Warranties May Be Asserted
[4] The Virtue of Moderation
§ 9.05 Putting It All Together

Part Four
Financial and Risk Allocation Provisions


Chapter 10
Indemnities

§ 10.01 Introduction—The Importance of Allocating Risk
§ 10.02 What Is Indemnification?
[1] Indemnification Defined
[2] Indemnification Distinguished from Contribution, Guaranties, and Surety Contracts
§ 10.03 The Pitfalls of Pursuing Common Law Remedies
§ 10.04 Contract Interpretation and Enforceability
[1] Interpretation of Indemnity Provisions
[2] Enforceability of the Indemnity
§ 10.05 The Shortcomings of the Basic Indemnification Provision
§ 10.06 Parties to the Indemnity
[1] Identify the Indemnitors
[2] Identify the Indemnitees
§ 10.07 The Promise to Indemnify
[1] Words of Promise
[2] Joint and Several Liability/Contribution
[3] Reciprocal Promises
§ 10.08 Scope of the Indemnity
[1] Scope of the Indemnity—Defining What the Indemnitor Must Pay
[2] Scope of the Indemnity—Defining the Subject Matter of the Indemnity
§ 10.09 Duration of the Indemnity
[1] Overview
[2] Acquisition-Related Issues
§ 10.10 Dollar Exposure of the Indemnity: Baskets, Caps, and Ceilings
[1] Baskets
[2] Caps and Ceilings
[3] Willfulness Exclusion
§ 10.11 Dollar Exposure of the Indemnity: Tax and Insurance Considerations
[1] Tax Considerations
[2] Offsets Against Insurance
§ 10.12 Exclusivity of Indemnity as a Remedy
§ 10.13 Procedural Issues
[1] Mechanics of Obtaining Indemnification
[2] Arbitration Provision
§ 10.14 Means of Securing the Payment of the Indemnity
[1] Escrow Funds
[2] Set-Offs
§ 10.15 Putting It All Together
[1] Long-Form Provision
[2] Short-Form Provision

Chapter 11
Force Majeure

§ 11.01 Introduction
[1] The Common Law Defense of Impossibility
[2] The Impracticability Defense and Its Application
[3] The Force Majeure Provision: The Negotiated Allocation of Risk
§ 11.02 The U.C.C. Model
§ 11.03 Negotiating and Drafting the Force Majeure Provision
[1] General Considerations Concerning Risk Allocation
[2] The Definition of a Force Majeure Event
§ 11.04 Suspension of Performance
§ 11.05 Covenants and Conditions Precedent During the Continuation of a Force Majeure Event
§ 11.06 Consequences of a Force Majeure Event
[1] Allocation of Costs Incurred as a Result of a Force Majeure Event
[2] Altered Performance Requirements
[3] No Excuse of Existing Liabilities
[4] Termination of the Contract
[5] Are the Remedies Exclusive?
§ 11.07 Resolving Disputes
§ 11.08 Putting It All Together
[1] Long-Form Provision
[2] Short-Form Provision

Chapter 12
Transaction Costs

§ 12.01 Introduction
§ 12.02 Defining the Terms
[1] Transaction Costs
[2] Costs
[3] Fees
[4] Expenses
§ 12.03 The Common Law: General Considerations
§ 12.04 The Common Law: Transaction Costs Incurred Prior to Contract Formation
[1] General
[2] Exceptions
§ 12.05 Transaction Costs Incurred to Perform the Contract or Satisfy Conditions Precedent
[1] “Expectation” Theory of Damages
[2] Reliance and Restitution Theories of Damages
§ 12.06 Transaction Costs Incurred to Enforce the Contract
§ 12.07 Fee-Shifting Provisions
[1] Enforceability Generally
[2] Common Law Limitations on Enforceability
[3] Fee-Shifting Statutes Applicable to Commercial Transactions
§ 12.08 Negotiating and Drafting Transaction Cost Provisions
[1] General Drafting Considerations
[2] Should the Contract Include a Transaction Costs Provision?
[3] Transaction Cost Provisions
§ 12.09 Putting It All Together

