May 12, 2021



Precision's Counterfeit: The Failures of Complex Documents, and Some Suggested Remedies
      Howard Darmstadter, 66(1): 61–84 (November 2010)
Contracts and other transaction documents are frequently said to be complex and difficult to read in order to avoid ambiguity and mistakes. I argue that such complexity has not solved these problems, and may have exacerbated them. Moreover, the problems are likely more widespread than generally appreciated. I examine some typical provisions of a revolving credit agreement that seem secure but that on closer examination (as might be given in litigation) contain potentially serious ambiguities and mistakes. These problems are not isolated instances of bad drafting but symptoms of a systemic problem. I suggest some partial remedies, some simple to implement but others requiring a more radical rethinking as to how a document should work.

LLC Agreement Forms
      LLCs, Partnerships and Unincorporated Entities committee, ABA Business Law Section, 69(3): 743-798 (May 2014)

That Pesky Little Thing Called Fraud: An Examination of Buyers’ Insistence Upon (and Sellers’ Too Ready Acceptance of ) Undefined “Fraud Carve-Outs” in Acquisition Agreements
      Glenn D. West, 69(4): 1049-1080 (August 2014)
In those states that have a high regard for the sanctity of contract, a wellcrafted waiver of reliance provision can effectively eliminate the specter of a buyer’s post-closing fraud claim based upon alleged extra-contractual representations of the seller or its agents. But undefined “fraud carveouts” continue to find their way into acquisition agreements notwithstanding these otherwise well-crafted waiver of reliance provisions. An undefined fraud carve-out threatens to undermine not only the waiver of reliance provision, but also the contractual cap on indemnification that was otherwise stated to be the exclusive remedy for the representations and warranties that were set forth in the contract. Practitioners continue to exhibit a limited appreciation of the many meanings of the term “fraud” and the extent to which a generalized fraud carve-out can potentially expand the universe of claims and remedies that can be brought outside the remedies specifically bargained-for under the parties’ written agreement. Given the frequent insistence upon (and continued acceptance by many of) undefined fraud carve-outs, and recent court decisions that bring the undefined fraud carve-out issue into focus, this article will examine the various (and sometimes surprising) meanings of the term “fraud”, and the resulting danger of generalized fraud carveouts, and will propose some possible responses to the buyer who insists upon including the potentially problematic phrase “except in the case of fraud” as an exception to the exclusive remedy provision of an acquisition agreement.

An Overview of the General Counsel’s Decision Making on Dispute-Resolution Strategies in Complex Business Transactions
     E. Norman Veasey and Grover C. Brown; 70(2): 407-436 (Spring 2015)
This Article is an overview of the hard choices that face a general counsel (GC) when weighing the pros and cons of whether and when a particular complex business dispute is better suited for litigation in the public courtroom or through a carefully constructed alternate dispute-resolution (ADR) process, including mediation and/or arbitration. Is either choice inherently more expensive, time consuming, or problematic than the other? The obvious answer is that each of these decisions is fact-intensive, dependent on myriad factors, and neither choice is “inherently” better or worse than the other.

We have focused exclusively on complex commercial disputes between businesses and we analyze the issues that would likely be considered by the GC and other corporate decision makers in choosing and navigating the route that provides the best opportunity for optimal results in resolving a domestic or international business dispute. These dispute resolution choices often must be faced in the negotiation of the terms of a business transaction, and thus before there is a dispute.

We explore the pros and cons of how the panoply of dispute-resolution mechanisms may play out down the road. In doing so, we are mindful of the complicated job of the GC in foreseeing at the negotiation stage how the optimal dispute-resolution process should be analyzed and drafted.

We have learned through our experience, current discussions with GCs, and the abundant literature on the subject that there are divergent views about the efficacy of domestic arbitration, in particular. We believe that the bad anecdotal experiences of some general counsel with arbitration should not pre-ordain a generally negative bias. Nor should good experiences dictate a generally positive bias. Like many questions, the common-sense answer is that “it depends.”

Consequential Damages Redux: An Updated Study of the Ubiquitous and Problematic “Excluded Losses” Provision in Private Company Acquisition Agreements
     Glenn D. West; 70(4): 971-1006 (Fall 2015)
An “excluded losses” provision is standard fare as an exception to the scope of indemnification otherwise available for the seller’s breach of representations and warranties in private company acquisition agreements. Sellers’ counsel defend these provisions on the basis of their being “market” and necessary to protect sellers from unreasonable and extraordinary post-closing indemnification claims by buyers. Buyers’ counsel accept such provisions either without much thought or on the basis that the deal dynamics are such that they have little choice but to accept these provisions, notwithstanding serious questions about whether such provisions effectively eviscerate the very benefits of the indemnification (with the negotiated caps and deductibles) otherwise bargained for by buyers. For buyers’ counsel who have given little thought to (or who need better responses to the insistent sellers’ counsel regarding) the potential impact of the exclusion from indemnifiable losses of “consequential” or “special” damages, “diminution in value,” “incidental” damages, “multiples of earnings,” “lost profits,” and the like, this article is intended to update and supplement (from a practitioner’s perspective) the legal scholarship on these various types of damages in the specific context of the indemnification provisions of private company acquisition agreements.

