Jesse r. Binnall Teaming agreements

Teaming agreements Enforcement of Intent Or Agreements to Agree?

UNDERSTANDING SOME Basic Contract principles Teaming agreements UNDERSTANDING SOME Basic Contract principles Offer, Acceptance, and Consideration Mutual Assent of Parties Sufficiently definite in its terms (not vague)

Issues to consider Which jurisdiction’s laws will apply? Teaming agreements Issues to consider Which jurisdiction’s laws will apply? Differences between pre-award obligations and post-award obligations Severability clauses How certain and definite are the terms

VIRGINIA LAW – two views of enforceability of teaming agreements EG&G, Inc. v. Cube Corp, 63 Va. Cir. 634 (Fairfax Co. 2002) (Ney, J.) - Looks to intent of parties Cyberlock Consulting, Inc. v. Info. Experts, Inc., 939 F. Supp. 2d 572 (E. D. Va. 2013) (Cacharis, J.) - Parol evidence cannot be used to create ambiguities - Intent does not create a binding contract; rather whether the parties mutually assented to a legally binding agreement

Teaming agreements The Supreme Court of Virginia Steps In: Navar, Inc. v. Fed. Bus. Council, 291 Va. 338 (2016) Another set aside contract Teaming agreement provided that parties would negotiate in good faith to come to terms on a subcontract if they won the contract 51% / 49% arrangement Found that the teaming agreement did not provide the necessary certainty to result in a binding contract Essentially adopted the Cyberlock analysis

“The rules of contract law do not apply… because it is merely an agreement to agree to negotiate at a future date.” Navar, Inc. v. Fed. Bus. Council, 291 Va. 338 (2016)

Status of Teaming Agreements Post-Navar For any hope of enforceability, a teaming agreement must have definite terms. Anything that is left to future negotiation is likely no better than a gentlemen’s agreement. Still possible liability for unjust enrichment. A plaintiff may recover for unjust enrichment under the Trade Secrets Act if it can prove that it 1) conferred a benefit on the defendant, albeit involuntarily; 2) the defendant knew of the benefit and should reasonably have expected to repay the plaintiff; and 3) the defendant accepted or retained the benefit without paying for its value. Collelo v. Geographic Services, Inc., 283 Va. 56, 68 (2012).

Teaming agreements Other jurisdictions California: Teaming agreements are enforceable if it uses best efforts to achieve a common objective in a closed, discrete, and actionable way. Maryland: Unenforceable agreements to agree. Florida: Fuzzy lines, but allowed a case to proceed where parties were to use “best efforts” to negotiate a subcontract. New York: Preliminary agreements are enforceable but may only require good faith negotiation.

Final Thoughts Always know which jurisdiction’s laws will apply Teaming agreements: Final Thoughts Final Thoughts Always know which jurisdiction’s laws will apply Look at how definite the terms are Know whether the contract is severable and whether there might by unjust enrichment liability Talk to a lawyer first so you have less risk of having to talk to a litigator later

Jesse R. Binnall Harvey & Binnall, PLLC jbinnall@harveybinnall.com (703) 888-1943