1. DEALINGS WITH CONTRACTS AND INDEMNIFICATIONS
Joseph J. Ortego, Esq.
New York City/ Long Island
Nixon Peabody LLP
DEALINGS WITH CONTRACTS AND INDEMNIFICATIONS

2. GENERAL ISSUES IN CONTRACTS

4. WHAT LAWYERS SEE IN CONTRACT DEALINGS…
Business people are not lawyers
Listen to the contract language, it means what it says
Cheaper to avoid a problem than correct it
Only lawyers pay attention to the language of the contracts
Parties have selective memories
Your lawyer can anticipate the future, but not predict it

6. SAVE YOURSELF A HEADACHE: MISTAKES TO AVOID
Not understanding the agreement and signing anyway
Vague language in the agreement
Negotiating after the contract is signed
No liability clauses, deadlines, or penalties
Not making sure the deal described in writing is the deal you approved
Only having one contracting party sign the agreement
Is there a condition that must be fulfilled?

8. PROTECT YOUR COMPANY, PROTECT YOURSELF
Read the contract, and read again
Never assume, ask for clarification
Anticipate contingencies
What is it you need from this contract, and is the need satisfied?
Look to alternative wording
Provide recommendations, and only sign when you agree, and are clear on the terms

9. PROTECT YOUR COMPANY, PROTECT YOURSELF
Only begin contractual obligations when the contract is actually executed
Make sure language is specific to spell out contemplated services

10. THE INDEMNIFICATION PROBLEM!

11. THE INDEMNITY CLAUSE
What should the clause say? What shouldn’t the clause say? Are you protected against the customer’s own acts of negligence?

12. NEW JERSEY CAUSING TROUBLE: PA and MICHIGAN FOLLOW

13. THE NEW FOCUS
The analysis focus shifted to the “arising out of the delivery of the product” instead of “acts or omissions”

14. BAD INDEMNIFICATION CLAUSE
SUPPLIER hereby agrees to defend, indemnify, and hold harmless Customer's system…from and against any and all actions, claims, suits, losses, damages, obligations, liabilities, and/or expenses (including reasonable attorneys’ fees) of every kind whatsoever which MAY ARISE IN whole or in part, directly or indirectly, from or be connected with (a) the breach of any warranty, express or implied, and/or any accident, occurrence, injury to persons or property which may occur before or after acceptance of the Products by any of them which SHALL ARISE FROM, be caused by, or connected with, in whole or in part, directly or indirectly, the preparation, processing, manufacture, completion, delivery, operation, consumption, and/or use of the Products…

15. PROTECT YOUR LIABILITY FROM INDEMNITY
REPLACE:
“MAY ARISE” WITH “CAUSED BY”
THEN ADD:
Notwithstanding the foregoing, SUPPLIER, does not agree to defend and, indemnify, or hold harmless a particular Indemnified Party for any claim, suit, loss, damage, liability, or expense to the extent arising from the negligence or willful misconduct of the Indemnified Party in the operation, consumption, use or sale (but not the acceptance or approval) of the Products.

16. NOT ALL NEW BUSINESS IS GOOD BUSINESS!

17. NEGOTIATING YOURSELF TO YES

18. RECOMMENDATIONS: Make sure language used in clause is not broad:
Substitute “arising out of” with “caused by”
Delete broad language, such as “without limits”
Keep language simple