Quiz Review

Question 1

Pick the best answer: “Alice is tall” is an example of what kind of statement?

Answer 1

Vague

Question 2

TRUE OR FALSE: It’s normally worthwhile to “fix” ambiguities in a draft contract.

Answer 2

True

Question 3

According to Professor Toedt, in most circumstances, the best way to state the date of a contract is

Answer 3

In the preamble: “This Agreement is entered into on the latest date signed as written in the signature blocks below.”

Question 4

It’s not unusual to backdate a confidentiality agreement to make it effective as of an earlier date. (Careful — read this closely.)

Answer 4

True

Question 5

a proper contract signature block should include: (Need Correct Order)

Answer 5

Printed Name, Title, Date Signed

Question 6

In DCT’s view, to make things easier on the parties’ signers, it’s normally OK to type in the expected signature date above the signature blocks, e.g., “Signed on December 25, 20xx.”

Answer 6

False

Question 7

FACTS: Alice bought $1 million of widgets from Bob. She is suing him for breach of warranty and for misrepresentation because he allegedly statements about the widgets that allegedly turned out not to be true.
QUESTION: Of the following causes of action, which (if any) require Alice to prove that she reasonably relied on Bob’s alleged statements? (Hint: Look up “Hill of Proof” in section 13.3 of the Notes on Contract Drafting reading materials.)

Answer 7

Misrepresentation

Question 8

FACTS:
(1) Your client ABC Inc. has asked you to review a contract drafted by XYZ Corporation.
(2) The preamble of the contract states that the parties are (i) ABC Inc. and (ii) XYZ Corporation and its Affiliates.
(3) In the definitions section, the contract defines the term Affiliate.
TRUE OR FALSE: This contract structure is unobjectionable.

Answer 8

False

Question 9

Representation and warranty are basically synonyms; while they’re not quite the same, they’re close enough that they can be used interchangeably in a contract.

Answer 9

False

Question 10

What does Professor Toedt mean by “A.T.A.R.I.”? (Omit all punctuation) (Hint: Search for this term in the reading materials, including the periods.)

Answer 10

avoid the argument rewrite it

Question 11

Professor Toedt thinks it would normally be OK for an in-house counsel in a company’s legal department to sign a contract on behalf of another department in the company.

Answer 11

False

Question 12

FACTS:
(1) Customer Corporation negotiates a master purchase agreement with Vendor Inc. The agreement specifies the pricing that Vendor will honor, during the agreement term, for Customer’s orders for particular goods and/or services.
(2) Customer wants its various “Affiliates” (defined in the agreement) to be able to place orders at the specified pricing.
QUESTION: To accommodate Customer’s desire, which of the following would be the best drafting approach?

Answer 12

In the preamble, recite that the parties are Vendor Inc. and Customer Corporation, but state in the body of the agreement that Customer’s Affiliates are entitled to place orders at the agreed pricing.

Question 13

Which is the best way to write the number below (in Prof. Toedt’s view)? (Hint: Check out “Style guide for numbers” in the Notes on Contract Drafting.)- payment is due thirty or 30

Answer 13

Payment is due 30 days from the date of this Agreement.

Question 14

In contracts, Professor Toedt prefers to use “may” for

Answer 14

permission

Question 15

In contracts, Professor Toedt prefers to use “might” for

Answer 15

possibility

Question 16

Adapted from language in an actual contract: “Seller will notify Buyer at least 30 (THIRTY) days before the effective date of any price increase.” TRUE OR FALSE: This is an acceptable drafting style.

Answer 16

False

Question 17

FACTS: A lease for a retail store provides in part that past-due rent payments will be subject to a monthly administrative fee of 5% of the past due amount. TRUE OR FALSE: This provision will probably be enforceable in most U.S. jurisdictions.

Answer 17

False

Question 18

This one-word term is used when “interest” charges (i) exceed a legal maximum, and/or (ii) are started before the legally-allowed date:

Answer 18

usury

Question 19

FACTS:
1. Your client, Buyer, is negotiating a contract to buy 1 million widgets from Seller.
2. A summer associate in your firm is reviewing and redlining the first draft of the contract, which was prepared by Seller’s counsel.
3. The summer associate notices that, while Seller’s draft includes some express warranties, there is no disclaimer of implied warranties. On her own initiative, the summer associate inserts the following text into the draft (with redlining, of course): Seller DISCLAIMS all other warranties, conditions, and terms of quality.
QUESTION: From Buyer’s perspective, what if anything is wrong with this provision?

