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Review of Boilerplate Contract
Provisions: Say What You
Mean and Mean What You Say
August 7, 2017 : Alex Hamilton & Molly Hust
Common Boilerplate
Contract Provisions
PAGE
1. Arbitration Clauses
2. Representation Clauses
3. Choice of Law / Venue Clause
4. Jury Waiver Clauses
5. Limitation on Liability Clauses
6. Reformation Clauses
7. Clauses Regarding the Recovery of Attorneys’ Fees
8. Clauses Regarding Injunctive Relief
Contractual Clauses to Cover
BOILERPLATE CONTRACT PROVISIONS 3
PAGE
Arbitration Clauses
Benefits of an Agreement to Arbitrate:
• May provide more control of the process with a well constructed
American Arbitration Association (“AAA”) clause
• Parties can keep occurrence and resolution of disagreement
confidential
• Hearings may be held in locations convenient to the parties
• Arbitration should be less expensive since there should be less
discovery, little or no motion practice, a shorter timetable to
obtain a decision and a limited scope of appeal
• Arbitration allows the parties to have some involvement in
choosing the arbitrator or panel
4BOILERPLATE CONTRACT PROVISIONS
Clause No. 1
PAGE
Arbitration Clauses
What elements can I incorporate into an Arbitration Clause?
• The scope of the clause can be broad or narrow
• The size of the arbitration panel and qualifications of arbitrator
• Choice of Law
• Appeal
• For additional elements check out https://www.adr.org/Clauses
• Consider injunctive carve outs (i.e. non compete provision)
• AAA has specialized rules for arbitration in the construction, employment
(employment plan), payor provider (healthcare), and certain other fields
• The AAA developed the ClauseBuilder® online tool to assist individuals
and organizations in developing clear and effective arbitration and
mediation agreements
Who is subject to an Arbitration Clause?
• Signatories to the agreement
• Any other party who meets the agreement’s definition of “Party.”
– In re Rubiola, 334 S.W.3d 220 (Tex. 2011).
5BOILERPLATE CONTRACT PROVISIONS
Clause No. 1
PAGE
Arbitration Clauses
Example (using ClauseBuilder® online tool):
Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be
settled by arbitration administered by the American Arbitration Association in accordance with its
Commercial Arbitration Rules and judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
Claims shall be heard by a single arbitrator. Except as may be required by law, neither a party nor
an arbitrator may disclose the existence, content, or results of any arbitration hereunder without
the prior written consent of both parties. The parties agree that failure or refusal of a party to pay its
required share of the deposits for arbitrator compensation or administrative charges shall constitute a
waiver by that party to present evidence or cross-examine witness. In such event, the other party shall
be required to present evidence and legal argument as the arbitrator may require for the making of an
award. Such waiver shall not allow for a default judgment against the non-paying party in the absence
of evidence presented as provided for above. Notwithstanding any language to the contrary in the
contract documents, the parties hereby agree: that the Underlying Award may be appealed pursuant
to the AAA's Optional Appellate Arbitration Rules ("Appellate Rules"); that the Underlying Award
rendered by the arbitrator(s) shall, at a minimum, be a reasoned award; and that the Underlying Award
shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate
Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Underlying Award,
as defined by Rule A-3 of the Appellate Rules, by filing a Notice of Appeal with any AAA office.
Following the appeal process the decision rendered by the appeal tribunal may be entered in any court
having jurisdiction thereof.
6BOILERPLATE CONTRACT PROVISIONS
Clause No. 1
PAGE
Representation Clauses
• Who do you represent?
• More importantly, who do you not represent?
• Have the parties been advised to consult counsel
regarding certain provisions in the Agreement?
• When to use a Representation Clause:
– Limited Liability Company Agreement
– Partnership Agreement
– Shareholder Agreement
– Voting Agreement
– Employment Agreement
Clause No. 2
PAGE
Legal Representation Clauses
Examples:
The parties hereto agree that in connection with the negotiation and
execution of this Agreement, Hamlin, Hamlin & McGill has only
represented the interests of Madrigal Electromotive GmbH and Herr
Herzog and not the individual interests of any other Member of the
Company.
The parties hereto acknowledge that they have been advised to
consult with each such party’s own counsel regarding legal and tax
related matters concerning this Agreement and have been afforded
the opportunity to consult with counsel that such party deems
advisable in connection with the negotiation and execution of this
Agreement.
Clause No. 2
PAGE
Choice of Law / Venue Clauses
• Who has home court advantage?
• How do you compromise?
• Forum selection clauses are generally enforceable, absent
fraud, undue influence, or other extreme inequities.
