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Document Review: Have Your Contract Reviewed For Specific Terms

A client of mine in in the City and County of San Francisco California called in to my office because he had just landed a new independent contractor gig in a nationally recognized technology company in the Bay area. As part of the new position he was tasked with the job of creating manuals for several internal operations and procedures. As with all other employment arrangements, following the grueling multi-step interview process he was issued an independent contractor agreement. Familiar with independent contractor agreements and arrangement requirements, he asked me to decipher the document full of legalese into plain English.

Upon his initial review of the document, he wasn’t bothered by the terms described within the 10-page agreement. The terms were short and reflected the general understanding the two parties made over the phone. However, this client wanted clarity concerning certain provisions that appeared to limit his rights upon entering the agreement. Following my same-day review of the document, we had a lengthy conference call to discuss the details of the contract.

First, wage and payment arrangements needed clarity. For example, a certain compensation amount was identified, but what are the reporting requirements? When was pay delivered and via what method? Was a time limit required? When are payments deemed late and what happens then? And so on. These are all questions that should be answered within the contract or described within some separate written policy.

Then we moved on just about 2/3 of the way into the agreement. This is where terms start getting interesting in a contract review. Terms included  the following:

  • a strict non-competition policy
  • a loyalty provision
  • a non-solicitation requirement
  • a media communications restriction
  • a moonlighting restriction
  • representation and warranties
  • limitations of liability
  • governing law
  • mediation and alternative dispute resolution
  • severability clause
  • a unique confidentiality clause
  • and the terms continued on.

While some of these are rather normal, some of the terms were too restrictive and 1 of them was arguably unlawful.

In all, my client was happy to have his independent contractor agreement reviewed BEFORE signing it allowing him the opportunity to negotiate certain terms. After a few days of some back-and-forth between the two parties and a bit more legal counseling through the process, he was able to settle the terms he was comfortable with and completed the agreement with information so as to remove ambiguities in other areas.

With a completed agreement at the end, the client was off and running with his job. Having his contract reviewed saved him future headaches by seeking clarity with plenty of areas in his contract. Do the same for yourself if there are provisions of the agreement that you do not understand. Do the same even if you do understand the terms and greatly value the transaction. Attorneys are trained to review documents with a critical eye and recommend negotiations when needed.

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Mediation and/or arbitration clauses in your contracts. Understand how each option works before signing your next contract.

When you enter into a contract you will often see that the initial terms are the most important ones describing the goods or services, prices, quantities and other matters that two parties have negotiated.  These are the material terms that contain the purpose of the contract. As you move towards the end of the contract, you will find miscellaneous boilerplate terms that a lot of people tend to glance over for a split second before signing the agreement. Miscellaneous terms tend to include provisions such as:

  • Jurisdiction. This paragraph describes which state laws will be used to interpret the terms of the contract.
  • Severability. This paragraph states that if any provision is determined invalid, the rest of the contract’s terms will be enforceable.
  • Assurances. This paragraph states that one party or the parties will take necessary actions necessary to carry out the terms of the contract.
  • Attorney’s Fees. This paragraph describes how and whether any attorney’s fees will be enforced if attorney’s are required in enforcing the terms of the contract.

The above are only a few examples and basic descriptions of the miscellaneous types of terms within a standard agreement. There are many others that should be reviewed thoroughly to understand the entirety of the transaction.

Well-written contracts also include a paragraph describing how any future disagreements related to the contract will be resolved. This paragraph is usually titled after your options – Mediation, Arbitration and/or Dispute Resolution. Understand that by signing the agreement, you are binding yourself to these resolution options in the event there is a problem in enforcing the contract in the future regardless of whether the enforcing party or not. It is a very important paragraph to review which will affect your future and should not be taken lightly.

  • Mediation is typically a 1 day negotiation facilitated by a neutral third party, usually a retired judge, with the goal of resolving the matter jointly between the parties.
  • Arbitration is a longer process similar to a lawsuit in court, except that it is managed outside of court using 1 arbitrator or a panel to make a decision. The process involves presenting evidence, arguments, calling witnesses and questioning by the parties, and so forth.

Both options are made available as more time- and cost efficient solutions towards resolving legal problems related to a contract rather than going to court for resolution.  The above descriptions are extremely basic and should be explored carefully. Well-written dispute resolution paragraphs describe in detail how the process will work.  Seek legal advice to interpret the paragraph if it is written in legal jargon.

BEFORE you sign an agreement, we recommend taking your contract to an attorney to discuss whether a dispute resolution option is best over the other option, Of course, this all depends on a few variables:

  • the type of transaction
  • the relationship between the parties
  • whether mediation is a practical option between the parties
  • your available funds towards resolving problems should they arise
  • whether you have a true option in negotiating the terms or simply have to adhere to the terms as written

KNOW that mediation, arbitration, and other alternative dispute resolution options apply to a wide variety of contracts. These include:

  • cable bill
  • internet bill
  • new car purchase and lease
  • mortgages
  • employer/employee contracts
  • furniture purchase contracts
  • car service agreements
  • rental car contracts

Practically, all well-drafted and complete contracts include this type of provision. If your contract does not include such provision, seek legal advice before signing the contract.

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Spring weddings are coming up. Add this to your wedding prep plans.

While parts of the County like Mission Valley, La Jolla, Fashion Valley, Ocean Beach and Sorrento Valley are currently  experiencing flooding issues this season with the recent El Nino related storms, some residents are thinking positively and are looking forward to a brighter upcoming Spring wedding season.

Weddings in general are surrounded by happy thoughts for the bride, the groom and their families. Most brides and grooms go through the motions of attending wedding expos and food samplings in preparation for their big day. These are all fun activities. But there are two activities that tends to get left out, probably for being considered less enjoyable: premarital legal planning and financial planning prior to marriage.  What is premarital legal planning? This can include the following:

For example, I once worked with a couple who were both previously married. The bride-to-be had a child from her previous marriage and the groom-to-be had an inheritance from his parents. Both wanted to know how their upcoming marriage was going to affect the bride’s son and the groom’s inheritance. Fortunately, they came for legal help before marriage thereby allowing them some important options. It was a bit of a rushed process since their wedding date was about 4 weeks out, however, timely assistance was possible.  Premarital legal planning is important.

If you’re getting married in 2016, we recommend that you speak with an attorney if you have any questions about your finances, family planning or property ownership planning. Marriage may or may not affect your situation. A consultation will help you determine your options.