Part Five
Communications Between the Parties and with Others


Chapter 13
Confidentiality

§ 13.01 Introduction
§ 13.02 Legal Remedies in the Absence of a Contract
[1] Common Law Remedies
[2] Uniform Trade Secrets Act
[3] Criminal Statutes
§ 13.03 Advantages and Limitations of Confidentiality Provisions
[1] What Confidentiality Provisions Can Do
[2] What Confidentiality Provisions Cannot Do
§ 13.04 Negotiating and Drafting Confidentiality Provisions
[1] Definition of Confidential Information
[2] Disclosure and Use of Confidential Information
[3] Permitted Disclosees
[4] Return of Confidential Information
[5] Competing Disclosure Obligations
[6] Remedies
[7] Ownership Rights
§ 13.05 Putting It All Together
[1] Long-Form Provision
[2] Short-Form Provision

Chapter 14
Announcements

§ 14.01 Introduction
§ 14.02 Common Law Absent a Contractual Provision
§ 14.03 Announcement Provisions in the Transactional Context
[1] When and Why Announcement Provisions Are Used
[2] Negotiating and Drafting Announcement Provisions in the Transactional Context
[3] The “Required by Law” Exception
[4] Variations on the Theme
§ 14.04 Announcement Provisions with Regard to Employee Termination
[1] When and Why Announcement Provisions Are Used
[2] Legal Issues
[3] Negotiating and Drafting Announcement Provisions with Regard to Employee Termination
§ 14.05 Announcement Provisions in Litigation Settlement Agreements
[1] When and Why Announcement Provisions Are Used
[2] Issues Regarding Litigation Settlements
[3] Timing of the Announcement
[4] Negotiating and Drafting Announcement Provisions in Litigation Settlement Agreements
§ 14.06 Putting It All Together

Chapter 15
Notices

§ 15.01 Introduction
§ 15.02 Common Law Roots of Notice
[1] Historical Background
[2] Mailbox Rule: A Risk Allocation Mechanism
§ 15.03 Enforceability
§ 15.04 The Uniform Commercial Code
[1] Definitions: Notify and Send
[2] The Requirement of a Signed Writing
§ 15.05 Generic and Specific Notice Provisions
§ 15.06 Drafting Generic Notice Provisions
§ 15.07 Definition of Notice
§ 15.08 The Giving of Notice as an Obligation vs. the Giving of Notice as a Condition Precedent
§ 15.09 Requirement of a Writing
§ 15.10 Requirements of a “Signed” Writing
§ 15.11 Methods and Effectiveness of Delivery
[1] Introduction
[2] Historical Presumption of Delivery vs. Effectiveness upon Receipt
[3] A Typical Clause Concerning Delivery
[4] Methods of Delivery
§ 15.12 Addresses and Addressees
§ 15.13 Specific Notice Provisions
[1] Affirming Notice
[2] Unwinding Notice
[3] Request Notice
§ 15.14 How to Give Proper Notice
§ 15.15 Putting It All Together
[1] The Long-Form Generic Notice Provision
[2] The Short-Form Generic Notice Provision
[3] Conclusion

Part Six
Determining What Constitutes the Contract


Chapter 16
Amendment and Waiver

§ 16.01 Introduction
§ 16.02 Modifications Under the Common Law—Both Written and Oral
[1] Requirement of Consideration: The Preexisting Duty Rule
[2] Surmounting the Consideration Requirement
§ 16.03 Oral Modifications Enforceable Despite Contract Provision
[1] Conduct Constituting Mutual Assent as Grounds for Enforcing Oral Modifications
[2] Estoppel Theories as Grounds for Enforcing Oral Modifications
[3] The Minority Position: Enforcement of No Oral Modification Provisions Under Common Law
§ 16.04 Enforcement of Oral Termination and Oral Rescission Provisions
§ 16.05 The Restatement (Second) of Contracts
§ 16.06 Common Law Waivers
[1] Waiver of a Condition Precedent
[2] Election
§ 16.07 Oral Waivers Enforceable Despite Contract Provisions
[1] Waiving a No Oral Waiver Provision
[2] Estoppel as a Means of Invalidating a No Oral Waiver Provision
§ 16.08 Retraction of Waivers
§ 16.09 Statutory Provisions Affecting Modifications and Waivers
[1] Statutory Provisions Affecting the Consideration Requirement of Modifications
[2] Statutory Attempts to Mandate Enforcement of No Oral Modification Provisions
[3] Modifications and Waivers Despite Statutory Attempts to Preclude Such Actions
[4] Retractions of Waivers
§ 16.10 Should a Contract Include No Oral Modification and No Oral Waiver Provisions?
§ 16.11 Negotiating and Drafting Modification and Waiver Provisions
[1] Modification Provisions
[2] Waiver Provisions
[3] Modification and Waiver Provisions in Credit Agreements
[4] Statutory Requirements as to Modification and Waivers
§ 16.12 How to Protect a Client from an Unintended Modification or Waiver
§ 16.13 Putting It All Together