– There are some exceptions, e.g., non-competition agreements with Texas
residents that purport to use another state’s laws.
• Venue selection clauses are not presumed valid, and clauses
that conflict with statutes are void as a matter of public policy.
9BOILERPLATE CONTRACT PROVISIONS
Clause No. 3
PAGE
Choice of Law / Venue Clauses
Example (Drafting Party and its attorney are in Houston, TX):
This Agreement and all claims or causes of action arising
hereunder shall be governed by and construed in accordance with
the laws of the State of Texas, excluding its conflicts of laws
provisions, and in the event of a dispute arising under this
Agreement, the Parties hereby submit to exclusive jurisdiction in
the federal or state courts located in Harris County, Texas, and
agree that venue is proper and convenient in such forum.
10BOILERPLATE CONTRACT PROVISIONS
Clause No. 3
PAGE
Choice of Law / Venue Clauses
Example (Other Party):
(Drafting Party and its attorney are in Oklahoma City, Oklahoma):
This Agreement and all claims or causes of action arising
hereunder shall be governed by and construed in accordance with
the laws of the State of Oklahoma, excluding its conflicts of laws
provisions, and in the event of a dispute arising under this
Agreement, the Parties hereby submit to exclusive jurisdiction in
the federal or state courts located in Oklahoma County,
Oklahoma, and agree that venue is proper and convenient in
such forum.
11BOILERPLATE CONTRACT PROVISIONS
Clause No. 3
PAGE
Choice of Law / Venue Clauses
Examples (Compromise):
This Agreement and all claims or causes of action arising hereunder
shall be governed by and construed in accordance with the laws of the
State of Texas, excluding its conflicts of laws provisions, and in the
event of a dispute arising under this Agreement, the Parties hereby
submit to exclusive jurisdiction in the federal or state courts located in
Dallas County, Texas, and agree that venue is proper and convenient in
such forum.
This Agreement and all claims or causes of action arising hereunder
shall be governed by and construed in accordance with the laws of the
State of Delaware, excluding its conflicts of laws provisions, and in the
event of a dispute arising under this Agreement, the Parties hereby
submit to exclusive jurisdiction in the federal or state courts located in
Dover County, Delaware, and agree that venue is proper and
convenient in such forum.
12BOILERPLATE CONTRACT PROVISIONS
Clause No. 3
PAGE
Jury Waiver Clauses
Jury waivers are valid in Texas—if:
• They are made “knowingly and voluntarily”
– Conspicuous and “crystal clear.”
• Conspicuous: written or displayed such a that a reasonable person ought to have
noticed, i.e., capital letters and bold print.
• Prima facie evidence of “knowing and voluntary.”
– Burden on party opposing to rebut the presumption
• Not procured through fraud
– Alleged fraud must relate specifically to the jury waiver and not the entire
contract.
13BOILERPLATE CONTRACT PROVISIONS
Clause No. 4
PAGE
Jury Waiver Clauses
Example:
EACH PARTY HERETO EXPRESSLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY.
14BOILERPLATE CONTRACT PROVISIONS
Clause No. 4
PAGE
Limitation of Liability Clauses
• How to reduce exposure and cap the amount of damages
• Exclusion of certain types of damages
– Consequential damages are those that do not necessarily, but do directly,
naturally, and proximately result from a breach (i.e. lost profits and lost
revenues)
• Limitations of liability clauses are generally enforceable,
although courts will often focus on whether the contract
provision was unfair or grossly one-sided (i.e. disparity in
bargaining power, ambiguous, fairly anticipates losses,
relationship between the parties, etc.)
• Must be conspicuous and use clear and unequivocal language
(i.e. include subtitles, bold or underlined font, add a space for
the parties' initials)
15POWERPOINT TITLE HERE :
Clause No. 5
PAGE
Limitation of Liability Clauses
Standard Clause:
NOTWITHSTANDING ANY PROVISION HEREIN OR IN ANY
WORK ORDER TO THE CONTRARY, IN NO EVENT SHALL
COMPANY A BE LIABLE FOR ANY INCIDENTAL OR INDIRECT,
CONSEQUENTIAL (INCLUDING LOST PROFITS), SPECIAL,
PUNITIVE, OR EXEMPLARY DAMAGES IN CONNECTION WITH
THIS AGREEMENT OR ANY SERVICES PROVIDED
HEREUNDER, EVEN IF NOTICE WAS GIVEN OF THE
POSSIBILITY OF SUCH DAMAGES AND EVEN IF SUCH
DAMAGES WERE REASONABLY FORESEEABLE. The
provisions of this Section shall survive termination or expiration of
this Agreement.
