1. Presentation of David H
Presentation of David H. Conaway Shumaker, Loop & Kendrick, LLP to Association of Corporate Counsel Charlotte, NC February 1, Managing Customer Risk: Successful Contract Terms and Strategies to Avoid Risk and Optimize Outcome

2. 1. Role of Sales Contracts – 2 Minute Drill
Purpose of a Sales Contract
Define Parties’ Obligations
Optimize Outcome When a Dispute arises
Trade Credit Role
2.8 trillion Accounts Receivable in Global Economy
Banks, Private Equity

3. Disputes Erode or Eliminate Contract Profit
Manufacturing Margins
Materiality is a Driver
How Much is Invested in Contracts
How Much Invested in Resolving Disputes

4. Managing Customer Risk: Know Thy Risk Financial Distress
Business/Management Issues
Takata Airbag Recall

5. External Market Conditions
Oil and Gas Industry
Third Party Action – often by the Lender
Lender
Private Equity
Activist Investors
Suppliers are co-venturers

6. 2. Sales Contract Cosmos Making Your Terms and Conditions Stick
Credit Applications – Highly Underrated
Purchase Orders
Order Acknowledgement
Invoices
Terms and Conditions
Sales or Supply Contract

7. 3. Terms and Conditions That Make a Difference
Efficient Dispute Resolution: Roadmap for Success
Attorneys’ Fees – Altering Incentives to Litigate
Interest Upon Default – Increasing the Cost of Non-Payment
E.D.N.Y. Wrongful Contract Termination Case Example: Interest/Attorneys’ Fees Made the Difference

8. Undelivered Inventory – Specially Manufactured Goods
Typical Customer’s Wisdom
Apple Tier One Supplier Example of Claim
Unassailable Inventory Claim – Duty to Mitigate
Improves Value of A/R Claim
Take or Pay Clause
Setoff

9. Multiple Buyers Provisions – Joint and Several Liability
Recoupment: A Distinction with a Difference
Limitation of Liability/Damages: Curb Your Customer’s Enthusiasm
Termination of Licenses Upon Default

10. Application of U.C.C. Article 2 in Chapter 11
U.C.C : Anticipatory Breach
U.C.C : Cash Before Delivery
Include in Sales Contract
When Worlds Collide: Chapter 11 Meets Article 2
Impact on Critical Vendor
Impact on Executory Contracts

11. 4. Global Sales Contracts: Square Peg, Round Hole
Introduction
Are you using domestic sales contract template?
Uniform Commercial Code Article 2
U.S. Article 2 Litigation Predictable
Bespoke Global Contracts
International Template
Materiality Drives Tailored Contracts

12. Global Contract Considerations Applicable Law
Article 2 vs. CISG (Convention for the International Sales of Goods)
Attached 84 signatory countries
Represent 80% world trade

13. Role of Bargaining Power
Comity and Reciprocity Issues
Battle of the Forms: Article 2 or CISG
Whose documents control
Seller’s Last Shot
Where Will Disputes Be Resolved
Home Field Advantage
Enforcement of U.S. Judgments Abroad
No U.S. Enforcement of Judgment Treaty

14. Where Are the Assets: Monetizing a U.S. Judgment
Duplicative Legal Proceedings
Arbitration of Foreign Disputes
New York Convention (1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards)
- Attached 156 Signatory Countries

15. Arbitration Institutions
Attached Arbitration Institutions
What Awards Will Countries Enforce?
- ICC, London Court of International Arbitration, CIETAC (China), Hong Kong International Arbitration Center?

16. Who Pays the Costs of Dispute Resolution?
“American Rule” of Legal Fees
“English Rule” Contrasted
Other Considerations
Protecting Intellectual Property Rights
Hedging Credit, Country and Legal Systems Risk
Force Majeure – Turbulent Financial Markets and Global Conflicts
Currency Fluctuations/Risks

17. Thank you for your attendance.
David H. Conaway
101 S. Tryon Street, Suite 2200
Charlotte, NC
Manufacturing • Customers • Vendors • Supply Chain
Insolvency • Litigation • Commercial and Financial Contracts • Cross-Border