Presentation Transcript

1. University of Minnesota Law SchoolContract Drafting SeminarSpring 2011

   March 1, 2011 Class 7 Adjunct Associate Professor Helen Winder
2. Know the Framework of the Contract 1. Title Come back to the title to name it appropriately 2. Preamble Formulaic as to identity Date? 3. Recitals or History or Background What happened before…what is happening now Smooth prose don’t use Whereas No operative provisions
3. More Framework… 4. Definitions Needed? “Means..” “Includes” “Does not include” No obligations in Definition Section Come back to refine this section 5. Words of Agreement “Accordingly, the parties agree as follows:”
4. More Framework… 6. Signature Block Proper identity Title Date Who goes first?
5. Operative Provisions Operative provisions do not include framework! Draft from the facts of the transaction Organize into Concepts… Covenants Conditions precedent Representations and warranties Declarations
6. Declaration Statement of fact Like a definition Like a stipulated fact in litigation It is a statement of fact to which all parties agree… May have effect on its own or in conjunction with a provision. Business Day means any day other than a day that New York City banks are authorized and required to be closed. The payment shall be due on the first Business Day of the Month.
7. Covenants Promise drafted using “shall” with a verb. Usually complex and heavily negotiated Borrower shall pay interest to the Lender
8. Conditions Precedent They modify the language of the obligation If Alex has not exercised his option by May 12, the shares revert to the company. Don’t use “Shall”…in this context cannot convey obligation!
9. Reps and Warranties Assertions of fact either accurate or not (cannot breach a rep) Can rep or can warrant or both Representations is cleaner approach but check local custom and cases Signals who is making the assertion…lays ground work for misrepresentation action
10. Organize!- Outline! Subject matter performance provision (Covenant to perform) Term Closing dates if any Consideration/Payment Other substantive provisions organized by topic and importance
11. Wrap Up Section Address defaults/breach Right to cure? Damages Remedies ADR? Spell out what happens in contract ends early…Services? Products? Money?
12. Remedies What do you want if the deal fails? How much will you give up if the deal fails? Types of remedies Specific Substitutional Categories: monetary damages, equitable remedies, restitution, declaratory judgment, enforcement of arbitration award.
13. Remedies continued… Cumulative remedies modern rule but with limits Limitation of remedies and damages Can’t be better off. Can’t be speculative Can’t be reasonably unforeseen Election of remedies chose between inconsistent remedies (remedies =make whole) Liquidated damages set a price (damages=$)
14. Don’t Forget the Remedies/Damages Reps and warranties need corresponding indemnity and R/M provisions Covenant breaches need same.
15. General or Boiler Plate Pick carefully based on your transaction facts Be consistent in use of defined terms in this section, too Don’t dump operative provisions here. Don’t forget authority. Indemnity can go here or operative side*
16. Amendments I.D Agreement to be amended ID parties- Preamble Consideration Changes or additions No additional disturbance Interpretation Authority Signature block
17. Assignment #2 Feedback Recitals muddled Too many concepts in single provision Adding covenants to declarations/definitions Definitions too muddled or unnecessary Reps and warranties are not used correctly Only statements of fact…not obligations Archaic language Sloppy signature blocks