16BOILERPLATE CONTRACT PROVISIONS
Clause No. 5
PAGE
Limitations of Liability Clauses
Further protection:
In no event shall World Wide Cup, Inc.’s liability to Frank the Tank
Enterprises, LLC for loss or damage under this Agreement exceed the
aggregate amount actually paid to World Wide Cup, Inc. under the
Agreement. The provisions of this Section shall survive the termination or
expiration of this Agreement.
17BOILERPLATE CONTRACT PROVISIONS
Clause No. 5
PAGE
Reformation Clauses
Reformation Clause v. Severability Provision
• Reformation Clause overlaps with the Severability Provision
• The main difference between is scope
• Reformation Clause is typically limited to restrictive covenants, while
severability applies to the entire document
• Contracts can contain both clauses
Example:
The parties hereby acknowledge their mutual intent that if any court or
arbitrator determines that any covenant or obligation of this Agreement is
excessive in duration or scope, unreasonable, or unenforceable under
the Laws of that state, that the court or arbitrator should modify or
amended that covenant or obligation to render it enforceable to the
maximum extent permitted under the Laws of that state.
18
Clause No. 6
BOILERPLATE CONTRACT PROVISIONS
PAGE
Reformation Clauses
Section 15.51 of the Texas Business & Commerce Code
Section 15.51 of the Texas Business & Commerce Code provides, in part,
that “[i]f the covenant is found to be ancillary to or part of an otherwise
enforceable agreement but contains limitations as to time, geographical
area, or scope of activity to be restrained that are no reasonable and impose
a greater restraint than is necessary to protect the goodwill or other business
interest of the promisee, the court shall reform the covenant to the extent
necessary to cause the limitations contained in the covenant as to time,
geographical area, and scope of activity to be restrained to be reasonable…”
Reformation clause can hurt you…
In Sentinel Integrity Solutions, Inc. v. Mistras Group, Inc., the Houston First
Court of Appeals found that such a “right to reform” provision served as
evidence that the employer knew the covenant was overly broad at the time
it was written and awarded the former employee attorneys’ fees.
19
Clause No. 6
BOILERPLATE CONTRACT PROVISIONS
PAGE
The Recovery of Attorneys’ Fees
Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560 (Tex.
App.—Houston [14th Dist.] 2014, pet. filed)
• Dispute between law firms involved in the Fen-Phen
pharmaceutical litigation over what expenses could be charged
to a referring lawyer under the parties’ letter agreement
• Fleming & Associates is a limited liability partnership
• The trial court awarded Barton Group its attorneys’ fees under
section 38.001(8) of the Civil Practice and Remedies Code
• Court of appeals reverses award of attorneys’ fees against
Fleming & Associates because it is not an “individual or
corporation”
20BOILERPLATE CONTRACT PROVISIONS
Clause No. 7
PAGE
The Recovery of Attorneys’ Fees
A person may recover reasonable attorneys’ fees from an individual
or corporation, in addition to the amount of a valid claim and costs,
if the claim is for:
• Rendered services;
• Performed labor;
• Furnished material
• Freight or express overcharges;
• Lost or damages freight or express;
• Killed or injured stock;
• A sworn account; or
• An oral or written contract.
TEX. CIV. PRAC. & REM. CODE ANN. § 38.
21BOILERPLATE CONTRACT PROVISIONS
Clause No. 7
PAGE
The Recovery of Attorneys’ Fees
“Person”
• Chapter 38 does not include any definitions.
• Section 1.002 of the CPRC provides that the Code Construction
Act applies to the construction of each provision in the CPRC,
except as otherwise expressly provided in the CPRC.
• The Code Construction Act defines the term “person” to include
“corporation, organization, government or governmental
subdivision or agency, business trust, estate, trust, partnership,
association, and any other legal entity.”
22BOILERPLATE CONTRACT PROVISIONS
Clause No. 7
PAGE
The Recovery of Attorneys’ Fees
“Individual” and “Corporation”
• “Individual” and “corporation” are not defined in the Code Construction
Act or in Chapter 38 of the CPRC
• The court’s research did not reveal a definition of “individual” or
“corporation” that included any type of partnership
• Section 38.001’s predecessor statute provided that “any person,
corporation, partnership, or other legal entity” could recover fees from a
“person or corporation”
• “[W]hen, as here, specific provisions of a ‘non-substantive’ codification
and the code as a whole are direct, unambiguous, and cannot be
reconciled with prior law, the codification, rather than the prior, repealed
statute must be given effect”
• Thus, under the plain language of section 38.001(8), a person may not
recover attorneys’ fees against a partnership or a limited liability
company
23BOILERPLATE CONTRACT PROVISIONS
Clause No. 7
PAGE
The Recovery of Attorneys’ Fees
BUT…Prevailing party provisions are counter-productive with
regard to non-competes
TBCC Section 15.52 – Preemption of Other Law. The criteria for
enforceability of a covenant not to compete provided by Section
15.50 of this code and the procedures and remedies in an action to
enforce a covenant not to compete provided by Section 15.51 of
this code are exclusive and preempt any other criteria for
enforceability of a covenant not to compete or procedures and
remedies in an action to enforce a covenant not to compete under
common law or otherwise.
