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Contract Interpretation & Drafting

Contract Interpretation & Drafting. Jack Friery UCSD Extension. Interpreting the Contract. Groucho: "That's in every contract, that's what you call a sanity clause." Chico: "You can't a fool-a me. There ain't no sanity clause” -- Groucho and Chico Marx in A Night at the Opera (Movie).

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Contract Interpretation & Drafting

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  1. Contract Interpretation & Drafting Jack Friery UCSD Extension Jack Friery

  2. Interpreting the Contract Groucho: "That's in every contract, that's what you call a sanity clause." Chico: "You can't a fool-a me. There ain't no sanity clause” --Groucho and Chico Marx in A Night at the Opera(Movie) Jack Friery

  3. Contract Definitions • "The party of the first part..." is hereinafter called: "the party of the first part..." and "The party of the second part..." is hereinafter called: "the party of the second part... --Groucho and Chico Marx in A Night at the Opera Jack Friery

  4. Contract Interpretation • Read and interpret the contract as a whole • Don’t throw anything out • Give ambiguous terms their reasonable and effective meaning • Ordinary terms—ordinary meaning • Technical terms—technical meaning • Trade practice & prior dealings may interpret • Common sense is part of the contract Jack Friery

  5. Interpretation (con’t) • Order of preference if necessary: • Negotiated terms over standardized terms • Specific terms over general terms • Written over typewritten terms • Typewritten over pre-printed terms • Contra proferentem if all else fails: • Interpret against the drafter Jack Friery

  6. Contract Drafting—Hot Topics • Description of the parties • “Whereas” clauses • Defined terms & definitions • Capitalize defined terms • Be consistent with terms • Effective date Jack Friery

  7. Drafting (con’t) • Anti-assignment • Indemnity • Covered events (Negligence? Intentional acts?) • Proportion • Cap on liability • Severability clause Jack Friery

  8. Drafting (con’t) • Choice of law • Disputes process • Preliminary negotiation? Establish time limit. • Mediation? • Arbitration? • Where? • Process? • Binding or non-binding Jack Friery

  9. Drafting (con’t) • Warranty • Duration, notice, warranted events, remedies • Only modify in writing • Publicity & disclosure • Breach & remedies • Consequential damages? Jack Friery

  10. Drafting (con’t) • Termination & duration • Force majeure • Survival provision (proprietary data, disputes) • Integration clause Jack Friery

  11. Questions? Jack Friery

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