Answer 19

When reviewing Seller’s draft, Buyer’s counsels shouldn’t insert a provision to protect Seller. But if Buyer’s draft, inserting provision to protect Seller might help to get contract signed quicker

Question 20

QUESTION: What if anything is wrong with the following provision? (Assume that other issues are satisfactorily addressed elsewhere, and that you haven’t been told which side you’re representing.)
Buyer represents that it will pay Seller’s invoices net 10 days.

Answer 20

Net 10 days from when, don’t know if 10 days is enough time, should b a covenant, not a representation

Question 21

FACTS:
(1) Alice wants to sell her car to Bob.
(2) Bob wants the contract to include a representation by Alice that the car has no significant defects.
QUESTION: In most circumstances, which language below for the representation would Alice prefer?

Answer 21

Alice represents that, so far as she is aware, the car has no significant defects.

Question 22

EXPLAIN IF FALSE: In Texas — but not in California — an employer can run whatever background checks it wants on a prospective employee, and then use the results in making a hiring decision, without having to say anything to the prospective employee,

Answer 22

False. While the state of Texas might not limit what employers can do with the information, other laws might. For instance, the FCRA requires that employers 1.) get the applicant’s written consent before requesting a check, 2) Give the applicant notice if the employer plans to screen him or her out based on the contents of the report, and 3) Notify the applicant once the employer makes a final decision not to consider the applicant based on the report. Additionally, anti-discrimination laws might be implicated by blanket denial of criminal convictions, etc.
Going even further, California has “ban the box” laws that prohibits employers from inquiring into an applicant’s criminal history before making a conditional offer of employment.

Question 23

The nuclear Navy, in which Professor Toedt served, has a saying: You get what you inspect, not what you [BLANK].

Answer 23

expect

Question 24

TRUE OR FALSE: Professor Toedt regards it as acceptable practice to draft a certification that states that a particular document is “true and correct.”

Answer 24

False, prefers “complete and accurate”

Question 25

Briefly explain why paying parties typically want to be invoiced for amounts they owe under a contract.

Answer 25

Paying parties will usually want to receive an invoice for internal controls & might be legally required to do so

Exception: For large, one-time payments, the paying party might not find it necessary to get an invoice

Question 26

FACTS: Another party asks your client to commit to using its “best efforts” to accomplish a challenging task on or before a particular deadline. The circumstances are such that if the client is unsuccessful in timely accomplishing the task, then the other party could incur significant financial loss.
TRUE OR FALSE: Under these circumstances, it’s probably OK for the client to agree to the best-efforts commitment.

Answer 26

False

Question 27

True or false: “Good faith” has a widely-accepted definition in the U.S. but not necessarily in other jurisdictions.

Answer 27

False

Question 28

True or false: New York law gives effect to usury-savings clauses.

Answer 28

False

Question 29

What is is an acceptable way to make a contract term “conspicuous”?

Answer 29

1. Putting the term in its own, short paragraph with gray shading
2. Rendering just a few words in ALL CAPS to call attention to the term
3. Putting the term in its own, short paragraph with a border around it

Question 30

Thirty days after termination, Customer must forward a final list of its users to Supplier. numeral or digits?

Answer 30

Thirty days after termination, Customer must forward a final list of its users to Supplier.

Question 31

Choose the BEST phrasing: ten billion dollars

Answer 31

The price is $10 billion.

Question 32

Choose the BEST phrasing: ten thousand dollars

Answer 32

The price is $10,000 [i.e., the zero cents is omitted]

Question 33

When drafting an entire-agreement provision, you should normally include a provision stating that each party is waiving (or disclaiming) reliance on representations by the other party that are outside the four corners of the contract and its attachments.