An employer enforcing a 15.50 covenant will not be entitled to an
award of attorneys’ fees.
24BOILERPLATE CONTRACT PROVISIONS
Clause No. 7
PAGE
The Recovery of Attorneys’ Fees
BUT…Prevailing party provisions are counter-productive with regard
to non-competes
In Glattly v. Air Starter Components, Inc., the Houston First Court of
Appeals upheld the trial court’s decision refusing to award attorneys’ fees
in favor of the employer enforcing the non-compete even where the
employment agreement at issue contained a prevailing party provision.
The First Court of Appeals made three important conclusions regarding
Section 15.52:
• It does not contain a provision that allows employers to recover attorneys’ fees;
• It expressly states the remedies in the Code are the exclusive remedies; and
• It expressly states that it preempts any other remedies in an action to enforce a
covenant not to compete.
25BOILERPLATE CONTRACT PROVISIONS
Clause No. 7
PAGE
The Recovery of Attorneys’ Fees
BUT…Prevailing party provisions are counter-productive with regard
to non-competes
An employee defending against enforcement of a 15.50 covenant may be
entitled to an award of attorneys’ fees if successful in such defense in
three ways:
• Under the statute, if the employee shows that the employer knew at the time of
execution of the agreement that the covenant did not contain restrictions that
were reasonable and the employer sought to enforce the covenant to a greater
extent than was necessary to protect the goodwill or other business interest of
the employer.
• Pursuant to a declaratory judgment action seeking a declaration that the
covenant is not enforceable.
• Potentially, in defending against an action to enforce a covenant, where the
agreement itself has a prevailing party provision. See Hardy v. Mann Frankfort
Stein & Lipp Advisors, Inc., 263 S.W.3d 232, 256 (Tex. App.–Houston [1st Dist.]
2007), rev’d on other grounds, 289 S.W.3d 844 (Tex. 2009).
26BOILERPLATE CONTRACT PROVISIONS
Clause No. 7
PAGE
Clauses regarding injunctive relief
Lasser v. Amistco Separation Prods., 2014 Tex. App. LEXIS 1363 (Tex.
App.—Houston [1st Dist.] Feb. 6, 2014, no pet.)
– The First Court of Appeals dissolved a temporary injunction order that
sought to enforce contractual non-compete and non-solicitation
obligations because the order was both not specific enough and
overbroad.
• The order failed to “identify, define, explain, or otherwise describe” what constituted
“confidential information” that Lasser was prohibited from disclosing. Thus, these
provisions did not provide adequate notice to Lasser as to what conduct he was
restrained from performing and left him to speculate what conduct might satisfy or
violate the order.
• The Court also found that Part (c) was impermissibly overbroad under Tex. R. Civ. P.
683 because it enjoined activities that Lasser had a legal right to perform, such as
deleting electronic records and files unrelated to the subject of the lawsuit.
27BOILERPLATE CONTRACT PROVISIONS
Clause No. 8
PAGE
Clauses regarding injunctive relief
Also keep in mind that liquidated damages can negate your
request for injunctive relief.
– An applicant must prove there is no adequate remedy at law,
meaning damages cannot be calculated
versus
– Liquidated damages that specify the amount of damages that one
party will receive if the other party breaches the agreement.
28BOILERPLATE CONTRACT PROVISIONS
Clause No. 8
PAGE
Clauses regarding injunctive relief
Example letter when hiring new employees:
We are pleased to offer you the opportunity to work for [EMPLOYER] as set forth in the
attached offer letter. However, we are requiring that you provide certain assurances prior to
accepting employment with us.
Specifically, [EMPLOYER] requires you to agree and sign this document prior to
employment, affirming that:
 You do not have any agreement with your current and/or former employer that would limit your
ability to work for [EMPLOYER].
 You will not rely upon, use, or disclose any non-public information acquired from your current
employer or from any other prior employers, whether or not formally designated as by such current
or former employer as trade secrets, proprietary, confidential, or private.
