The In-House Advisor

  • Get Formal Extensions When You Have a “Time is of the Essence” ClauseNovember 11, 2021

    In some contracts, a party must meet its obligations by a certain date or forfeit its rights, and some of those contracts also include a “time is of the essence” clause. As most practitioners know, coupling a date for performance with a time is of the essence clause means that the deadline is inflexible. Having said that, there also are a number of cases where such hard deadlines were deemed to have modified by the conduct of the parties. Seee.g., McCarthy v. Tobin.  However, it is perilous to assume that your negotiations imply an extension when a time is of the essence clause is in play. Indeed, that is exactly what happened to the defendant in Reem Property, LLC v. Transfer Financial, LLC.

    Reem Property was the high bidder in a foreclosure sale of real estate, and it entered into a Memorandum of Understanding with Transfer Financial to purchase that property. Pursuant to the MOS, Reem paid a $10,000 deposit. The time for closing was set for 12:00 p.m. on June 30, 2014, and time was of the essence. Before the closing, Reem’s counsel found that there was a problem with the newspaper advertisement … Keep reading

  • Take Your Time Before Agreeing to Settle in PrincipleAugust 25, 2021

     

    You have gone back and forth with an adversary via email several times and keep getting closer to a monetary settlement. Finally, the other side makes an offer that is over your bottom line, and you want to put the matter to rest. Should you accept? Maybe, but before you do, be sure that you have thought through all the non-monetary components of that offer. Failing to do so could end up binding you to an agreement that does not include provisions that are important to your client.

    Lane v. Powell started as a wrongful death and personal injury action that became particularly nasty during the litigation. Certain lawyers, expert witnesses and other non-parties were accused of defamation and criminal witness tampering. Eventually, summary judgment limited the claims in the case, and the remaining parties engaged in serious settlement negotiations. After several emails between counsel closed the gap, the following exchange took place:

    • First, Defendants’ counsel wrote: “I’ve got $120,000 for all claims and nowhere else to go for more.”
    • Two days later, Plaintiffs’ counsel responded: “$120,000 is accepted. …The releases will include the 93A case, but no confidentiality.”
    • Twelve minutes later, Defendants’ counsel answered: “Excellent, that’s great.
    Keep reading

  • The Dubious Enforceability of ‘Only Can Be Modified by a Written Instrument’ ClausesJuly 08, 2021

     

    How many times over the years have you seen a clause in a contract stating that it only can be modified by a written instrument signed by the parties? Depending upon how long you have been practicing, the answer may well be hundreds, if not thousands. The problem with such a clause, however, is that it may not be as binding as it appears. Indeed, in a recent decision by Judge Saris in the Federal District Court, she ruled that a series of contracts prohibiting oral modifications or modification by conduct were, in fact, modified by words and acts.

    In May of 2019, Sasha Hoffman began working for Thras.io Inc. pursuant to a written “Consulting Agreement” covering the period May 1 through July 31, and the parties subsequently entered into three additional Consulting Agreements that extended the term of her work through October. Each Consulting Agreement contained the following clause:

    No provision of this Consulting Agreement may be modified, amended, waived or terminated except by a prior instrument in writing signed by the parties to this Consulting Agreement. No course of dealing between the parties will modify, amend, waive or terminate any provision of this Consulting Agreement

    Keep reading

  • Another Forum Selection Clause That Did Not Achieve Its ObjectiveJune 17, 2021

    Over the years, I have written a number of blog posts dealing with forum selection clauses, often in disputes where a party who wanted to enforce those provisions was not able to do so. While in-house counsel may view a forum selection clause as a boilerplate provision (and that is not necessarily inappropriate), it is critical that such a boilerplate provision be drafted properly. As the First Circuit’s recent decision in Bautista Cayman Asset Co. v. Fountainebleu Plaza, 2021 WL 2154778, confirms, failing to do so can lead to a forum selection clause being of little or no value.

    In March of 2017, Bautista Cayman Asset Company brought a collection action against Fountainebleu Plaza, S.E. and others in the Federal District Court for the District of Puerto Rico. While Bautista eventually was awarded summary judgment on its claim, the defendants appealed, arguing that the Federal District Court had no subject matter jurisdiction, because the parties’ contract had a forum selection clause stating:

    In the event of any litigation that arises in connection with this contract, with the Loan, or with the other documents connected hereto, the parties submit to the jurisdiction of the General Court of Justice

    Keep reading

  • Arbitration Clauses Will Not Be Enforced Against Employees Who Engage in Interstate Commerce – and What Comprises Interstate Commerce Is Not Always ObviousApril 13, 2021

    As part of your company’s onboarding process, all employees sign an agreement making it crystal clear that if there ever is any dispute between them and the company, that dispute must be decided by an arbitrator in arbitration and not by a judge or jury in a court of law. Your agreement then adds a belt to those suspenders by itemizing a wide variety of specific claims that would be covered by the agreement and, thereby, subject to arbitration. Your agreement even specifically includes a statement to the effect that employees have a right to consult with an attorney of their own choice before signing the document. Surely, then, when an employee brings a suit in a court of law, you will be able to dismiss the claim and compel arbitration, right? Well, as GrubHub learned earlier this year, that may not be the case.

    From September of 2016 through July of 2019, Veronica Archer worked for GrubHub as a driver delivering food and other products to consumers. At or about the time her employment with GrubHub began, Ms. Archer electronically signed an agreement that included provisions akin to those described above. In October of 2019, Ms. Archer joined … Keep reading

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