Answer 33

False

Question 34

FACTS:
1. After oral sales discussions, Alice, in Houston, sends Bob, in the Houston office of a company based in Phoenix, Arizona, a “quote sheet” offering to sell Bob’s company 1,000 widgets at USD $100 each, for delivery in two weeks. (Assume Alice and Bob have actual authority to bind their respective companies.)
2. Alice’s quote sheet incorporates Alice’s standard terms of sale by reference from Alice’s Web site and includes a link to those terms. (Assume that this has the same effect as setting forth the terms of sale within the quote sheet.)
3. Alice’s terms of sale document on the Web states that: A) Alice objects to any additional or different terms proposed by Bob, and B) any dispute between Alice and Bob must be litigated in Houston.
4. Bob responds to Alice’s quote sheet with a purchase order whose fine print states that: A) Bob objects to any additional or different terms proposed by Alice, and B) all disputes arising out of the parties’ contract must be litigated in Phoenix.
5. Alice doesn’t sign or return Bob’s purchase order, but she does ship 1,000 widgets to Bob in Houston and sends Bob an invoice for the USD $100,000 price. Bob’s company pays the invoice in order to get an early-payment discount.
6. When Bob examines the widgets a few weeks after accepting the shipment, he concludes that Alice shipped him the wrong type of widgets. Alice disagrees, saying, in effect, this is what you ordered.
7. Alice files suit in Houston against Bob, seeking a declaratory judgment that she is not liable for breach of contract. Bob files a motion to dismiss on grounds that the forum-selection provision in his company’s purchase order requires litigation to be in Phoenix. (Assume that this would be a valid grounds for dismissing Alice’s lawsuit.)
QUESTION: What should the court do?

Answer 34

Deny Bob’s motion to dismiss because of the drop-out rule of UCC § 2-207

Question 35

From the perspective of a manufacturer, which of the following is a potential advantage of the manufacturer’s granting a reseller an exclusive territory? (Could be more than one.)

Answer 35

Manufacturer has more leverage during negotiation to demand that Reseller commit to achieving specific performance targets.

Question 36

FACTS: A manufacturer is negotiating a reseller agreement with a prospective reseller. The reseller has asked for exclusivity in a stated geographic territory and market segment.
QUESTION: From the manufacturer’s perspective, what would be the preferred approach, of those that are listed below?

Answer 36

The reseller must achieve concrete sales goals and payments on a quarterly or annual basis, failing which the manufacturer can terminate the reseller relationship

Question 37

FACTS: Manufacturer wants Reseller to agree to charge Reseller’s customers in accordance with a price schedule that Manufacturer will promulgate from time to time. You represent Reseller.
TRUE OR FALSE: This is probably unobjectionable

Answer 37

False

Question 38

FACTS:
(1) A contract states that breach of a certain obligation will be considered a “material” breach that will allow the other party to terminate the contract by notice.
(2) The obligated party breaches the obligation, whereupon the other party duly terminates the contract and sues for damages.
(3) In court, the obligated party admits its breach, but it claims that the breach wasn’t material and so the other party shouldn’t have terminated the contract.
TRUE OR FALSE: The breaching party might have a very difficult time persuading a court that the breach wasn’t material.

Answer 38

True

Question 39

TEXT: “If a party becomes insolvent, then the solvent party may terminate this Agreement upon 30 days’ written notice.”
TRUE OR FALSE: This is an acceptable form of drafting. (Assume that the ipso facto termination prohibition of the U.S. Bankruptcy Code does not apply.)

Answer 39

False

Question 40

FACTS: A contract between Alice and Bob allows Alice to terminate both for cause and (only during a specified time frame) without cause; either form of termination written notice.
TRUE OR FALSE: If Alice wants to terminate without cause, her notice of termination must state the reason for termination, so as to be clear that the termination was not for cause.

Answer 40

False

Question 41

FACTS: Bob breaches his contract with Alice. She gives him notice of the breach per the contract’s termination provision. Bob doesn’t cure the breach within the cure period stated in the contract. Alice terminates the contract as permitted by the termination provision.
TRUE OR FALSE: By terminating the contract, Alice has elected her remedy and so has waived her right to sue Bob to recover her damages arising from the breach.

Answer 41

False

Question 42

TEXT: “By notice to Bob, Alice may terminate this Agreement at will if Bob materially breaches this Agreement and does not cure the breach within 30 days after receiving Alice’s notice of breach.”
QUESTION: Does this provision make sense?