 You have not taken and do not have in your possession any non-public information acquired from
your current employer or from any prior employers, and you will not bring nor use any such non-
public information in your employment with [EMPLOYER].
If you have any further questions regarding the content of this requirement, I will be happy
to discuss them with you. If not, we would appreciate your acknowledgement of and
agreement with the above information by signing below.
29BOILERPLATE CONTRACT PROVISIONS
Clause No. 8
Questions?
Alex Hamilton & Molly Hust
BoyarMiller
713.850.7766
ahamilton@boyarmiller.com, mhust@boyarmiller.com

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Review of Boilerplate Contract Provisions: Say What You Mean and Mean What You Say

  • 1. Review of Boilerplate Contract Provisions: Say What You Mean and Mean What You Say August 7, 2017 : Alex Hamilton & Molly Hust
  • 3. PAGE 1. Arbitration Clauses 2. Representation Clauses 3. Choice of Law / Venue Clause 4. Jury Waiver Clauses 5. Limitation on Liability Clauses 6. Reformation Clauses 7. Clauses Regarding the Recovery of Attorneys’ Fees 8. Clauses Regarding Injunctive Relief Contractual Clauses to Cover BOILERPLATE CONTRACT PROVISIONS 3
  • 4. PAGE Arbitration Clauses Benefits of an Agreement to Arbitrate: • May provide more control of the process with a well constructed American Arbitration Association (“AAA”) clause • Parties can keep occurrence and resolution of disagreement confidential • Hearings may be held in locations convenient to the parties • Arbitration should be less expensive since there should be less discovery, little or no motion practice, a shorter timetable to obtain a decision and a limited scope of appeal • Arbitration allows the parties to have some involvement in choosing the arbitrator or panel 4BOILERPLATE CONTRACT PROVISIONS Clause No. 1
  • 5. PAGE Arbitration Clauses What elements can I incorporate into an Arbitration Clause? • The scope of the clause can be broad or narrow • The size of the arbitration panel and qualifications of arbitrator • Choice of Law • Appeal • For additional elements check out https://www.adr.org/Clauses • Consider injunctive carve outs (i.e. non compete provision) • AAA has specialized rules for arbitration in the construction, employment (employment plan), payor provider (healthcare), and certain other fields • The AAA developed the ClauseBuilder® online tool to assist individuals and organizations in developing clear and effective arbitration and mediation agreements Who is subject to an Arbitration Clause? • Signatories to the agreement • Any other party who meets the agreement’s definition of “Party.” – In re Rubiola, 334 S.W.3d 220 (Tex. 2011). 5BOILERPLATE CONTRACT PROVISIONS Clause No. 1
  • 6. PAGE Arbitration Clauses Example (using ClauseBuilder® online tool): Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Claims shall be heard by a single arbitrator. Except as may be required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties. The parties agree that failure or refusal of a party to pay its required share of the deposits for arbitrator compensation or administrative charges shall constitute a waiver by that party to present evidence or cross-examine witness. In such event, the other party shall be required to present evidence and legal argument as the arbitrator may require for the making of an award. Such waiver shall not allow for a default judgment against the non-paying party in the absence of evidence presented as provided for above. Notwithstanding any language to the contrary in the contract documents, the parties hereby agree: that the Underlying Award may be appealed pursuant to the AAA's Optional Appellate Arbitration Rules ("Appellate Rules"); that the Underlying Award rendered by the arbitrator(s) shall, at a minimum, be a reasoned award; and that the Underlying Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Underlying Award, as defined by Rule A-3 of the Appellate Rules, by filing a Notice of Appeal with any AAA office. Following the appeal process the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. 6BOILERPLATE CONTRACT PROVISIONS Clause No. 1
  • 7. PAGE Representation Clauses • Who do you represent? • More importantly, who do you not represent? • Have the parties been advised to consult counsel regarding certain provisions in the Agreement? • When to use a Representation Clause: – Limited Liability Company Agreement – Partnership Agreement – Shareholder Agreement – Voting Agreement – Employment Agreement Clause No. 2
  • 8. PAGE Legal Representation Clauses Examples: The parties hereto agree that in connection with the negotiation and execution of this Agreement, Hamlin, Hamlin & McGill has only represented the interests of Madrigal Electromotive GmbH and Herr Herzog and not the individual interests of any other Member of the Company. The parties hereto acknowledge that they have been advised to consult with each such party’s own counsel regarding legal and tax related matters concerning this Agreement and have been afforded the opportunity to consult with counsel that such party deems advisable in connection with the negotiation and execution of this Agreement. Clause No. 2
