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Clients don’t always do the needful: Court bails out California employer after parties fail to initial arbitration clause

When drafting a contract (or other legal document), don’t count on the parties doing things like filling in blanks, because sometimes the parties simply don’t do what you expect. EXAMPLE: In a California case, “neither party to an arbitration agreement place[d] initials next to a jury waiver contained in the agreement, even though the drafter included lines for their initials[.]” Fortunately for the drafter of that agreement, the court held that “[o]n the facts of this case, we conclude the lack of initials is of no legal consequence.” Martinez v. BaronHR, Inc., No. B296858 (Cal. App. Jul. 8, 2020) (reversing denial of motion to compel arbitration; citing cases).

(But courts will not always bail out a drafter when parties don’t initial blank lines. See, e.g., Bruni v. Didion, 160 Cal. App. 4th 1272, 73 Cal. Rptr. 3d 395, 413 (2008) (affirming denial of motion to compel arbitration).)

Similarly, many lawyers have seen situations where contract forms included blanks for things such as the effective date — e.g., “This Agreement is made the ___ day of _____, 2020” — but the parties neglected to fill in the blanks when they signed.

Incidentally, as to the agreement-date issue, my preferred approach is this:

  • I draft the preamble to read as follows: “This Agreement is made effective the last date signed as written in the signature blocks.” (Emphasis added.)
  • In the signature blocks, I include, for each signer, a blank line for “Date signed” — not just “Date” — along with blanks for the signers to write their printed names and titles.

Signers are likely to hand-write the date signed when they sign the document, as long as the blank line for the date signed is right there with their signature lines. If the signers do hand-write the date signed, it takes care of the effective-date problem — and it also reduces the temptation to backdate signatures for deceptive purposes, which has sometimes resulted in business executives and counsel going to prison.

Caution: Sometimes it might be necessary to include things like blank lines for initialing. Example: UCC § 2-209 provides in part that: “(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.” (Emphasis added.)

Drafting lessons:

  1. Don’t count on parties’ filling in blanks or otherwise doing what you expect them to do. True, a court might bail you out, as happened in the Martinez case cited above — but your client might well have to incur the expense and burden of litigating the matter.
  2. Try to draft things so that what the parties do manage to do will be enough — as in the “Date signed” example above.
  3. Make it clear to the client, in writing, just what you’re expecting the parties to do. For example, in a draft contract, consider yellow-highlighting any blanks that need to be filled in. That will help to avoid unpleasant future conversations about whether you properly advised your client.
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