In drafting a contract, when should you refer to matters “arising out of or relating to ” the agreement, as opposed to just those matters “arising out of” the agreement?
This can be an important question when you’re drafting — or reviewing — an attorneys’ fees clause; a forum-selection clause; a governing-law clause; or an arbitration clause, to name four common examples.
More after the break.
At the IACCM annual conference, someone made the comment that renegotiating a master supply agreement with a customer at renewal time can be really tricky, because the vendor isn’t likely to get as good a deal. This is probably one of those truths universally acknowledged [1]. Here are a few possible reasons:
The scene: You’re in a contract negotiation, representing The Good Guys Company. The other side, Nasty Business Partner Inc., insists on requiring The Good Guys to get NBP’s consent before assigning the agreement. NBP has all the bargaining power; The Good Guys decide they have no choice but to go along.
Trying to salvage the situation, you ask NBP for some additional language: “Consent to assignment may not be unreasonably withheld, delayed, or conditioned.” But NBP refuses.
Have you just screwed your client?
This past week I guest-lectured at an introductory lawyering-skills class for first-year law students. One of the points I wanted to make was the old chestnut, get to know your client’s business, which is self-evidently important for any lawyer or other professional who helps clients arrange their business relationships and document them in contracts.
Suddenly, though, I remembered a few of the parents at my son’s Little League baseball games, who would shout out from the bleachers to the batter: “OK, Johnny, be a hitter!”
Be a hitter? Even back then I wondered, what does that mean — what is little Johnny supposed to do?
It dawned on me that when we tell law students and young lawyers to get to know the client’s business, we might as well be yelling, “be a hitter, Johnny!” After the jump, some practical tips on actual things you can do toward that end.
A software-vendor client was on the verge of making a big sale to a potential marquee customer. The negotiations hit a snag, though, over the issue of customer-support response times.
The customer’s procurement people wanted the vendor to make a firm commitment that it would fix any bugs in the software within a certain amount of time — and that amount of time might be unrealistic in some situations.
We broke the impasse by reaching beyond the boundaries of software support. More about how we did so after the jump.
Signing a business contract:
An annotated checklist
for business people
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