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Transaction Agreement Template Engineering
TATECompendium™ community library
of business contract clauses
Development draft adele,* 20091001
www.TATECompendium.org
Copyright © 2009 D. C. Toedt III
Member of the Texas and California bars
www.linkedin.com/in/dctoedt
* The current plan is to name successive TATE Compendium versions alphabetically, like hurricanes.
Comments and suggestions for revisions and additional clauses are welcome – please email them to the author at the address above.
TATECompendium™ VERSION ADELE - 1 -
CAUTION: DON'T RELY ON THIS DOCUMENT AS A SUBSTITUTE FOR LEGAL ADVICE— ASK YOUR LAWYER IF IT'S RIGHT FOR YOU.
Contents
Introduction to the TATE Compendium 4
A LEGO®-style document architecture, for easier drafting and review 4
Passive voice and other deliberate awkwardness 4
Revision history 4
Introduction 5
ARB Arbitration 6
ASG Assignment of this Agreement 10
ATT Attorneys' fee-shifting to encourage settlement† 13
AUD Audit rights 15
BAC Background checks 19
BRE Breach (see also Termination) 20
CMS Commission payments 22
COM Compensation for services 23
CON Confidential information 25
DEF Definitions & usages 34
DIS Dispute management processes 39
EXP Export controls 40
FOR Force majeure 42
GEN General provisions 44
GRA Gramm-Leach-Bliley Act provisions 51
HIP HIPAA business-associate provisions 53
IND Indemnity & defense general provisions 54
INF Infringement warranty 57
INS Insurance 61
INT Intellectual property rights 64
LIM Limitation of liability 69
MAR Marketing efforts 72
ORD Orders for products and services 73
PAY Payments 74
PER Personnel – certain matters 78
PRI Pricing adjustments† 81
PRR Pricing to Reseller 83
PUB Publicity 85
REL Relationship management 86
RES Resale of Provider products and/or services 87
SER Services 93
SIT Site visits 98
STA Staffing † 99
SUB Subcontractors 101
TAX Taxes 104
TER Termination (see also Breach) 106
TRA Trademarks 111
TRG Training 113
UNI Unilateral amendments † 114
WAD Warranty against defects 116
WAG Warranties – general provisions & disclaimer 118
WAI Warranty against infringement – see "Infringement indemnity" 120
Revision history 121
Version AARON 121
Version ABIGAIL 121
Version ADAM 121
Version ADELE 122
Creative Commons license 124
TATECompendium™ VERSION ADELE - 3 -
CAUTION: DON'T RELY ON THIS DOCUMENT AS A SUBSTITUTE FOR LEGAL ADVICE— ASK YOUR LAWYER IF IT'S RIGHT FOR YOU.
Introduction to the TATE Compendium
A LEGO®-style document architecture, for easier drafting and review
Short, mix-and-match clauses: Traditional contracts often involve complex sentences and paragraphs. They may be works of literary art, but that can make them difficult to parse and understand quickly. I've tried a different approach: cutting up complex language into simple, single-topic clauses that should be much easier to mix and match — and for a busy reviewer to absorb.
The clause titles are, in essence, editable summaries: Most provisions in this Compendium take the form of: (i)a clause title, generally written as a complete sentence, so that it can do double duty as a short-form clause; (ii)long-form language; and (iii)one or more commentary paragraphs, with yellow background, as explained below.
Angle brackets indicate variable text that can be changed as needed: Many clauses below include text in angle brackets, signifying terms (for example, names, amounts, etc.) that a drafter may well wish to edit to fit the situation. In that case, the edited text takes precedence over the angle-bracketed text below.
Daggers in a clause title are alerts for drafters: Some clauses below are marked with daggers† to indicate that some drafters might view them (i)as entailing potentially-troublesome business- or legal commitments, or (ii)as otherwise inappropriate for their particular situations. NOTE: NOT ALL SUCH CLAUSES are necessarily so marked.
Negotiation categories indicate how controversial a clause might be: In their comments, some Compendium clauses are tagged to indicate how well they're generally received by negotiators, at least in my experience— of course, your mileage may vary:
On the green "No-brainer" provisions, usually agreed to without serious objection.
On the fairway Often agreed to, but sometimes a point of contention in negotiations.
In the rough Often objected to, sometimes strenuously, by one party or another.
Tends-to-favor indicators suggest what the name says: In their comments, some Compendium clauses indicate which party the clause tends to favor. OF COURSE, USERS AND THEIR LAWYERS SHOULD DETERMINE WHETHER A PARTICULAR CLAUSE IS RIGHT FOR THEIR SPECIFIC SITUATION.