Answer 42

False

Question 43

TEXT: A termination section says in part: “Alpha may terminate this Agreement if Beta files a petition in bankruptcy.” Both Alpha and Beta are in Houston.
TRUE OR FALSE: In the U.S., this should be unobjectionable, but not in the UK

Answer 43

False

Question 44

If a contract is going to define “material breach,” how would that BEST be done?

Answer 44

Specify that particular breaches are to be deemed material.

Question 45

FACTS: You represent MathWhiz, which has asked you to draft a contract under which MathWhiz will engage in seismic data analysis for Gigunda Energy to use in looking for petroleum deposits. You and MathWhiz are concerned that seismic data analysis is an imprecise science, and so you want to include some serious warranty disclaimers, because Gigunda will be sinking (no pun intended) hundreds of millions of dollars into its drilling efforts. Gigunda is willing to agree to including your proposed disclaimers, but asks that MathWhiz commit to using its “best efforts” to produce an accurate map showing the best areas for Gigunda to drill wells.
QUESTION: In these circumstances, would it probably be OK for MathWhiz to agree to Gigunda’s request for a best-efforts commitment?

Answer 45

Not a great idea, because a best-efforts clause can mean different things in different jurisdictions.

Question 46

FACTS:
1. You represent Alice in negotiating a contract with Bob. Texas law applies.
2. Bob’s draft contract states that Alice must use her best efforts to get X done by a specified date.
3. “X” is something that’s not really a big deal to Bob.
4. Alice tells you in confidence that she can “give it a try” to make X happen by the specified date, but she isn’t at all sure she’d succeed, because succeeding might require her to spend far more money than she can afford.
QUESTION: Is it likely to be an acceptable business risk for Alice to go along with the best-efforts obligation?

Answer 46

Yes: A best-efforts obligation doesn’t require success, and Bob isn’t likely to be terribly upset if Alice doesn’t succeed.

Question 47

FACTS: 1) You represent Alice, who is negotiating a contract under which she will perform certain Web development services for Bob, who has drafted the contract. 2) Bob’s contract draft calls for Alice to perform the services in a “workmanlike” manner.
QUESTION: If Alice were to agree to this requirement, to what would she be committing herself?

Answer 47

“Workmanlike” generally refers to work that would be considered proficient by those who regularly and successfully engage in the relevant trade or business.

Question 48

What are two areas of (federal and/or state) citizen-rights law that parties conducting background checks on individuals should keep in mind?

Answer 48

1. Federal FCRA (Fair Credit Reporting Act)
2. Both Federal and State Antidiscrimination Laws

Question 49

FACTS: Alpha Corp. and Beta Inc. are negotiating a $100 million contract. The notices provision states: “Any notice under this Agreement will be effective three days after mailing by first class mail.”
QUESTION: What do you think?

Answer 49

I think the 3R’s (receipt, refusal, or reasonable attempts). As written, the party being notified could have a provision forced on them even though it never received the mailing.
Also, it might be good to include that the notice will go to a specific position and copied to the legal department or law firm.
And I think specifying the type of mailing might lead to less problems, i.e., a type of mail that needs to be signed for, for example certified mail.
Lastly, depending on what is being noticed, it might be better to have a less formal way of notifying the other parties, i.e., emails for standard notifications that don’t matter as much, and leave the formal certified notifications to the more important notices.

Question 50

TEXT: A termination section says in part: “Alpha may terminate this Agreement if Beta files a petition in bankruptcy.” Both Alpha and Beta are in Houston.
QUESTION: What do you think about this?

Answer 50

If Beta files for bankruptcy, then Alpha will very likely not be able to terminate because of the stay created by United States Bankruptcy law, i.e., this provision is likely unenforceable

Question 51

Name one type of agreement that, under U.S. law, generally cannot be assigned without the other party’s consent, even if the agreement is silent on the subject.

Answer 51

If the assigning party’s performance is special or unique

1. Intellectual-property license agreements
2. Agreements where it’s important who the party is that will be providing services or other performance (e.g., Kanye West replacing Willie Nelson at the Houston Livestock Show & Rodeo).

Question 52

Paying parties typically want to be invoiced for amounts they owe under a contract because they want to comply with [blank] requirements imposed (typically) by accounting standards.

Answer 52

internal controls

Question 53

It’s not unusual to backdate a sales contract to make it effective as of an earlier date. (Careful — be sure to read this closely.)

