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
• Critical
C
• 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