Passive voice and other deliberate awkwardness
To make it easy for a reader to quickly see what a clause is about, I've used passive voice in some clause titles, as well as certain language choices that might seem awkward. My goal has been to put the main topic of the clause in bold-faced language as close as possible to the beginning of the line, so that the topic can be readily grasped in a quick scan of the page.
Revision history
See the Revision history section.
Introduction
Parties: This Agreement is between Party 1 name, entity type, whose initial address for notice is address; and Party 2 name, entity type, whose initial address for notice is address. It is effective the last date signed as written in the signature blocks below.
Bracketed clause numbers: Certain clauses below contain bracketed numbers of clauses in the TATE Compendium™ community library of contract clauses, version adele, , available at www.tatecompendium.org/.
Background: Briefly describe the factual background of the agreement— give later readers (like a judge or juror) an idea how the parties came to be signing a contract .
ARB Arbitration
ARB1 All disputes arising out of or relating to this Agreement or any transaction or relationship resulting from it will be resolved by binding arbitration.† [ARB1]
(1)All disputes, claims, and controversies (i)arising out of this Agreement, including for example concerning its interpretation, performance, or breach— and if so specified, all disputes, claims, and controversies (ii)relating to this Agreement, including for example any tort- or statutory claim, or (iii)arising out of or relating to any transaction or relationship resulting from this Agreement— will be resolved by binding arbitration under the U.S. Federal Arbitration Act and the law governing this Agreement.
(2)Any resulting arbitration award will be enforceable in any court of competent jurisdiction.
NEGOTIATION CATEGORY: On the fairway.
COMMENT: See thesenotes.
ARB2 Other claims, of whatever nature, that may arise between the parties are also covered by this agreement to arbitrate.† [ARB2]
In the interest of promoting consistency in their business relationship, the parties intend for this agreement to arbitrate to encompass any other claims, of any nature, that may arise between them during the life of this Agreement.
NEGOTIATION CATEGORY: In the rough — see this note.
ARB3 The arbitration rules will be the Commercial Arbitration Rules of the American Arbitration Association (AAA). [ARB3]
The arbitration will be conducted in accordance with the specified rules, to the extent not inconsistent with this Agreement.
NEGOTIATION CATEGORY: On the fairway.
COMMENT: See this note.
ARB4 The arbitration panel will consist of a single arbitrator. [ARB4]
NEGOTIATION CATEGORY: On the fairway.
COMMENT: See this note.
ARB5 Disputes about arbitrability are to be decided by the arbitration panel, as well as disputes about the enforceability of the agreement to arbitrate. † [ARB5]
NEGOTIATION CATEGORY: On the fairway.
COMMENT: See this note.
ARB6 Arbitrator qualifications: An arbitrator must be a member of the bar of any jurisdiction who has experience in the general field of the dispute. [ARB6]
Any person serving as an arbitrator, in addition to meeting any relevant requirements of applicable arbitration rules, must meet the specified qualifications.
NEGOTIATION CATEGORY: On the green.
ARB7 The place of the arbitration will be as agreed by the parties, or if not agreed, as determined by the AAA.† [ARB7]
NEGOTIATION CATEGORY: On the fairway.
ALERT: The place of arbitration can affect things like the law governing the arbitration proceedings and the court(s) in which an award can be enforced — see this note.
ARB8 Administration: Unless otherwise agreed by the parties in a particular case, the arbitration will be administered by the parties themselves. [ARB8]
NEGOTIATION CATEGORY: On the fairway.
COMMENT: Self-administered arbitration may not be the best choice — see this note.
ARB9 Temporary relief: A party may apply to any court of competent jurisdiction for temporary, interim, or preliminary injunctive relief, without waiver of its right to arbitration. † [ARB9]
NEGOTIATION CATEGORY: On the green.
COMMENT: See this note.
ARB10 Standard of decision: The arbitration panel shall decide the dispute in accordance with this Agreement and applicable law (including for example statutes of limitation or repose) and not asamiable compositeurorex aequo et bono. [ARB10]
NEGOTIATION CATEGORY: On the green.
COMMENT: See this note.
ARB11 Standard of decision: The arbitration panel may apply the principles ofamiable compositeurandex aequo et bono.† [ARB11]
NEGOTIATION CATEGORY: In the rough.
COMMENT: See this note.
ARB12 Streamlined proceedings: The arbitration panel should streamline the proceedings to the extent reasonably possible. [ARB12]
(1)The arbitration panel is authorized and directed to take reasonable measures to streamline and expedite the arbitration proceedings at all stages.