Answer 53

False

Question 54

EXPLAIN IF FALSE: In the U.S., a court will generally enforce an arbitration provision (unless it’s unconscionable).

Answer 54

True

Question 55

1. Gigunda wants MathWhiz to sign a special confidentiality agreement to protect some super-secret Gigunda information.
2. Gigunda’s draft agreement says that if it appears that MathWhiz will be disclosing or using Gigunda’s information without permission, then Gigunda can seek a preliminary injunction, AND that MathWhiz waives any requirement that Gigunda post a bond.
   CHOOSE THE BEST ANSWER: How do you respond?

Answer 55

Delete the bond waiver, redlining it.

Question 56

1. Your client MathWhiz (based in Texas) and Gigunda (in California) are negotiating a contract for MathWhiz to perform services for Gigunda.
2. For this particular contract, Gigunda wants MathWhiz to send people to Gigunda’s California headquarters to work with Gigunda’s people.
3. The draft contract is silent about choice of law and choice of forum, because Gigunda rejected specifying Texas law and forum.
4. MathWhiz plans to sign the contract at Gigunda’s California headquarters.
5. MathWhiz asks you whether you should add a waiver of jury trial to the contract.
   CHOOSE THE BEST ANSWER: What do you advise MathWhiz?

Answer 56

Not a great idea - on these facts, any litigation would likely be filed in (or transferred to) California, and California law would apply; under California law, pre-dispute waivers of the right to jury trial are unenforceable.

Question 57

FACTS: Gigunda wants MathWhiz to obtain Gigunda’s prior written consent before assigning a contract between the two companies.

FILL IN THE BLANKS: MathWhiz is willing to agree to the assignment-consent requirement, but it proposes revising the provision to say: “Gigunda will not unreasonably [blank] its consent.”

Answer 57

withhold, delay, or condition

Question 58

TRUE OR FALSE: It might NOT be worthwhile to “fix” vague language in a draft contract (as opposed to ambiguous language).

Answer 58

True

Question 59

If a contract provision gives Alice the right to unilaterally amend the contract but does not put certain limits on that right, then the entire contract might be unenforceable because it is “ill” in this way: [BLANK]

Answer 59

illusory

Question 60

FACTS:
1. You represent ABC LLC, a manufacturer of highly-specialized oil drilling equipment. You’re helping ABC negotiate a major master purchase agreement with Gigunda Energy; ABC is hopeful that this agreement could represent significant business.
2. Gigunda’s lawyer has drafted the contract; it includes a provision requiring ABC to obtain Gigunda’s prior written consent before assigning the agreement.
ABC has informed you — in confidence — that it is discussing a possible agreement with a private-equity firm, Delta Tau Chi L.P., in which ABC will “spin off” one of ABC’s product lines by selling the business assets of that product line to a new company to be formed by Delta. Your contact at ABC cautions you that ABC isn’t yet ready for anyone else to know about its discussions with Delta.
QUESTION: What is probably sensible advice to suggests to ABC? (There could be multiple correct answers.)

Answer 60

1. “Consider asking Gigunda to sign an NDA and then telling them you’re considering spinning off a product line.”
   
   2. “Ask Gigunda to include an exception to the assignment-consent requirement for asset dispositions.”
   3. “Ask Gigunda to delete the assignment-consent provision BUT state that Gigunda may terminate the Agreement within X days if it doesn’t like the new owner.”

Question 61

An agreement can be amended by setting out the entire agreement anew, as modified; this is referred to as a (or an) [blank] agreement

Answer 61

amended and restated

Question 62

FACTS: A draft contract between MathWhiz and Gigunda Energy states in part: “The parties agree and acknowledge that Gigunda’s liability for breach of any of its obligations, other than its obligations to pay MathWhiz’s invoices when due, will be limited to USD $100.”
QUESTION: In Professor Toedt’s view, which of the following will be true about the “agree and acknowledge” wording? (Ignore the business- and legal substantive issues arising from the provision.)

Answer 62

This drafting style could be used sparingly if desired for “sound bites.”

Question 63

FACTS:
1. A seller normally deals exclusively in widgets. But for one transaction, a new salesperson, working for seller, mistakenly accepts as a trade-in a batch of gadgets — a totally-different product — even though no one at the seller knows much about gadgets.
2. The seller checks online to find out what gadgets sell for, and places a for-sale ad on Craigslist to sell the gadgets.
QUESTION: Under these circumstances, and under the Uniform Commercial Code, does seller count as a “merchant”? CHOOSE THE BEST ANSWER.

