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Updates starting in September 2011 can be viewed on this page. Clauses of the day prior to September 2011 can be viewed in the Daily Clause Archive
The Unified Contract Structure will be revised with two main adjustments: the introduction of an acknowledgements section and the regrouping of the remedies section to include rights and remedies related to claims arising from the agreement, including damages, specific performance and indemnities.
1. Acknowledgements. In many agreements provisions stipulating the parties acceptance of certain facts and circumstances are found in may different sections of the agreement. For example, in a non-disclosure agreement, an acknowledgement of ownership of property may be included as a separate clause, a statement regarding the reasonableness of restrictions may be included in the covenants, while an acknowledgement that each party will pay is own expenses may be found in the general provisions. Grouping all the acknowledgments into one section adds clarity. The acknowledgements work closely with the representations and covenants. Representations and covenants cover statements and promises within the control or interest of the party making the assertion, while acknowledgements capture stipulations regarding certain facts or circumstances, such as ownership vesting in another person, that the parties agree not to contest.
2. Remedies. Over the course of the next few weeks, ContractStandards will substantially revise the remedies section to include all terms regarding the rights, remedies, and procedures in the event of breach or failure of the agreement. The revisions will first address indemnities.
The Standard of Care
clause defines the level of protection that the receiving party must use to protect the disclosed confidential information. Typically, the agreement requires the recipient to treat the disclosed information in the same manner as it treats its own confidential information, provided that such standard may not be less than "reasonable care." A few agreements require a higher standards, such as "strict confidence" or the "highest standard of care." However, such higher standards may not be attainable or practicable.
The marking clause in a confidentiality agreement defines whether information must bear an indication of confidentiality, such as a stamp or header stating: "Private and Confidential."
Marking requirements can have both advantages and disadvantages for both sides. On one hand, it provides clarity. On the other, it may fail to protect information that inadvertently is not marked. In order to protect inadvertent disclosure the clause may provide for "catch-up" marking, permitting the disclosing party to retroactively mark material within a reasonable or specified time period following disclosure.
A marking clause is uncommon. When used it has three main variants: marking is not required; marking is required, and marking may be applied if practicable.
The remedies cumulative
clause typically states that the nonbreaching party to a contract is allowed to pursue any and all remedies that may be available under the facts of the dispute, even though some of those remedies may be inconsistent with each other.
The modern day general rule—applied by most states—is that all remedies, whether at common law, under statute, under equitable principles, are cumulative. This general rule applies only in the absence of specific contractual provisions to the contrary. A party’s intent to limit cumulative remedies must be clear.
In the context of a licensing agreement, an indemnification
clause generally indemnifies a licensee against costs arising out of the licensee’s use of a licensor’s software. However, in some instances an agreement will call for the licensee to indemnify the licensor. The identity of the indemnifying party will typically be determined by the terms of the agreement (whether the license is free or paid, etc.) and the bargaining power of the parties involved.
While state contract law generally protects the licensee in most jurisdictions, the parties will want to expand or modify these provisions to define explicitly the protections and obligations for each party.
Starting work on an Inventions Assignment Agreement. The initial clause analysis
indicates a high degree of variation. Is this due the specific circumstances of each situation? Or, in the same manner as other employment related agreements, does it simply reflect broad divergence in opinion and preferences.
A “force majeure” clause (French for “superior force”) is a contract provision that allows a party to suspend or terminate the performance of its obligations when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible. The provision may state that the contract is temporarily suspended, or that it is terminated if the event of force majeure continues for a prescribed period of time.
A Headings and/or Construction
clause in the general provisions section of an agreement acts as an interpretive aid in the event of a dispute over the terms of the contract. A typical Headings clause states that the headings and captions used throughout the agreement are for reference purposes only and should not have any effect on the interpretation. However, you ca use the captions as the basis of a checklist when viewing the table of contents of an agreement. (See, Contract Checklists-does sequence matter?
The “No Waiver” (or “Waiver”) clause in the general provisions section of an agreement aims to ensure that a party’s failure to enforce its contractual rights, whether intentionally or by oversight, does not result in a waiver of those rights or remedies for their breach.
clause in the Articles or Certificate of Incorporation defines:
(a) who has authority to adopt or amend the Bylaws;
(b) what procedures must be followed;
(c) what notice is required and
(b) who must approve the action.
Most clauses, however, do not detail the process and notice requirements; surprisingly some not specify the approval requirements. Incorporators are free to set the approval requirements. But where a proposed amendment adversely affects shareholder interests, state statutes may define the requirements and procedures for amendment. (See, Amendment of California Corporations Articles of Incorporation