What Happens When Your Agreement Goes Michelle Pinto ?

What Happens When What Happens When Your Agreement Goes Your Agreement Goes

Michelle PintoMichelle Pinto

?

DisclaimerDisclaimer

This presentation provides information about the law This presentation provides information about the law designed to serve as guidance by increasing awareness designed to serve as guidance by increasing awareness and understanding of selected legal issues that may and understanding of selected legal issues that may affect your business operations. affect your business operations.

But legal information is not the same as legal advice -- But legal information is not the same as legal advice -- the application of law to an individual's specific the application of law to an individual's specific circumstances. Although we go to great lengths to make circumstances. Although we go to great lengths to make sure our information is accurate and useful, we sure our information is accurate and useful, we recommend you consult your attorneys for professional recommend you consult your attorneys for professional assurance that the information, and your interpretation assurance that the information, and your interpretation of it, is appropriate to your particular situation.of it, is appropriate to your particular situation.

Roadmap of Roadmap of PresentationPresentation

Ways to Bypass Adversity in Ways to Bypass Adversity in Contract Contract

LanguageLanguage Managing Contract PerformanceManaging Contract Performance Evaluating the BreachEvaluating the Breach Termination StrategiesTermination Strategies

Contracting GoalContracting Goal

To obtain a product and/or a service To obtain a product and/or a service that meets the customer’s that meets the customer’s expectations within an acceptable expectations within an acceptable timeline and for a predictable price, timeline and for a predictable price, and to ensure adequate and to ensure adequate mechanisms are in place to address mechanisms are in place to address performance concerns and performance concerns and potential disputes among the potential disputes among the partiesparties

Ways to Negotiate Ways to Negotiate Favorable Termination Favorable Termination

LanguageLanguage

- Use preferred contract terms in Use preferred contract terms in RFPRFP- Keep 2+ vendors in the RFP Keep 2+ vendors in the RFP processprocess- Don’t be unreasonableDon’t be unreasonable- Leverage existing agreements Leverage existing agreements with with

vendor where possible vendor where possible

The Balancing ActThe Balancing Act

One the One HandOne the One Hand On the On the Other…Other…

Lowest PriceLowest Price Maximize Price Maximize Price

Work until completeWork until complete Get in & Get in & OutOut

Decrease SpendDecrease Spend Increase Increase RevenueRevenue

Pay on ResultsPay on Results Pay on Time Pay on Time

Contract TermsContract Terms

Termination ClausesTermination Clauses

Why?Why?

- With or Without Cause- With or Without Cause

When?When?

- Immediately upon breach (or - Immediately upon breach (or after expiration of cure after expiration of cure

period)period)


Reasons to TerminateReasons to Terminate Cause (breach of agreement, Cause (breach of agreement,

confidentiality, warranty)confidentiality, warranty) Change of control, assignment of Change of control, assignment of

agreementagreement Ethical reasonsEthical reasons Violations of law or change in law that Violations of law or change in law that

would affect performance of agreementwould affect performance of agreement BankruptcyBankruptcy ConvenienceConvenience


Warranties Warranties – UCC WarrantiesUCC Warranties– Service WarrantyService Warranty– Software WarrantiesSoftware Warranties

InteroperabilityInteroperability Backwards CompatibilityBackwards Compatibility Virus/Use of Open Source SoftwareVirus/Use of Open Source Software

– Product Life Cycle WarrantyProduct Life Cycle Warranty– Integration WarrantyIntegration Warranty


Liability LimitationsLiability Limitations– Indirect Liabilities – disclaimer of Indirect Liabilities – disclaimer of

indirect, consequential, special or indirect, consequential, special or punitive damagespunitive damages

– Monetary Limitations on Direct Monetary Limitations on Direct DamagesDamages


Dispute Resolution ClausesDispute Resolution Clauses– Required Negotiation/Mediation Required Negotiation/Mediation

ClausesClauses– ArbitrationArbitration– Forum Selection/Litigation/Jury v/ Forum Selection/Litigation/Jury v/

