1. Rethinking “Standard” Provisions and “Boilerplate” in Contracts: Identify Key Drafting Issues and Avoid Litigation
Monday, April 11, 2016
Presented by Lex Mundi, ACC Litigation Committee, and ACC Small Law Department Committee

2. Faculty Members
Bryon Koepke Senior Vice President, Chief Securities Counsel Avis Budget Group, Inc.
Kevin Norman
Senior Counsel, Legal and Compliance North America
Evonik Corporation
Ken Adams
President and Consultant
Adams Contracts Consulting LLC
Patrick De Ridder
Partner
McGuireWoods LLP
(Lex Mundi Member Firm for USA, Virginia)
Jamie Levitt
Partner
Morrison & Foerster LLP
(Lex Mundi Member Firm for USA, California)

3. Session Overview and Objectives
Focus on rethinking certain boilerplate provisions in an interactive manner
Discuss common pitfalls and hidden issues in certain “boilerplate” or “standard” provisions in commercial contracts
Work in small groups on two collaborative breakout exercises

4. Session Overview and Objectives (Cont.)
First Breakout: “What's Wrong with This Clause?”
Second Breakout: “Strategic Approach of Contract Structure”
Boilerplate Demonstration
Final insights from the Faculty

5. Context on Contracts and Risk Management
Boilerplate provisions are mostly at the end of a contract, often under the heading “Miscellaneous”
Many of these provisions interact with and are linked to key business goals
Business people assume that these are standard provisions and do not always understand the importance of boilerplate provisions

6. Context on Contracts and Risk Management (Cont.)
Incomplete or conflicting boilerplate provisions may result in devastating consequences for the business with significant financial ramifications
In case of a dispute, litigators will pull apart and dissect standard and boilerplate provisions, often interpreting such provisions very differently than the parties may have originally intended

7. First Breakout: “What is Wrong with this Clause?”
Objective and Context
Introduce the Scenario
Instructions for the Exercise
Table Exercise
Report Findings
Additional Insights from the Faculty

8. First Breakout (Cont.) Main Boilerplate Issues: Force Majeure
Time is of the Essence
Indemnification
Notices
Governing Law
Binding Effect
Attorneys’ Fees
Entire Agreement
Assignment

9. Second Breakout: “Strategic Approach of Contract Structure”
Objective and Context
Introduce the Scenario
Instructions for the Exercise
Table Exercise
Report Findings
Additional Insights from the Faculty

10. Second Breakout (Cont.)
Key Business and Risk Management Goals
Strategic Clauses to Consider Addressing:
Termination
Limitation on Liability
Non-Reliance
Jury Waivers
Forum, Venue and Choice of Law

11. Termination Clauses
Consider business context that informs termination advantages and disadvantages
E.g., are there alternative vendors ready to step up, particularly where transition costs are low?
Termination rights provide leverage
But may not always provide realistic options when:
A party reliant on a specific product or service (e.g., licensee of mission critical technology in a license agreement)
A party has no other options (e.g., customer in a sole source service agreement)
A party has other commitments that depend upon the underlying contract (e.g., buyer has made promises to third party customers)

13. Limitation on Liability Clauses
Know what business or strategic needs may impact your ability to limit liability in the agreement
Generally DE and NY will enforce more strictly, CA will consider whether limitation is against public policy
DE , NY and CA allow exclusion of liability for simple negligence under appropriate circumstances
CA will not allow limitation of liability for fraud, gross negligence or willful injury

14. Non-Reliance Clauses
Is a party relying on any oral or written representations made by the other party that are not expressly set forth in agreement?
Can you exclude liability for fraudulent statements made outside the contract?
DE & NY = Yes, where there are clear provisions between sophisticated parties (need to watch out for omissions)
CA = No, but some cases give weight to the provision
Contracts typically limit liability for breach of reps and warranties
Can you limit liability for fraudulent statement within the contract?
DE, NY & CA = No
Cannot exclude gross negligence either
Need to consider Legal and Business views

15. Jury Waivers

16. Jury Waivers Enforceability: Varies by jurisdiction
Traditional considerations
David v. Goliath?
Sympathetic or not?
Desire to avoid (or have) a runaway jury
Cost
Complexity
Time

17. Jury Waivers (Cont.) Other considerations
Different relationship with judge
Likelihood of dismissal or summary judgment
Fewer evidentiary battles
Impact on appeal
Other options (e.g., mediation, arbitration)

18. Forum, Venue and Choice of Law Clauses
2015 State Rankings for Overall Treatment of Tort and Contract Litigation*
*U.S. Chamber Institute for Legal Reform, 2015 Lawsuit Climate Survey

19. Will Your Forum Selection Clause be Enforced?
DE – “presumptively valid;” Enforced unless unjust
NY – has statutory provision for large commercial contracts
Will enforce NY forum clause involving foreign corporation or resident if: (1) NY Choice of law; (2) contract for over $1 million N.Y. Gen. Oblig. Law §
CA – enforced, at the court’s discretion, unless shown to be unreasonable

20. Will Your Venue Provision be Enforced?
DE – Yes, unless unreasonable or unjust
NY – Yes, if venue can host a fair trial
CA – Unsettled
Cannot select venue that would not otherwise be permitted by statute
Some cases hold venue provisions unenforceable

21. Will Your Choice of Law be Enforced?
DE and CA – follow Restatement, may not enforce if no substantial relationship or against public policy
NY – will enforce NY choice of law in commercial contracts over $250,000 even if no substantial relationship to state
N.Y. Gen. Oblig. Law §

22. Breakout Takeaway Materials
First Breakout:
Cheat Sheet:
Online Writings on Boilerplate:
Second Breakout
Cheat Sheet:

23. Boilerplate Demonstration

33. QUESTIONS?

34. Thank You
Bryon Koepke Senior Vice President, Chief Securities Counsel Avis Budget Group, Inc.
Kevin Norman Senior Counsel, Legal and Compliance North America Evonik Corporation
Ken Adams
President and Consultant
Adams Contracts Consulting LLC
Patrick De Ridder
Partner
McGuireWoods LLP
(Lex Mundi Member Firm for USA, Virginia)
Jamie Levitt
Partner
Morrison & Foerster LLP
(Lex Mundi Member Firm for USA, California)