CONTRACT DRAFTING ANALYSIS AND NEGOTIATION LAW
EIGHT (8) SHORT-ANSWER QUESTIONS FOR QUESTIONS 1-4: Crystal Summit is the CEO and founder of Summit Stones LLC, a renowned supplier of rare minerals and gems from Alpine Valley. Crystal recently negotiated a deal with Alpine Ascent Ventures, Inc., a wellknown developer of luxury mountain resorts and eco-tourism destinations. Alpine Ascent wants Summit Stones to be the exclusive provider of precious stones and high-quality minerals for Alpine Ascent’s upcoming mountain lodge and hiking trail projects. Alpine Ascent is known for its environmentally conscious approach and commitment to sustainable adventure tourism. They will be developing a world-class hiking trail network through the peaks of the Alpine Range, known for its breathtaking vistas and challenging terrain. Alpine Range is also an area where many of the government’s secret military training facilities are located. Crystal would like you to draft the contract and represent Summit Stones in finalizing this agreement. She provided you with the following information: • • • • The Summit Stones office is located at 207 Anderson Avenue, Alpine, New Jersey 07620. Alpine Ascent Ventures is headquartered at 14605 North 73rd Street, Scottsdale, Arizona 85260. Summit Stones will deliver all materials to the construction site(s) specified by Alpine Ascent. Initial term of 3 years, automatically renewing for 2-year terms unless either party gives written notice 30 days prior to the expiration of the relevant term. 1. Draft the title, preamble, and recitals. Note if there is additional information that you need. 2. Alpine Ascent’s attorney sent the following pricing and payment terms provision that Alpine Ascent uses in their contracts with other suppliers. Please review, then fill out the chart below with a brief summary of the provision and any edits/issues/questions you would like to raise. Supplier shall sell the Products to AAV at the prices set forth on Schedule B annexed hereto and incorporated herein by this reference. The prices shall be deemed to include the cost of warehousing, loading and shipment to the Premises. Supplier’s prices and terms of sale to AAV for the Products shall be no less favorable to AAV than Supplier’s prices and terms of sale to any other customer or distributor used or engaged by Supplier in any territory in the United States. Supplier may not raise prices at any time during the Initial Term. Supplier may adjust prices during the Renewal Term(s) upon one hundred twenty (120) days’ advance written notice to AAV, with such price changes becoming effective with Purchase Orders received by Supplier after the expiration of such one hundred twenty (120) day notice period. AAV shall pay the purchase price for the Products within thirty (30) days of its receipt of the Products from Supplier. Payment terms for payment of Product(s) shall be net thirty (30) days, two percent (2%) ten days. Summary • • • • • • • • • Proposed edits / questions / issues • • • • 3. Draft the signature lines for Summit Stones and Alpine Ascent. 4. What are some provisions specific to this prompt that you will want to include in the contract? • • • • • • 5. Your client, a software development company named TechCode Solutions, included the following force majeure clause in its standard contracts: “In no event shall TechCode Solutions be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications, or computer (software and hardware) services; it being understood that TechCode Solutions may use reasonable efforts to resume performance as soon as practicable under the circumstances.” During a critical software development project for a major client, TechCode Solutions encounters a significant disruption in its operations due to a cyberattack that compromises its internal systems and data. As a result, TechCode Solutions is unable to meet project deadlines outlined in the contract. Is the nonperformance excused? Why or why not? 6. Identify the ambiguity and redraft these provisions to eliminate it: a. The Canadian and Australian parties agreed to pay $3 million for the deal. b. Employee may be considered for a promotion only if the employee has three recommendations or one department award and has been working at the company for at least 2 years. c. The Trust may donate funds only to charitable and educational institutions. 7. You represent SCDP, an older, well-established advertising company that uses traditional marketing strategies. SDCP has a big book of business that includes products and services for senior citizens. SCDP wants to refresh its image to expand its market reach and explore new opportunities to appeal to younger audiences and diversify its client base. SCDP was recently approached by BitCBlockBlock, a successful cryptocurrency app popular among college students that wants to do some traditional marketing to tap into the broader market and enhance its brand visibility among experienced investors. Given this promising opportunity, SCDP would like you to meet with BitCBlockBlock next week to work out a deal for an Advertising Agency Agreement. How would you approach this negotiation? 8. You are the new General Counsel for Off White Lighting, Inc., a high-end interior design and retail firm. Six months ago (before you joined the company), Off White signed a Manufacturing Agreement with Rimowatt Manufacturing Co., a German company known for their hand-made light bulbs that get better with time and come with a lifetime guarantee. The agreement provided for the exclusive production of a line of unique, high-end light bulbs in a signature “off white” hue. An initial order of 2,000 light bulbs is in the final production phase and is scheduled to be delivered to the Off White warehouse next month. The President of Off White announced a major change to the company’s strategy yesterday. Off White wants to focus on being environmentally friendly and sell stylish window treatments that can harness natural sunlight. She wants the company to pivot away from any kind of artificial lighting and wants to cancel the light bulb contract with Rimowatt. There is nothing wrong with the light bulbs, and the loss of the contract will cause a hardship for Rimowatt, which dedicated their entire manufacturing team for three months to fulfill this order. You are handed the Manufacturing Contract and asked to figure it out. What are your next steps, and how would you advise the President?
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