Non-Jury awardsNon-Jury awards– Choice of LawChoice of Law– Equitable Relief (injunctions, TROs)Equitable Relief (injunctions, TROs)


Boilerplate ClausesBoilerplate Clauses– SurvivabilitySurvivability– WaiverWaiver– Cumulative Remedies Cumulative Remedies – Time is of the EssenceTime is of the Essence– Prevailing PartyPrevailing Party

Contract Drafting Contract Drafting RulesRules

Avoid AmbiguityAvoid Ambiguity Level Set ExpectationsLevel Set Expectations Be Able to Answer 5-point Be Able to Answer 5-point

Question with DeliverablesQuestion with Deliverables Be Clear in Contract Language Be Clear in Contract Language COMMUNICATION IS KEY!!!COMMUNICATION IS KEY!!!

Contract PerformanceContract Performance

Notice of Performance IssuesNotice of Performance Issues

Follow Up – demand letter, invoke Follow Up – demand letter, invoke remedy rights if available…remedy rights if available…

Talk to Legal CounselTalk to Legal Counsel

Breach of ContractBreach of Contract

MinorMinor Material Material

Party gains substantial no benefit Party gains substantial no benefit ofof

benefitbenefit the bargain the bargain

immediate immediate right right to to remediesremedies

How You Do Determine Whether a How You Do Determine Whether a Breach is Material?Breach is Material?

Amount of benefit receiveAmount of benefit receive Adequacy of damagesAdequacy of damages Extent of part performanceExtent of part performance Hardship to the breaching Hardship to the breaching

partyparty Negligent or willful behaviorNegligent or willful behavior Likelihood of full performanceLikelihood of full performance

Taking It To The Next Taking It To The Next LevelLevel

Discourage litigation. Persuade your Discourage litigation. Persuade your neighbors to compromise whenever you can. neighbors to compromise whenever you can. As a peacemaker the lawyer has superior As a peacemaker the lawyer has superior opportunity of being a good man. There will opportunity of being a good man. There will still be business enough. still be business enough.

Abraham LincolnAbraham Lincoln

When will mankind be convinced and agree to When will mankind be convinced and agree to settle their difficulties by arbitration? settle their difficulties by arbitration?

Benjamin FranklinBenjamin Franklin

Paths to Dispute Paths to Dispute ResolutionResolution

Contract LanguageContract Language ADRADR LitigationLitigation SettlementSettlement

Attorney Client PrivilegeAttorney Client Privilege

A communication between lawyer and client is A communication between lawyer and client is "confidential" if it is not intended to be "confidential" if it is not intended to be

disclosed to disclosed to third persons other than:third persons other than:

1. Those to whom disclosure is in 1. Those to whom disclosure is in furtherance of the rendition of legal services furtherance of the rendition of legal services to the client.to the client.

2. Those reasonably necessary for the 2. Those reasonably necessary for the transmission of the communication.transmission of the communication.

Fla. Stat. § 90.502 (2007)Fla. Stat. § 90.502 (2007)

DiscoveryDiscovery

Relevance – any tendency to Relevance – any tendency to make a fact more or less probable make a fact more or less probable – Federal Rule of Evidence 401– Federal Rule of Evidence 401

Admissible – question of law Admissible – question of law determined by judge, e.g., determined by judge, e.g., documents, conversations, documents, conversations, observationsobservations

eDiscoveryeDiscovery

Rule 26(a): Provisions Governing Discovery; Duty of Disclosure

Party must provide description by category and location of all documents,

electronically stored information, and tangible things in their control and which they may use to support their case

EDiscovery Safe HarborEDiscovery Safe Harbor

Court May Not Impose Sanctions For

Failure to Produce electronically stored

information as Result of “Routine,”

“Good-Faith” Destruction of Information

as Routine Operation of System

When all else Fails…When all else Fails…

Creative SettlementsCreative Settlements Credits on future paymentsCredits on future payments Explore other existing or potential Explore other existing or potential

future relationships with party for future relationships with party for leverageleverage

Questions?

Any area or points not Any area or points not covered?covered?

Other questions?Other questions?

What Happens When Your Agreement Goes Michelle Pinto ?

Documents