Answer 63

No, because the seller does not regularly deal in gadgets and gadgets are very different from the widgets that the seller normally deals in.

Question 64

An officer of a limited partnership who also owns a limited-partnership interest in the limited partnership can sign a contract on behalf of the limited partnership.

Answer 64

True

Question 65

TEXT: “Consultant agrees to indemnify and hereby does indemnify, defend and hold harmless Atari, its affiliates, and their respective officers, directors, employees, distributors, agents, customers and licensees from and against any liability, damage or expenses (including without limitation attorneys’ fees) based on the untruth or breach of any representation, warranty or covenant contained in this agreement.”
QUESTION: Does “and hereby does indemnify” belong here? Pick the BEST answer.

Answer 65

No (unless Consultant is paying off his/her indemnity obligations in advance)

Question 66

FACTS:
1. Your client, Alpha LLC, is being asked by Bravo Corporation to sign a services agreement drafted by Bravo. The intent is for Alpha LLC to perform services for Bravo.
2. The payment provisions cover payments made by either party.
PICK THE BEST ANSWER - TRUE OR FALSE: Assuming that the payment provisions were the only concern, it likely would be OK for your client to sign the agreement “as is,” because the payment provisions apply equally to each party.

Answer 66

False

Question 67

TRUE OR FALSE: Under article 2 of the Texas Uniform Commercial Code, a breach of contract action can be brought against a seller if the seller delivers the contracted-for goods BUT the goods do not measure up to the seller’s warranties for the goods.
Hint: Look up Baker Hughes Process & Pipeline Services, L.L.C. v. UE Compression, 938 F.3d 661, 666-67 (5th Cir. 2019) (affirming summary judgment for defendant).

Answer 67

False

Question 68

TEXT in a contract draft: “Buyer represents that it will pay Seller’s invoices net 10 days.”
QUESTION: Which of the following — if any — is true? (Could be zero or more.)
Assume that other issues are satisfactorily addressed elsewhere.
NOTE: You haven’t been told which side you’re representing.

Answer 68

If this is a “representation,” it could leave the door open for Buyer to argue that it needn’t pay.

Question 69

FACTS:
1. You represent Alice in negotiating a contract with Bob.
2. Texas law applies.
3. Bob’s draft contract states that Alice must use her best efforts to get X done by a specified date.
4. “X” is something that’s quite important to Bob.
5. Alice tells you in confidence that she can “give it a try” to make X happen by the specified date, but she isn’t at all sure she’d succeed, because succeeding might require her to spend far more money than she can afford.
QUESTION: In considering whether it’s likely to be an acceptable business risk for Alice to go along with the best-efforts obligation, choose the CORRECT answers below (could be zero or more):

Answer 69

1. Under Texas law, a best-efforts obligation doesn’t require success.
2. Under Texas law, it’s not entirely clear what level of effort would satisfy a best-efforts obligation.

Question 70

TEXT: “By notice to Bob, Alice may terminate this Agreement at will if Bob materially breaches this Agreement and does not cure the breach within 30 days after receiving Alice’s notice of breach.”
CHOOSE THE BEST ANSWER for assessing whether this provision is likely to be workable:

Answer 70

Termination at will does not require that there be a breach, nor a cure period.

Question 71

FACTS:
1) You represent Alice, who is negotiating a contract under which she will perform certain Web development services for Bob, who has drafted the contract.
2) Bob’s contract draft calls for Alice to perform the services in a “workmanlike” manner.
3) Texas law applies.
QUESTION: If Alice were to agree to this requirement, to what would she be committing herself? Choose the BEST answer.

Answer 71

Proficient work, as judged by successful practitioners

Question 72

If a contract is going to define “material breach,” how would that BEST be done in terms of being useful for the parties and (if necessary) litigation counsel and judges?

Answer 72

If a particular type breach is to be deemed “material” (e.g., late payment), then say so in the contract.

Question 73

FACTS: A Texas company competes in a global (geographic) market.
TRUE OR FALSE: For that company, a post-employment noncompetition covenant might be enforceable even if the (former) employee is prohibited from taking a job with a competitor anywhere in the world, as long as the time period and the scope of what the employee is prohibited from doing are reasonable.

