1 Contracts — Ten Steps to a Better Contract American Chamber of Commerce Executives Presented by George E. Constantine, III, Esq. Venable LLP Washington, DC

2 George E. Constantine, III, Esq. Counsel to tax-exempt trade associations, professional societies, chambers of commerce Former Staff Counsel for the American Society of Association Executives Concentrates practice on tax, contracts, intellectual property licensing, election law, corporate governance and other issues affecting tax-exempt, nonprofit corporations.

3 Today’s Program Introduction to contracts Ten steps to a better contract Questions Conclusion

4 Introduction to Contracts What is a contract? Offer Acceptance Consideration Memorandum of understanding Letter of intent Oral vs. written

5 Introduction to Contracts (continued) Who can bind your organization? Board members Staff Electronic signatures Organizational procedures and limits

6 Ten Steps to Negotiating a Better Contract

7 Step 1: Rethink the Process — Starting with the RFP What is an RFP? Why does my chamber need an RFP? Formalizes the process More professional approach to contracting

8 Step 1: Rethink the Process — Starting with the RFP (continued) Key provisions Take advantage of your leverage Not just price and timeline Address indemnification, liability, independent contractor Get signature from contractor

9 Step 2: Remember that Everything is Negotiable The big lie — “it’s a standard provision” Read everything in the document Consider using a chamber-created form agreement as the starting point Be ready to walk away

10 Step 3: Be Certain the Contract Says What the Contractor Will Do “Warranty” provision should be very clear Consider incorporating the original proposal as an attachment (leverage) Watch for “weasel” words like “estimate,” “on or about,” “reasonably,” etc.

11 Step 3: Be Certain the Contract Says What the Contractor Will Do (continued) Include blanket provision promising competence and compliance with laws and regulations Avoid disclaimers of warranties (address in RFP if possible)

12 Step 4: Don’t Let the Contractor Control Liability Issues Artificial limitations of liability Amount of contract Direct vs. indirect Indemnification

13 Step 5: Make Sure Payment Terms are Clear Fixed price vs. time-and-materials (watch for “weasel” words here) Ability to dispute invoices Reasonable turnaround time Payment obligations on termination

14 Step 6: Intellectual Property — Protect What is Yours Chamber name, logo, mailing list Chamber trade secrets and confidential information Who owns what is being created (freelancers)? What if a contractor provides something that is owned by a third party?

15 Step 7: Term and Termination Provisions Should be Reasonable Avoid long-term deals Seek no-fault exit provisions Avoid long-term renewals Think carefully about “automatic” renewals Provide for termination on breach (watch for long “cure” periods) Arbitration or mediation?

16 Step 8: Even Read the “Boilerplate” Choice of law and jurisdiction Notice provisions Assignment rights

17 Step 9: Always be Willing to Walk Away

18 Step 10: Remember “Special” Chamber Issues Involvement of a board member’s company should be handled in a way to minimize conflict of interest concerns Improperly structured agreements could result in unnecessary tax burden to chamber Know enough to spot the issues and when to ask questions of your tax and/or legal advisers

19 Questions????