contract


So your company is considering getting into a new area of business, and to do so, it will have to hire a variety of talent. While the launch of the new venture is not a certainty, the prospects of it are enticing, and time is of the essence. Thus, when talking to potential new hires, you want to focus on the positives and the possibilities. As a recent decision from the federal District Court, Bhammer v. Loomis Sayles and Company, Inc., makes clear, however, failing to disclose factors that may affect the viability of the new opportunity can be fraught with peril.… Keep reading

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It makes perfect sense that when entering into a new business relationship the parties (and their counsel) are keenly focused on getting things started. While there is nothing wrong with this, sometimes parties forget to memorialize, or even discuss, when, how and under what circumstances their contractual obligations will end. A recent case from the Massachusetts Appeals Court, Robert and Ardis James Foundation v. Meyers, reminds us that failing to spell out when a contract ends can result in seemingly unfair consequences.… Keep reading

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In order to obtain a an injunction under federal law, the moving party has to show each of the following:

(i) It has a likelihood of success on the merits of its claim.

(ii) Without injunctive relief, it would risk suffering irreparable harm.

(iii) Such harm outweighs the irreparable harm that the non-moving party would suffer if an injunction were to enter.

(iv) Entering an injunction is in the public interest.

In addition, however, Rule 65(c)  of the Federal Rules of Civil Procedure states that:

The court may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained.

Indeed, as a recent case from the District of Massachusetts confirms, this is no small technicality, and something to which any company should give due consideration before having its outside litigation counsel seek injunctive relief.… Keep reading

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Last week I had the pleasure of being a panelist at the Association for Corporate Growth (Boston) and the Turnaround Management Association (Northeast) joint conference on “Challenges and Opportunities in US Manufacturing.” A theme common to all of the speakers was the need to address workforce issues, whether with respect to training, engagement or transition. 

The challenges posed by human capital can often propel or derail improvement strategies, yet certain employment law issues are often overlooked or only addressed at the last minute. If in-house counsel are aware that an improvement plan that requires the exit of employees is being considered, the following issues in advance may help alleviate some last minute problems.

  1. Be sure that all employees have up-to-date, enforceable post-employment restrictive covenants. After implementing a layoff or termination of employees, the last thing that a company needs is to be surprised by a former employee’s attempt to use the company’s confidential information or goodwill to give a competitor an advantage. Reviewing existing confidentiality, non-solicitation and non-competition agreements for enforceability under applicable state laws, and even considering the company’s plan (and costs) for enforcement of post-termination restrictive covenants, will go far to help avoid unpleasant surprises.
… Keep reading
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In a prior post, I discussed how a letter of intent could constitute a binding agreement even if the parties contemplated that they later would execute a full-blown contract.  Last month, the Federal District Court in Boston went one step further and ruled that a series of e-mails constituted a binding agreement to settle a litigation even though a settlement agreement and related documents never were executed.… Keep reading

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Just as in romance, employer-employee relationships often are at their best in the courting stage.  During the after-glow of an initial hire, many employers wish to make new employees feel welcome by sending confirmatory offer letters.  Yet, in that warm and fuzzy moment, employers also should keep in mind that they may be binding themselves to certain obligations to which they never intended to be bound. 

To minimize regret when the employer-employee relationship goes sour, here are my top six tips of things to avoid in offer letters:

  1. If you intend for the employee to actually stay on for a set period of time, the term may be included, but be sure to couch the term as “anticipated term” and allow yourself the ability to terminate the relationship before the end of the term.  If the employment is “at-will,” specifically state “your employment is at-will, which means that you or the company may terminate your employment at any time for any reason or no reason at all.”
  2. Avoid stating compensation as an annual salary.  For example, state that the compensation to be provided an employee is $X per week, which is the equivalent of $Y annualized.  A promise of
… Keep reading
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Sometimes, when business people can’t directly negotiate (or re-negotiate) favorable deal terms, they are tempted to withhold a payment or some other obligation in an effort to leverage the other party into an agreement it otherwise would not make.  In-house counsel should be wary of endorsing such conduct, as this could result in exposing their companies to liability going far beyond simply having to lose face and/or doing what they should have done in the first place.  Take, for example, the following scenario:

Acme engaged Alpha as its exclusive manufacturer for widgets and gidgets for two years.  Four months later, Acme tries to negotiate a similar deal with Beta to manufacture didgets, and, if consummated, such a deal would provide Acme with ten times the revenue that the Alpha contract was expected to provide.  While Beta expresses interest, it eventually makes clear that unless it also can manufacture gidgets, there will be no deal.  While Acme tries to buy out of the gidget portion of the Alpha contract so that Acme can give Beta what it wants, Alpha refuses.  Acme’s CEO realizes that the Beta deal is going to fall apart if something does not change quickly, so she … Keep reading

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The Basics of Liquidated Damages Provisions

A liquidated damages provision fixes the amount of money one party will pay to the other if a breach occurs.  Because the law of contracts is designed to be compensatory, however, a payment-for-breach-clause that is penal will not be enforceable (Some reasons for this are discussed in “Why Not Enforce ‘Penalty’ Liquidated Damages Clauses?”).  Accordingly, even if a contract conspicuously says: “If the purchaser is one second late to the closing, it shall pay the seller $10,000,000,” that clause very likely will be deemed to be an unenforceable penalty.

So what makes for a valid liquidated damages provision?  There are two essential conditions:

  1. At the time the contract was executed, it must have been the case that it would have been difficult to determine the damages caused by a breach.
  2. At the time the contract was executed, the amount of the monetary payment designated must have appeared to have been a reasonable estimate of the expected damages for the contemplated breach. 
… Keep reading
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