Contract drafting tips: Sept. 2, 2016

(If you’re reading this on the front page of the blog, click on the post title to see the post with a table of contents.)

Verizon-Yahoo fail: Don’t use “substituted for” if you mean “replaced by”

Many young drafters incorrectly use sub­sti­­tu­ted for instead of re­placed by.  As an ex­ample, look at section 1.03(b) of the stock pur­chase agree­ment un­der which Verizon is to acquire Yahoo’s op­er­a­ting business (which I’m reviewing in the course of drafting some new sections for the Common Draft contract deskbook):

• That section of the Verizon-Yahoo contract makes it clear that Yahoo’s employees are to have their existing restricted-stock unit awards, or “RSUs,” replaced by Verizon RSUs.
• But the contract language erroneously says that each Yahoo RSU is to be “substituted for” a Verizon RSU (emphasis added).

Unfortunately, what this contract language says is exactly the op­pos­ite of what’s supposed to happen in the deal.  The Merriam-Webster on­line dict­ion­a­ry defines substitute as: “1 to put in the place of an­oth­er[;] 2 to take the place of another <Honey can substitute for sugar in the recipe.>” So section 1.03(b) is back­wards; it should say instead that a Ver­i­zon RSU is to be substituted for each Yahoo RSU, not the other way around.  Or even better:  The section could say that each Yahoo RSU is to be replaced by (or re­placed with) a Veri­zon RSU.

According to the press release, the parties were represented by top-flight law firms:  Wachtell; Gibson Dunn; Covington; Winston & Strawn; Skadden; Wilson Sonsini; and Cravath.

Trump campaign fail: Give some thought to how the contract might read if made public

From Vox.com (with extensive excerpts): Apparently if you want to volunteer for the Donald Trump campaign, you must electronically sign a really-egregious nondisclosure agreement that prohibits you from criticizing Trump, his family, his business, etc., for the rest of your life. The NDA seems to have been drafted by lawyers wearing horse blinders who myopically considered only the purely-legal issues, with nary a thought to the likely real-world political- and public-relations consequences.