ELEMENTS OF GOOD ASSOCIATION CONTRACTS SNA National Leadership Conference Colorado Springs, CO April 25, 2008 Jerry Jacobs, Pillsbury Law Firm, Washington, DC

1 Agenda What is a Contract? Special Issues with Contracts Special Issues with Contracts for Meetings Reviewing Contracts

What is a Contract?

3 Preliminary -- Recognition –Letter/memo/brochure/deck/ offering services or goods if association agrees (“agree” may be implied) –Written on paper or not –“Memorandum of Understanding”? –Terms sheet, deal memo, letter of intent –Most common non-obvious enforceable contract – exchange of letters or s –Distinguish “contract” from “partnership” –ALL CONTRACTS ARE NEGOTIABLE

4 Preliminary -- Definition Understanding* between people or firms that creates a binding relationship; each has obligations; each expects something in return. * “CONTRACT” = “AGREEMENT”

5 Essential Elements 1. Offer - Conditional promise - Can be withdrawn before acceptance - Can have time limit

6 Essential Elements 2. Acceptance - Assent to offer on its terms - Any means ok unless specified - Material change = counter-offer

7 Essential Elements 3. Consideration - Value exchanged - Adequacy not an issue - If unspecified, no contract

8 No Contract without All Three Essential Elements: 1. OFFER 2. ACCEPTANCE 3. CONSIDERATION

Special Issues with Contracts

10 Special Issues 1. Modification - If contract exists, no modification unless all parties agree - Discussion, assurance, promise, expectation, reasonableness all insufficient

11 Special Issues 2. Authority - Be sure representative has authority - If representative says so, and is not obviously without authority, that’s enough

12 Special Issues 3. Applicable Law - Most states have equivalent law - Does not affect jurisdiction

13 Special Issues 4. Arbitration/Mediation - Anything’s better than litigation (unless it’s not) - Very dependent upon system/personnel

Special Issues with Contracts for Meetings

15 Special Issues -- Meetings 1. Their form or yours? - Rarely an option - “Adhesion” doctrine inapplicable - Alternative: addendum

16 Special Issues -- Meetings 2. ”Block” vs. ”Reservation” - Standard -- facility commits to hold space if sponsor commits to promote use - Alternative: sponsor agrees to use - Failure to use subject to cancellation/ penalty provisions

17 Special Issues -- Meetings 3. Cancellation - Usually subject to conditions - Penalties depend upon timing - “Force Majeure” excuses cancellation

18 Special Issues -- Meetings 4. Attrition - Penalties if inadequate use - Mitigation

Contract Review

20 Contract Review – W I P I T 1. W arranty - What precisely will be provided - Include due dates for performance - Include standards/criteria - Include who will perform - Must rely for breach or leverage - INSIST THAT IT BE DETAILED

21 Contract Review – W I P I T 1. I ntellectual Property - Must include (1) who’s providing copyrights, trademarks, mailing lists, (2) under what terms and (3) who owns what - For copyrights, use license (permission) or assignment (transfer) unless work-for-hire - For trademarks, use license and rules

22 Contract Review – W I P I T 1. P ayment - Clear statement of payment terms, including schedule - Consider payments stretched over time of performance - Retain some amount until performance is concluded

23 Contract Review – W I P I T 1. I ndemnification - Vendor/provider will protect association from claims arising from vendor/providers’ services - Usually mutual, although association rarely has much risk - If vendor/provider is small or poorly capitalized, consider alternatives – other vendors, insurance, limited engagement, closer scrutiny, acceptance of risk

24 Contract Review – W I P I T 1. T ermination - Clear statement of term and end of contract - Doesn’t have to be equivalent - Specify return of materials, delivery of partially- completed work, relinquishment of IP whether or not there’s a dispute - Pro’s and con’s of arbitration/mediation - Anticipate and address worst case

25 More Information: Jerald A. Jacobs Partner Pillsbury Winthrop Shaw Pittman LLP