The Impact of Transaction Size on Highly Negotiated M&A Deal Points
     Eric Rauch and Brian Burke, 71(3): 835-848 (Summer 2016)
When negotiating mergers or acquisitions, deal lawyers will often support their position by asserting that it is in accord with the “market” based on published deal points studies. However, as many of these lawyers intuit based on their experience, terms vary across the market based on a number of factors including deal size, a factor that no previously published study has examined or accounted for. This article confirms that intuition by surveying the middle market at deal sizes from several million to several billion dollars and showing, for the first time, that highly negotiated deal points tend to become more seller favorable as transaction value increases. This conclusion is based on a review of five terms (liability cap, liability basket amount and type, sellers’ catchall representations, the “no undisclosed liabilities” representation, and closing conditions) across 849 deals from 2007 to 2015, a sample larger than that used in any previously published deal points study of mergers and acquisitions.

Task Force Introductory Report and Background Considerations Model Intellectual Property Security Agreement
     Model Intellectual Property Security Agreement Task Force, Commercial Finance committee and Uniform Commercial Code committee, ABA Business Law Section, 771(3): 849-932 (Summer 2016)

The Medicare Provider Agreement: Is It a Contract or Not? And Why Does Anyone Care?
     Samuel R. Maizel and Jody A. Bedenbaugh, 71(4): 1207-1240 (Fall 2016)
The article first considers the conflicting positions taken by the United States Government regarding whether the Medicare Provider Agreement is an executory contract in and outside of bankruptcy court. It examines whether the Government’s positions can be reconciled, and if the Government should be barred by preclusion and estoppel principles from asserting in bankruptcy court that a Provider Agreement is an executory contract. The article then discusses whether the Provider Agreement should be treated as an executory contract in bankruptcy, and the implications of such treatment on a bankrupt provider’s ability to transfer its Provider Agreement to a purchaser under the Bankruptcy Code and related issues, such as the Government’s setoff and recoupment rights and successor liability.

Human Rights Protections in International Supply Chains - Protecting Workers and Managing Company Risk
      David V. Snyder and Susan A. Maslow, 73(4) 1093-1106 (Fall 2018)

Interpreting and Drafting Efforts Provisions: From Unreason to Reason
      Kenneth A. Adams, 74(3) 677-722 (Summer 2019)
Contracts often feature efforts standards—best efforts, reasonable efforts, and other variants. In the United States, England, and Canada, many who work with contracts accept the idea of a hierarchy of efforts standards, with some imposing obligations that are more onerous than others. With minor exceptions, U.S. courts have rejected the idea, whereas courts in England and Canada have accepted it. But no one has coherently explained their position. This article demonstrates that a hierarchy of efforts provisions is unworkable, for three reasons. First, imposing an obligation to act more than reasonably is unreasonable. Second, requiring that a contract party act more than reasonably creates too much uncertainty as to what level of effort is required. And third, legalistic meanings attributed to efforts standards conflict with colloquial English. Furthermore, rationales offered to validate the idea of a hierarchy of efforts standards fall short. This article proposes how courts should interpret efforts provisions. Specifically, they should ignore the conventional wisdom that a best efforts obligation is more onerous than a reasonable efforts obligation. This article also recommends how drafters can take control of efforts provisions. It proposes a simple and unobtrusive fix—use only reasonable efforts and structure efforts provisions to minimize the vagueness.

Notice and Assent Through Technological Change: The Enduring Relevance of the Work of the ABA Joint Working Group on Electronic Contracting Practices
      Nancy S. Kim, Juliet M. Moringiello, and John E. Ottaviani; 75(2): 1725-1746 (Spring 2020)
This article, prepared for the 75th anniversary volume of The Business Lawyer, reflects on the efforts of the ABA Business Law Section’s Joint Working Group on Electronic Contracting Practices. The Working Group produced two articles in The Business Lawyer in 2001 and 2003 that were designed to give guidance to companies presenting standard-form contract terms electronically.

LLC Default Rules Are Hazardous to Member Liquidity
     Donald J. Weidner, 76(1): 151-182 (Winter 2020-2021)
Simply by forming LLCs, entrepreneurs now unwittingly lock themselves in to perpetual entities that offer them no liquidity and present them with costly procedural obstacles to enforcing both their agreement among themselves and their statutory rights. Even in atwill LLCs that are member-managed, recent LLC acts deny members both a right to dissolve and a right to be bought out. While thus locking members in, these acts deny them standing to bring many if not most of their claims among themselves or against the firm.

Contracting COVID: Private Order and Public Good (Standstills)
     Jonathan C. Lipson and Norman M. Powell, 76(2): 437-466 (Spring 2021)
COVID (2019) rendered many contracts in or near breach. If commercial actors in these circumstances marshaled their presumptive legal rights—whether to sue or to shelter in bankruptcy—the result could be catastrophic for the legal system and for...