  • 9. PAGE Choice of Law / Venue Clauses • Who has home court advantage? • How do you compromise? • Forum selection clauses are generally enforceable, absent fraud, undue influence, or other extreme inequities. – There are some exceptions, e.g., non-competition agreements with Texas residents that purport to use another state’s laws. • Venue selection clauses are not presumed valid, and clauses that conflict with statutes are void as a matter of public policy. 9BOILERPLATE CONTRACT PROVISIONS Clause No. 3
  • 10. PAGE Choice of Law / Venue Clauses Example (Drafting Party and its attorney are in Houston, TX): This Agreement and all claims or causes of action arising hereunder shall be governed by and construed in accordance with the laws of the State of Texas, excluding its conflicts of laws provisions, and in the event of a dispute arising under this Agreement, the Parties hereby submit to exclusive jurisdiction in the federal or state courts located in Harris County, Texas, and agree that venue is proper and convenient in such forum. 10BOILERPLATE CONTRACT PROVISIONS Clause No. 3
  • 11. PAGE Choice of Law / Venue Clauses Example (Other Party): (Drafting Party and its attorney are in Oklahoma City, Oklahoma): This Agreement and all claims or causes of action arising hereunder shall be governed by and construed in accordance with the laws of the State of Oklahoma, excluding its conflicts of laws provisions, and in the event of a dispute arising under this Agreement, the Parties hereby submit to exclusive jurisdiction in the federal or state courts located in Oklahoma County, Oklahoma, and agree that venue is proper and convenient in such forum. 11BOILERPLATE CONTRACT PROVISIONS Clause No. 3
  • 12. PAGE Choice of Law / Venue Clauses Examples (Compromise): This Agreement and all claims or causes of action arising hereunder shall be governed by and construed in accordance with the laws of the State of Texas, excluding its conflicts of laws provisions, and in the event of a dispute arising under this Agreement, the Parties hereby submit to exclusive jurisdiction in the federal or state courts located in Dallas County, Texas, and agree that venue is proper and convenient in such forum. This Agreement and all claims or causes of action arising hereunder shall be governed by and construed in accordance with the laws of the State of Delaware, excluding its conflicts of laws provisions, and in the event of a dispute arising under this Agreement, the Parties hereby submit to exclusive jurisdiction in the federal or state courts located in Dover County, Delaware, and agree that venue is proper and convenient in such forum. 12BOILERPLATE CONTRACT PROVISIONS Clause No. 3
  • 13. PAGE Jury Waiver Clauses Jury waivers are valid in Texas—if: • They are made “knowingly and voluntarily” – Conspicuous and “crystal clear.” • Conspicuous: written or displayed such a that a reasonable person ought to have noticed, i.e., capital letters and bold print. • Prima facie evidence of “knowing and voluntary.” – Burden on party opposing to rebut the presumption • Not procured through fraud – Alleged fraud must relate specifically to the jury waiver and not the entire contract. 13BOILERPLATE CONTRACT PROVISIONS Clause No. 4
  • 14. PAGE Jury Waiver Clauses Example: EACH PARTY HERETO EXPRESSLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. 14BOILERPLATE CONTRACT PROVISIONS Clause No. 4
  • 15. PAGE Limitation of Liability Clauses • How to reduce exposure and cap the amount of damages • Exclusion of certain types of damages – Consequential damages are those that do not necessarily, but do directly, naturally, and proximately result from a breach (i.e. lost profits and lost revenues) • Limitations of liability clauses are generally enforceable, although courts will often focus on whether the contract provision was unfair or grossly one-sided (i.e. disparity in bargaining power, ambiguous, fairly anticipates losses, relationship between the parties, etc.) • Must be conspicuous and use clear and unequivocal language (i.e. include subtitles, bold or underlined font, add a space for the parties' initials) 15POWERPOINT TITLE HERE : Clause No. 5
  • 16. PAGE Limitation of Liability Clauses Standard Clause: NOTWITHSTANDING ANY PROVISION HEREIN OR IN ANY WORK ORDER TO THE CONTRARY, IN NO EVENT SHALL COMPANY A BE LIABLE FOR ANY INCIDENTAL OR INDIRECT, CONSEQUENTIAL (INCLUDING LOST PROFITS), SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY SERVICES PROVIDED HEREUNDER, EVEN IF NOTICE WAS GIVEN OF THE POSSIBILITY OF SUCH DAMAGES AND EVEN IF SUCH DAMAGES WERE REASONABLY FORESEEABLE. The provisions of this Section shall survive termination or expiration of this Agreement. 16BOILERPLATE CONTRACT PROVISIONS Clause No. 5
