Drafters of online employment- and consumer contracts might want to try to plan for consumers and employees to claim that they couldn’t read an arbitration provision because it was too tiny to read on their smartphones. That happened in a 2023 California decision: A court rejected an employer’s petition to compel arbitration of an employee’s claim of racial discrimination (among other things), in part because: When the employee was hired, she had to complete an online onboarding package that included an arbitration provision. The employee asserted that she did not own a computer and completed ..read more

State requirements, not just intentions In an Oklahoma case, DXP hired Grubb as an executive. His employment agreement stated that he and DXP intended to set up a new company, of which Grubb would own 10% and have the right to require DXP to buy him out at a price pegged to the value of the company’s business. But the employment agreement didn’t require DXP to form the new company. Grubb and DXP grew the business but DXP never did form a new company. When Grubb asked DXP to buy out his interest in (what was supposed to be) the new company, DXP refus ..read more

This week, Washington state’s supreme court decided Nelson v. P.S.C., Inc., which turned on whether a state statute’s reference to “within three years of the marriage” required a specified event to occur: during the three years before the marriage; or no later than the three years after the marriage. The details aren’t important, only that the case had to be litigated — thanks, legislative drafters! See also (list is generated automatically): Contract drafter’s failure to specify timing of stock sale leads to $44M damage award In a decision issued last week, Massachusetts’s ..read more

An employee’s employment agreement included both a non-solicitation clause and a non-competition clause; the latter clause read in part as follows: “Employee further covenants that for a period of one year following the termination of Employee’s employment for whatever reason ….” (Emphasis added.) The agreement also allowed either party to terminate the employment agreement at will. Years later (following acquisition of the employer), the employee quit her job and, three days later, terminated her employment agreement. Reversing a preliminary injunction enforcing the non-competition clause, th ..read more

In my Contract Drafting class tomorrow I’ll be discussing the Formal Opinion 503 issued this month by the ABA’s Standing Committee on Ethics and Professional Responsibility. (The hypothetical) facts below are those of a semester-long simulation in which students are to assume that they represent a small data-analysis company, “MathWhiz,” in dealing with a giant oil company, “Gigunda Energy.”) FACTS: You represent MathWhiz in a contract negotiation with Gigunda Energy. Gigunda’s lawyer, Ginny, sends you an email. The “cc” line of Ginny’s email includes Gerry, a Gigunda business person. QUESTI ..read more

A manufacturer terminated a sales-representative company, as permitted by their contract, for failing to meet quota. The rep received commissions ranging between 15% and 22% of sales. The manufacturer thought that the contract provided for the terminated sales-rep company to get a total send-off payment of 7.5% of sales for the previous 12 months, paid out monthly over six months, as compensation for a one-year, post-termination noncompetition covenant. But here’s what the contract language actually said: In the event this Agreement is terminated or not renewed by Exactech, then during each c ..read more

In the previous post, my initially-published version (which went out to this blog’s email subscribers but which I subsequently revised) blamed the Bayer and Merck lawyers for the wall-of-words paragraphs reproduced in the Delaware chancery court’s opinion in Merck v. Bayer. The actual version of those contract sections contract, as filed at the SEC’s EDGAR Web site, includes somewhat-shorter paragraphs. But the language could still have been pretty-drastically simplified. And for that we should indeed blame the lawyers — especially the lawyers for Buyer, likely at the Sullivan & Cromwell f ..read more

Get a load of the long, complex contract clauses “reproduced” in this week’s Merck v. Bayer decision concerning whether talc-litigation liabilities were transferred in Merck’s 2014 asset sale of its Claritin, Coppertone, and Dr. Scholl’s product lines for some $14 billion. The Delaware chancery court concluded that the relevant contract provisions were “clear and unambiguous” and that Bayer’s interpretation was “the only reasonable one” (slip op. at 2). But that’s sure as hell not obvious at a glance from the court’s reproduction of the language in question, copied from the court’s opinio ..read more

The following is adapted from comments I made at Sean Hogle’s splendid lawyers-only discussion forum redline.net, in a thread entitled Run your own redline dammit. Responding to Sean’s post saying that BigLaw lawyers seem not to send redlines, an anonymous commenter said (possibly satirically), “‘Big’ firm lawyer here: yea, run your own damn redlines! We’re not here to make your job easier. We’re here to be zealous advocates for our client. There is no upside to doing your job for you.” Oh? > We’re not here to make your job easier. 1. When you make my job easier, it helps both of ..read more

The setting: A company’s option-agreement form allowed the company to repurchase the relevant ownership interests “during the six (6) month period following (x) the (i) [t]ermination of [the employee’s] employment with the [company] for any reason . . . and (y) a Restrictive Covenant Breach.” (Emphasis added.) The company tried to exercise its repurchase option after an employee left, but the employee countered that the repurchase right would be triggered only if both the employment ended and the employee breached a restrictive covenant. The holding: The Delaware supreme court — after extensiv ..read more