Quick question for contracts aficionados: is “managing member” really a thing? I’m constantly seeing “managing member” as the title for people signing contracts for limited liability companies. In fact, a bank once actually made me sign documents as my law firm’s managing member when I set up a bank account. But there’s no such thing as a managing member at Blue Maven Law. As I’ve written before, there are two flavors of limited liability companies: those that are managed by their members, and those that are managed by one or more managers, which might or might not be members. So the correct t ..read more

As I announced in my recent post My New Blog Project, I’m in the process of automating some of my contract templates. The first step in contract automation is to get your basic templates in decent shape. Then you can program various language options that will apply in specific situations. I’ve published a couple of form contracts in the past, including a simple asset purchase agreement and a basic contract for the sale of goods. It’s always a bit nerve-wracking to put something out there as an example of a decent contract (“that’s the best he can do?” or “he thinks that pile of garbage r ..read more

I started theContractsGuy in January 2011, and it’s been one of the most interesting projects of my legal career. I’ve made friends, written about interesting stuff, and simply enjoyed writing and being a part of the conversation. Unfortunately, when I went full-time as a solo attorney in 2015, the demands of a fledgling practice made it almost impossible to write regularly, so there’s been a significant reduction in production. And by “significant” I mean zero posts in 2015 after leaving my day job in May, six in 2016, and one in 2017. Only this year have I been able to post more than once a ..read more

The 8th Circuit held, in Symphony Diagnostic Services No. 1 Inc. v. Greenbaum, that certain noncompetition and confidentiality agreements were assignable without consent in the context of a business acquisition. In Greenbaum a business was sold via an asset purchase. The buyer attempted to enforce noncompetition and confidentiality agreements the seller had with two of its employees and which were transferred in the transaction via assignment. The two employees had been offered employment by the seller at the time of the acquisition, but they refused the offers because the empl ..read more

Liquidated damages clauses stipulate in advance the amount of damages a party will have to pay if it breaches a contract. Because a breach of contract action requires proof of damages, liquidated damages provisions can be a useful tool in circumstances where proving damages would be difficult. Examples of liquidated damages clauses include assessment of an administrative fee for late payment, per diem damages for late completion of a construction contract, and an earnest money deposit in a real estate contract. Penalties aren’t enforceable Courts–including those in Missouri–will generally enf ..read more

Do you have an uneasy feeling when you “agree” to legal terms on websites, your iPhone, apps, and the like? You feel like you should be reading the terms before you accept them, but you don’t have time. Plus, you wouldn’t understand them if you read them. Plus, you have no choice but to agree to the terms, so why not save some brain cells and just click “I agree” and get on with your life? When I do presentations on electronic contracting, I ask the audience how many read online terms before they agree to them (none), whether they think the terms they click on are enforceable (yes), and wheth ..read more

I’ve advised clients on whether to sue for breach of contract many times over the past several years. In most cases the other side had clearly breached the contract, and my clients would have a solid case. However, they often decide not to bring suit, because the cost of suing would be excessive compared to the amount at stake. As I discuss in my 2013 post Recovering Attorneys’ Fees, parties to litigation generally have to pay their own legal fees even if they win the litigation. So if someone has a $10,000 claim and it would cost $5,000 to sue, they’re probably not going to sue because it wo ..read more

The 8th Circuit held yesterday that Panera Bread breached contractual obligations owed to its general managers when the company unilaterally placed a cap on their bonuses. The case is unusually interesting in that it deals with a number of contract issues, including unilateral versus bilateral contracts, what constitutes consideration supporting contracts with at-will employees, commercial frustration, novations, and more. The case is Boswell v. Panera Bread Company. The Facts Several years ago Panera Bread created a bonus program to recruit and retain general managers of its restaurants. Und ..read more

Yesterday, I finally had the opportunity to attend Ken Adams’s Drafting Clearer Contracts seminar, when he brought his world tour to St. Louis. I’ve known Ken from the blogosphere and Twitter for several years, but we’d not met until this week. I thoroughly enjoyed the seminar and came away inspired and motivated to continue to up my contract-drafting game. The seminar is based on Ken’s book A Manual of Style for Contract Drafting, which is currently in its third edition. I’ve read the book cover-to-cover several times and have followed Ken’s blog and recommendations for years, so I was famil ..read more

In this 2013 post, I blogged about Whelan Security Co. v Kennebrew, an important Missouri case involving an employee noncompetition agreement. In that case, the Missouri Supreme Court enforced a general noncompetition agreement and modified a non-solicitation agreement against out-of-state former employees. Specifically, the Court held that a general restriction on competition within a 50-mile radius was enforceable. However, a covenant restricting the employees from soliciting the employer’s customers for two years after termination of employment was too broad as written, because the co ..read more