  • 17. PAGE Limitations of Liability Clauses Further protection: In no event shall World Wide Cup, Inc.’s liability to Frank the Tank Enterprises, LLC for loss or damage under this Agreement exceed the aggregate amount actually paid to World Wide Cup, Inc. under the Agreement. The provisions of this Section shall survive the termination or expiration of this Agreement. 17BOILERPLATE CONTRACT PROVISIONS Clause No. 5
  • 18. PAGE Reformation Clauses Reformation Clause v. Severability Provision • Reformation Clause overlaps with the Severability Provision • The main difference between is scope • Reformation Clause is typically limited to restrictive covenants, while severability applies to the entire document • Contracts can contain both clauses Example: The parties hereby acknowledge their mutual intent that if any court or arbitrator determines that any covenant or obligation of this Agreement is excessive in duration or scope, unreasonable, or unenforceable under the Laws of that state, that the court or arbitrator should modify or amended that covenant or obligation to render it enforceable to the maximum extent permitted under the Laws of that state. 18 Clause No. 6 BOILERPLATE CONTRACT PROVISIONS
  • 19. PAGE Reformation Clauses Section 15.51 of the Texas Business & Commerce Code Section 15.51 of the Texas Business & Commerce Code provides, in part, that “[i]f the covenant is found to be ancillary to or part of an otherwise enforceable agreement but contains limitations as to time, geographical area, or scope of activity to be restrained that are no reasonable and impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee, the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant as to time, geographical area, and scope of activity to be restrained to be reasonable…” Reformation clause can hurt you… In Sentinel Integrity Solutions, Inc. v. Mistras Group, Inc., the Houston First Court of Appeals found that such a “right to reform” provision served as evidence that the employer knew the covenant was overly broad at the time it was written and awarded the former employee attorneys’ fees. 19 Clause No. 6 BOILERPLATE CONTRACT PROVISIONS
  • 20. PAGE The Recovery of Attorneys’ Fees Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560 (Tex. App.—Houston [14th Dist.] 2014, pet. filed) • Dispute between law firms involved in the Fen-Phen pharmaceutical litigation over what expenses could be charged to a referring lawyer under the parties’ letter agreement • Fleming & Associates is a limited liability partnership • The trial court awarded Barton Group its attorneys’ fees under section 38.001(8) of the Civil Practice and Remedies Code • Court of appeals reverses award of attorneys’ fees against Fleming & Associates because it is not an “individual or corporation” 20BOILERPLATE CONTRACT PROVISIONS Clause No. 7
  • 21. PAGE The Recovery of Attorneys’ Fees A person may recover reasonable attorneys’ fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for: • Rendered services; • Performed labor; • Furnished material • Freight or express overcharges; • Lost or damages freight or express; • Killed or injured stock; • A sworn account; or • An oral or written contract. TEX. CIV. PRAC. & REM. CODE ANN. § 38. 21BOILERPLATE CONTRACT PROVISIONS Clause No. 7
  • 22. PAGE The Recovery of Attorneys’ Fees “Person” • Chapter 38 does not include any definitions. • Section 1.002 of the CPRC provides that the Code Construction Act applies to the construction of each provision in the CPRC, except as otherwise expressly provided in the CPRC. • The Code Construction Act defines the term “person” to include “corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity.” 22BOILERPLATE CONTRACT PROVISIONS Clause No. 7
  • 23. PAGE The Recovery of Attorneys’ Fees “Individual” and “Corporation” • “Individual” and “corporation” are not defined in the Code Construction Act or in Chapter 38 of the CPRC • The court’s research did not reveal a definition of “individual” or “corporation” that included any type of partnership • Section 38.001’s predecessor statute provided that “any person, corporation, partnership, or other legal entity” could recover fees from a “person or corporation” • “[W]hen, as here, specific provisions of a ‘non-substantive’ codification and the code as a whole are direct, unambiguous, and cannot be reconciled with prior law, the codification, rather than the prior, repealed statute must be given effect” • Thus, under the plain language of section 38.001(8), a person may not recover attorneys’ fees against a partnership or a limited liability company 23BOILERPLATE CONTRACT PROVISIONS Clause No. 7
  • 24. PAGE The Recovery of Attorneys’ Fees BUT…Prevailing party provisions are counter-productive with regard to non-competes TBCC Section 15.52 – Preemption of Other Law. The criteria for enforceability of a covenant not to compete provided by Section 15.50 of this code and the procedures and remedies in an action to enforce a covenant not to compete provided by Section 15.51 of this code are exclusive and preempt any other criteria for enforceability of a covenant not to compete or procedures and remedies in an action to enforce a covenant not to compete under common law or otherwise. An employer enforcing a 15.50 covenant will not be entitled to an award of attorneys’ fees. 24BOILERPLATE CONTRACT PROVISIONS Clause No. 7