(2)For the avoidance of doubt, the parties, by agreement, may overrule any particular procedural decision of the arbitration panel.
NEGOTIATION CATEGORY: On the green.
ARB13 The arbitration hearing should be conducted on consecutive days. [ARB13]
In the interest of reducing inefficiencies and the attendant extra expense, the arbitration hearing should be conducted on consecutive days if at all practicable.
NEGOTIATION CATEGORY: On the fairway.
COMMENT: See this note.
ARB14 Multiple arbitrators shall stay together until they render an award. [ARB14]
In any arbitration involving a multi-arbitrator panel, in the interest of reducing potential delays and inefficiencies and the attendant extra expense, after the conclusion of the hearing the panel members are to remain together, at the hearing location or other agreed location, until they have rendered the award.
NEGOTIATION CATEGORY: On the fairway.
COMMENT: See this note.
ARB15 Enhanced appellate review of the award is agreed to.† [ARB15]
(1)The arbitration panel's powers do not include the power to render an award based:
(A)on errors of law or legal reasoning, nor
(B)on findings of fact not supported by substantial evidence.
(2)The parties agree that any award that is so based, in whole or in part, shall be appealable to a court of competent jurisdiction on grounds, that the arbitration panel thereby exceeded its agreed powers.
NEGOTIATION CATEGORY: On the fairway.
ALERT: A clause like this might not be enforceable — see this note.
ARB16 Findings of fact and conclusions of law are to be included in the award. [ARB16]
Unless otherwise agreed, the arbitration panel shall set forth written findings of fact and conclusions of law in its award.
NEGOTIATION CATEGORY: On the fairway.
COMMENT: Requiring the arbitration panel to provide findings of fact and conclusions of law and a transcript may sound like it would increase the expense of the proceeding. As a practical matter, however, arbitration awards typically contain an explanation of the underlying reasoning anyway— if for no other reason than that the arbitrator(s) want the parties and their lawyers to think well of them, so that they’ll have a shot at being hired again someday for another case.
ARB17 A transcript of oral testimony is to be provided. [ARB17]
Unless otherwise agreed, the arbitration panel shall provide the parties with a court reporter's transcript of all oral testimony.
NEGOTIATION CATEGORY: On the fairway.
COMMENT: As a practical matter, in many arbitrations a court reporter will transcribe the hearing in any case, so the transcript will already be available..
ARB18 Joint arbitration expenses are to be shared equally unless the award specifies otherwise. [ARB18]
Unless otherwise agreed:
(1)Each party will bear its own expenses of the arbitration.
(2)All other expenses of the arbitration will be borne equally by the parties unless the arbitration panel duly assesses some or all of such expenses against one or more specified parties (for the avoidance of doubt, this clause does not in itself give the arbitration panel the power to do so).
NEGOTIATION CATEGORY: On the green.
COMMENT: The agreed The agreed arbitration rules may well contain similar expense-sharing provisions. See, for example, Rule R50 of the AAA's Commercial Arbitration Rules, on which some of the language in this clause is modeled..
ARB19 Survival: The arbitration provisions of this Agreement will survive any termination or expiration of the Agreement in respect of any arbitrable matter that arose before such event. [ARB19]
NEGOTIATION CATEGORY: On the green.
ARB-20 Arbitration proceedings are confidential except for enforcement purposes. [ARB20]
ARB21 Third-party participants in transactions under this Agreement may enforce these arbitration provisions against a party.† [ARB21]
(1)The parties anticipate that one or more individuals or organizations in addition to themselves— that is, non-parties to this Agreement— may participate in one or more transactions or relationships arising out of this Agreement.
(2)If but only if so specified, each such non-party will have the right to enforce the arbitration provisions hereof, as a third-party beneficiary of those provisions, against any party to this Agreement.
NEGOTIATION CATEGORY: In the rough.
COMMENT: This clause allows a third party, finding itself in a dispute arising out of an agreement containing an arbitration requirement, to force a signatory to the agreement to comply with the arbitration requirement, even though the third party itself did not enter into the agreement.
In May 2009 the U.S. Supreme Court held that, as long as state law permits the third party to enforce the requirement, doing so is permissible under the Federal Arbitration Act: "[A] litigant who was not a party to the relevant arbitration agreement may invoke §3 [of the Act, permitting a stay of litigation] if the relevant state contract law allows him to enforce the agreement." Arthur Andersen LLP v. Carlisle, No. 08146, slip op. at8 (U.S. May9, 2009) (reversing and remanding appellate court affirmance of denial of stay).