Chapter 17
Severability

§ 17.01 Introduction
§ 17.02 The Common Law: If the Contract Has No Severability Provision
[1] Preliminary Inquiries
[2] The Restatement Approach (Part One): Severability and Independent Mutual Agreements
[3] The Restatement Approach (Part Two): Severability and Dependent Promises (Doctrine of “Essential Part of the Agreed Exchange”)
[4] No “Serious Misconduct”
[5] Severability vs. Reformation: “Blue-Pencil” Power and the Rule of Reasonableness
§ 17.03 Why Include a Severability Provision?
§ 17.04 Is a Severability Provision Desirable?
§ 17.05 Negotiating and Drafting the Severability Provision
[1] Basic Statement
[2] Not a Waiver
[3] Specified Essential Terms
[4] Further Limitations
[5] Partial Enforcement; Deletions Under the “Blue-Pencil” Rule or Reformation Under the Rule of Reasonableness
[6] Negotiations to Modify Illegal Terms
[7] Anti-Severability
§ 17.06 Putting It All Together

Chapter 18
Merger

§ 18.01 Introduction
§ 18.02 The Parol Evidence Rule
[1] The Scope and Effect of the Rule
[2] When Is a Writing Integrated?
[3] When Is a Writing Completely Integrated?
§ 18.03 Merger Provisions
§ 18.04 Negotiation Issues
[1] Conditions Precedent
[2] Fraudulent Inducement
[3] Course of Dealings/Usage of the Trade
[4] Course of Performance
§ 18.05 Negotiating and Drafting the Merger Provision
§ 18.06 Omitting a Merger Provision
§ 18.07 Putting It All Together

Chapter 19
Counterparts

§ 19.01 Introduction
§ 19.02 Common Law
§ 19.03 Enforceability
[1] Execution, Delivery, and the Counterparts Provision
[2] Evidence
[3] Chattel Paper
§ 19.04 Negotiating and Drafting the Counterparts Provision
§ 19.05 Putting It All Together

Part Seven
Interpretive Provisions


Chapter 20
Number and Gender

§ 20.01 Typical Provision: Purpose and Pitfalls
§ 20.02 Misuse of the Gender Clause: The Alternative of Gender Neutral Drafting
§ 20.03 Misuse of the Number Clause: Vigilance in Use of Defined Terms
§ 20.04 Putting It All Together

Chapter 21
Captions

§ 21.01 Introduction
§ 21.02 If the Contract Is Silent
[1] When a Caption Adds to Text
[2] When a Caption Conflicts with Text
§ 21.03 Is a Captions Provision Desirable?
§ 21.04 Forms and Drafting
§ 21.05 Putting It All Together

Part Eight
Other Provisions


Chapter 22
Further Assurances

§ 22.01 Introduction
§ 22.02 Implied Covenant of Good Faith and Fair Dealing
§ 22.03 Implied Covenant of Best Efforts
§ 22.04 Reasons for Including Further Assurances and Pre-Closing Assurances Provisions; Provisions Regarding Good Faith
§ 22.05 Negotiating and Drafting Further Assurances and Pre-Closing Assurances Provisions
[1] Introduction
[2] General Language
[3] Acquisition Agreements
[4] Joint Venture Agreements
[5] Loan Agreements
[6] Settlement Agreements
§ 22.06 Putting It All Together

Part Nine
Conclusion


Chapter 23
Putting It All Together

§ 23.01 Introduction
§ 23.02 Title of the Article
§ 23.03 Order of the Provisions
§ 23.04 A Proposed “General Provisions” Article
§ 23.05 Notices Provision—Long-Form Provision
§ 23.06 Confidentiality—Long-Form Provision
§ 23.07 Indemnification—Long-Form Provision
§ 23.08 Force Majeure—Long-Form Provision
§ 23.09 Arbitration—Long-Form Provision