  • 25. PAGE The Recovery of Attorneys’ Fees BUT…Prevailing party provisions are counter-productive with regard to non-competes In Glattly v. Air Starter Components, Inc., the Houston First Court of Appeals upheld the trial court’s decision refusing to award attorneys’ fees in favor of the employer enforcing the non-compete even where the employment agreement at issue contained a prevailing party provision. The First Court of Appeals made three important conclusions regarding Section 15.52: • It does not contain a provision that allows employers to recover attorneys’ fees; • It expressly states the remedies in the Code are the exclusive remedies; and • It expressly states that it preempts any other remedies in an action to enforce a covenant not to compete. 25BOILERPLATE CONTRACT PROVISIONS Clause No. 7
  • 26. PAGE The Recovery of Attorneys’ Fees BUT…Prevailing party provisions are counter-productive with regard to non-competes An employee defending against enforcement of a 15.50 covenant may be entitled to an award of attorneys’ fees if successful in such defense in three ways: • Under the statute, if the employee shows that the employer knew at the time of execution of the agreement that the covenant did not contain restrictions that were reasonable and the employer sought to enforce the covenant to a greater extent than was necessary to protect the goodwill or other business interest of the employer. • Pursuant to a declaratory judgment action seeking a declaration that the covenant is not enforceable. • Potentially, in defending against an action to enforce a covenant, where the agreement itself has a prevailing party provision. See Hardy v. Mann Frankfort Stein & Lipp Advisors, Inc., 263 S.W.3d 232, 256 (Tex. App.–Houston [1st Dist.] 2007), rev’d on other grounds, 289 S.W.3d 844 (Tex. 2009). 26BOILERPLATE CONTRACT PROVISIONS Clause No. 7
  • 27. PAGE Clauses regarding injunctive relief Lasser v. Amistco Separation Prods., 2014 Tex. App. LEXIS 1363 (Tex. App.—Houston [1st Dist.] Feb. 6, 2014, no pet.) – The First Court of Appeals dissolved a temporary injunction order that sought to enforce contractual non-compete and non-solicitation obligations because the order was both not specific enough and overbroad. • The order failed to “identify, define, explain, or otherwise describe” what constituted “confidential information” that Lasser was prohibited from disclosing. Thus, these provisions did not provide adequate notice to Lasser as to what conduct he was restrained from performing and left him to speculate what conduct might satisfy or violate the order. • The Court also found that Part (c) was impermissibly overbroad under Tex. R. Civ. P. 683 because it enjoined activities that Lasser had a legal right to perform, such as deleting electronic records and files unrelated to the subject of the lawsuit. 27BOILERPLATE CONTRACT PROVISIONS Clause No. 8
  • 28. PAGE Clauses regarding injunctive relief Also keep in mind that liquidated damages can negate your request for injunctive relief. – An applicant must prove there is no adequate remedy at law, meaning damages cannot be calculated versus – Liquidated damages that specify the amount of damages that one party will receive if the other party breaches the agreement. 28BOILERPLATE CONTRACT PROVISIONS Clause No. 8
  • 29. PAGE Clauses regarding injunctive relief Example letter when hiring new employees: We are pleased to offer you the opportunity to work for [EMPLOYER] as set forth in the attached offer letter. However, we are requiring that you provide certain assurances prior to accepting employment with us. Specifically, [EMPLOYER] requires you to agree and sign this document prior to employment, affirming that:  You do not have any agreement with your current and/or former employer that would limit your ability to work for [EMPLOYER].  You will not rely upon, use, or disclose any non-public information acquired from your current employer or from any other prior employers, whether or not formally designated as by such current or former employer as trade secrets, proprietary, confidential, or private.  You have not taken and do not have in your possession any non-public information acquired from your current employer or from any prior employers, and you will not bring nor use any such non- public information in your employment with [EMPLOYER]. If you have any further questions regarding the content of this requirement, I will be happy to discuss them with you. If not, we would appreciate your acknowledgement of and agreement with the above information by signing below. 29BOILERPLATE CONTRACT PROVISIONS Clause No. 8
  • 30. Questions? Alex Hamilton & Molly Hust BoyarMiller 713.850.7766 ahamilton@boyarmiller.com, mhust@boyarmiller.com