Answer 73

True

Question 74

It’s typically OK for a party receiving confidential information under an NDA to agree (in the NDA) that upon termination of the NDA, the receiving party will return, or destroy, all copies of the confidential information that it received or made

Answer 74

False

Question 75

California will allow a non-California company to enter into an employment agreement with a California employee, with the agreement containing a post-employment noncompetition covenant, as long as: (i) the covenant is reasonable in time, geographic scope, and market scope, and (ii) the employment agreement states that the agreement will be governed by the law of a state that permits such covenants.

Answer 75

False

Question 76

Once an NDA is in place, it’s generally safe for the parties to switch roles — for example, the initial receiving party could later safely disclose its own confidential information to the initial disclosing party under the NDA.

Answer 76

False

Question 77

Which of the following is true about schedules (it could be zero or more):

Answer 77

1. Schedules are sometimes used as an easily-edited means of memorializing deal-specific information (e.g., price, dates, etc.)
2. Schedules are used in contracts to state exceptions to reps and warranties
3. A schedule in a contract will typically have the same number as the contract section where the schedule is principally referenced – e.g., “Schedule 4.5” is principally referenced in § 4.5 of the body of the contract.

Question 78

FACTS: You are reviewing a draft of a merger agreement between two billion-dollar companies.
CLAUSE TEXT:
Any notice required or permitted by this Agreement will be effective three (5) days after being deposited in the U.S. Mail in a sealed envelope that has first-class postage affixed and is addressed to the notified party as follows:
To Buyer: Buyer Corporation, 1600 Pennsylvania Avenue, Washington DC 20500.
To Seller: Seller LLC, First St SE, Washington, DC 20004.
QUESTION: Which — if any — of the following statements is true? (Could be zero or more.)

Answer 78

1. The address for notice to an organization should specify an “attention:” line.
2. A notice should be effective upon receipt (or refusal, or after reasonable unsuccessful attempts at delivery)

Question 79

1. Your client ABC LP is a Texas limited partnership.
2. Your contact at ABC is one of ABC’s investors (limited partners), Annie Alpha.
3. ABC is to enter into a contract with XYZ Corporation.
4. Annie has asked you to review XYZ’s draft of the contract.
5. In the draft contract, ABC’s signature block says “Annie Alpha, limited partner.”
   QUESTION: Is this signature block OK?

Answer 79

False

Question 80

FACTS: Manufacturer wants Reseller to agree to charge Reseller’s customers in accordance with a price schedule that Manufacturer will promulgate from time to time.
You represent Reseller.
Which of the following answers is CORRECT? (There could be more than one.)

Answer 80

1. This could create “resale price maintenance” issues, a.k.a. “vertical price fixing,” which could entail problems under U.S. antitrust law or EU competition law.
2. Reseller would likely object to this because Reseller likely will have made at least some investment in being able to sell Manufacturer’s product line, and Reseller will want to be able to recoup that investment.

Question 81

FACTS:
1. You’re a second-year associate. Your client, Buyer, is negotiating a contract to buy 1 million widgets from Seller.
2. A summer associate in your firm is reviewing and redlining the first draft of the contract, which was prepared by Seller’s counsel.
3. The summer associate notices that, while Seller’s draft includes some express warranties, there is no disclaimer of implied warranties. On her own initiative, the summer associate inserts the following text into the draft (with redlining, of course): Seller DISCLAIMS all other warranties, conditions, and terms of quality.
QUESTION: Which — if any — of the following is true? Could be zero or more.)

Answer 81

1. If you and the summer associate were preparing the draft (i.e., not Seller), then you’d want to check with the partner before including this warranty disclaimer in the draft.
2. When Buyer’s counsel is reviewing -Seller’s- draft, It’s not the job of Buyer’s counsel to insert a provision to protect Seller if Seller didn’t think to include the provision.
3. If you and the summer associate include this warranty disclaimer, it’d be a good idea to flag it in the draft for discussion with the partner and possibly the client before sending the draft to Seller.
4. If the facts were different, and it were you and the summer associate who were preparing the draft, then it might make sense to include this warranty disclaimer, to help get the contract to signature sooner.