Category Archives: Newsletter

How to Protect Long-Term Investments in Operational Contracts (Technology Law Letter #10)

In this Newsletter

How to Protect Long-Term Investments in Operational Contracts

Consider one of the most difficult issues you’ll ever encounter when negotiating a contract: one party must make a large, long-term investment for the deal to work, but won’t sign the contract unless its investment (and its return on the investment, or ROI) is adequately protected.

I’ve posted an article on my blog that explains three key approaches to protect that investment and get your deal done.

The article covers long-term investments made as part of an agreement concerning a company’s operations, such as an independent contractor agreement, technology development agreement, distribution agreement, or purchase and sale of products or services.

Those operational agreements are different from investment contracts, such as stock purchase agreements or loans to a corporation, partnership or limited liability company (LLC). Investment contracts raise additional questions under corporate/partnership, tax and securities laws. For example, long-term cash investments can be protected using preferred stock in a corporation or special provisions for capital accounts in partnerships and LLC’s. Loans may be protected by taking an interest in collateral, such as real estate (e.g., a mortgage on a commercial building). By contrast, my article focuses on provisions of non-financial contracts used in operations.

The article explains three approaches:

1. Match the contract duration to the investment horizon. If necessary, lay out an early exit path that works, considering termination for convenience with a kill fee, a liquidated damages clause, mediation, a management escalation process and a transition process after termination.

2. Focus the relationship by wisely choosing whether to use exclusivity, semi-exclusivity, a Most Favored Nation (MFN) clause, minimum required purchase or recoupment.

3. Finally, look at other contracts between the parties to see if the parties’ relationship should be strengthened by cross-collateralization or cross-default provisions.

Of course, the article defines and explains all of the “shorthand” words above, such as “semi-exclusivity.” By considering and applying the 3 approaches that I describe, you’ll be far ahead of many other deal makers.

You can read the full article at: www.boadweelaw.com/how-to-protect-long-term-investments-in-operational-contracts-full-article/

Cyberspace Primer Recently Released

On April 21, 2010, the Cyberspace Committee of the California State Bar Business Law Section officially released its Cyberspace Primer, a publication designed to brief California state legislators and others on relevant cyberspace law issues.

The Primer was drafted by various Committee members and advisors and covers topics such as Privacy Policies, Radio Frequency Identification Technology (RFID), Spam and Spyware, Phishing, the Communications Decency Act, Social Networking, and Behavioral Advertising.

As a member of the Committee, I assisted with the Primer and contributed a short piece on the Digital Millennium Copyright Act (DMCA) and User-Generated Content.

The Primer is available via http://businesslaw.calbar.ca.gov/Publications/CyberspaceLawandPolicy.aspx

Fifth Anniversary Special: My Book, Protect Your Business with Non-Disclosure Agreements

I’m celebrating the fifth anniversary of my law practice this year. As part of the celebration, I’m offering the ebook version of my book, Protect Your Business with Non-Disclosure Agreements, for free.

The free ebook version is available at www.BoadweeLaw.com/ndabook

Feel free to share the link with anyone who may be interested.

All the best,

- Harry

Please visit my newsletter archives at
www.BoadweeLaw.com/newsletter.html

Harry Boadwee’s Technology Law Letter is published by the Boadwee Law Office, legal advisers to innovative companies in the fields of technology transactions, software and internet law.

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This Newsletter is for general information purposes only, and is not provided in connection with rendering of legal or other professional advice. It is subject to the Terms of Use of the Boadwee Law Office (www.BoadweeLaw.com/terms.html) and may be Attorney Advertising in some jurisdictions.

Using Contracts to Deal with Unknowns: Part 2 –“Unknown Unknowns” (Technology Law Letter #9)

In the previous issue of this newsletter, I discussed how to use contracts to protect against “known unknowns,” those events and circumstances for which you know the general category of uncertainty, but not the outcome. This article covers “unknown unknowns,” those events and circumstances that you cannot foresee. Here are several approaches to deal withContinue Reading

Using Contracts to Deal with Unknowns: Part 1 –“Known Unknowns” (Technology Law Letter #8)

In this Newsletter Using Contracts to Deal with Unknowns: Part 1 – “Known Unknowns” From My Blog Ask Harry Boadwee Using Contracts to Deal with Unknowns: Part 1 –“Known Unknowns” Business people deal with unknown facts and circumstances in contracts all the time. Contracts allocate the responsibility for unknowns to one party or the other. Continue Reading

The Three Critical Negotiations in Any Contract (Technology Law Letter #7)

In this Newsletter The Three Critical Negotiations in Any Contract Postings from My Blog The Three Critical Negotiations in Any Contract Any contract requires not one, but three, critical negotiations. The first is the negotiation between the two parties to the contract.  Without the “main deal,” there can be no agreement. The second and thirdContinue Reading

The Most Useful Contract Provision? (Technology Law Letter #6)

In this Newsletter The Most Useful Contract Provision? Launch of Technology Contracts Glossary The Most Useful Contract Provision? In my view, the most useful contract provision is the “term” of the contract, in other words, the time period that the contract is legally in force before it expires. Why? Because a very short-term contract (suchContinue Reading

Should You Sign Your Term Sheets? The Power of Commitment and Consistency (Technology Law Letter #5)

In this Newsletter Should You Sign Your Term Sheets?  The Power of Commitment and Consistency Should You Sign Your Term Sheets?  The Power of Commitment and Consistency I recommend using term sheets for most deals other than the simplest ones.  Clients often ask me, “Should we sign the term sheet?” Previously, I told them itContinue Reading

Contract Provisions for Troubled Times: Myths and Realities of Bankruptcy (Technology Law Letter #4)

In this Newsletter Contract Provisions for Troubled Times: Part 4  – Myths and Realities of Bankruptcy Contract Provisions for Troubled Times: Part 4  – Myths and Realities of Bankruptcy Bankruptcy is a clear and present danger to many business contracts, especially in our difficult economy.  Of course, companies can go bankrupt at any time andContinue Reading

Contract Provisions for Troubled Times – How Third Parties Can Assure Performance (Technology Law Letter #3)

In this Newsletter Contract Protections for Troubled Times: Part 3 – How Third Parties Can Assure Performance Harry Boadwee Appointed to Bar Committee on Cyberspace Law Ask Harry Boadwee Contract Protections for Troubled Times: Part 3 – How Third Parties Can Assure Performance For practical and legal reasons, you may want a third party toContinue Reading

Contract Provisions for Troubled Times: Making Sure the Other Party Performs (Technology Law Letter #2)

In this Newsletter Contract Provisions for Troubled Times: Part 2 – Making Sure the Other Party Performs From My Blog Ask Harry Boadwee Contract Provisions for Troubled Times: Part 2 – Making Sure the Other Party Performs In addition to getting paid, in troubled times, you also want to monitor and manage the other activities ofContinue Reading

Contract Provisions for Troubled Times: Part 1 – Getting Paid (Technology Law Letter#1)

In this Newsletter Welcome to my Technology Law Letter Contract Provisions for Troubled Times: Part 1 – Getting Paid Re-launch of My Blog Ask Harry Boadwee Welcome to my Technology Law Letter My newsletter will be a reflection of my law practice, which focuses on technology transactions and intellectual property licenses. In other words, contractsContinue Reading