A Fresh Look at the

Humble Contract Boilerplate

Contextual Views from Transactional Counsel
Karl Knoll, Clarabridge & Todd Harris, Womble Carlyle
ACC National Capital Region
July 18, 2017
 Who we are…
• Karl Knoll
– General Counsel of Clarabridge, formerly
corporate/securities partner at Womble Carlyle
– Focus today: GC’s do everything! What doesn’t a GC do?
– Focus when in law firms: M&A, venture capital, corporate
governance
• Todd Harris
– Partner, Womble Carlyle, Adjunct Professor, Georgetown
University Law Center
– Focus: Technology transactions, IP matters in M&A,
software and big data commercialization
 Today’s Big Picture…
• A big-picture discussion about the purpose and
strategic possibilities of common boilerplate
• In-the-weeds participatory discussion about
several key boilerplate provisions
• Presentation borrowed from Georgetown
University Law Center course, Information
Technology Transactions (LAWJ0295)
– “CITT” = Commercial IT Transactions
 What are we talking about when we
say “boilerplate”?
• General and miscellaneous provisions, “standard” to commercial practice
in the United States
• Contract “fine print,” usually at the end, commonly including these
provisions:
• Headings • Counterparts • Choice of Law
• Recitals • Notices • Venue
• Severability • Assignability • Merger/Integration/
• Amendments • Third-Party Entire Agreement
• Waivers Beneficiaries

• What we’re NOT talking about: the totality of rigid pre-printed, non-
negotiable contracts sometimes referenced as boilerplate
 Today’s 3 Main Points:
1. Context matters! The advisability, applicability and impact of common
boilerplate terms vary depending upon the nature of the deal.
– We’ll consider M&A, commercial B2B licenses, and B2C online contract
contexts.
– Not a litigation mindset per se.
– Note: Given their different backgrounds (practice contexts), Karl and Todd
sometimes view boilerplate provisions differently.
– Pause: What are the various practice contexts of lawyers in the room?
2. Boilerplate can serve strategic risk management purposes! It’s more
than mere contractual housekeeping!
3. Boilerplate often determines substantive business terms of a deal.
 Our Method:
• 1. What? (Identify the key clause to be discussed.)
• 2. What for? (Identify the commonly understood
“standard” purpose.)
• 3. Contextual Insights? (Consider the transactional
context where the clause is used. How can strategic
risk management purposes be served? )
• 4. Keep an eye on the business deal. (How does the
clause impact the agreed business-level outcome?)
Let’s apply the method to some key
boilerplate provisions!
 The Basic Choice of Law (1/2)
“Applicable Law. The Parties intend that the laws of the Commonwealth of
Virginia should be used to interpret and enforce this Contract. If any
instances occur when the laws of Virginia themselves would require the law
of another jurisdiction to be applied to this Contract, the Parties do not wish
the other jurisdiction’s law to be applied and instead intend for Virginia’s law
to be applied even in those situations. [The Parties do not intend or desire for
the UN Convention on Contracts for the International Sale of Goods to apply
to this Contract.][The Parties do not intend or desire for the Uniform
Computer Information Transactions Act to apply to this Contract.]”
 The Basic Choice of Law (2/2)
• “Standard” Purpose(s)? - Why do we need to specify the choice of law?
– Ensure enforceability?
– Consistency of interpretation across multiple contract partners when using
standard forms?
• What occurs when choice of law is not expressly specified?
• Context matters:
– M&A context? Choice of law yields efficiencies.
– Licensing of software and informational content? CoL changes deal.
• Virginia is a UCITA state!
– Consumer Ts & Cs. CoL impacts enforceability and numerous risk factors!
• We mean business: The choice of law may dramatically affect what the
substantive deal terms are!
– E.g., Applicability of UTSA/DTSA
 Participatory/Discussion Moment:
Apply the method to “Venue” clauses.
 Sample Venue Clause…
“Venue for disputes. The Parties agree that any litigation
between them may only be brought in courts located within
Virginia, and each Party consents to the jurisdiction of those
courts. However, a Party may bring an action solely for
purposes of seeking an injunction to stop or prevent
infringement of intellectual property rights or misappropriation
of Proprietary Information by the other Party in any court that
has jurisdiction.”
 Analysis of Sample Venue Clause
• Standard Purpose?
– Ensure use of courts local to client
• Strategic Purposes?
– Ensure fair courts, avoid unfavorable forum or obtain favorable forum
– Force ADR (manage costs, achieve confidential treatment, ensure expert
“judges”)
– Address international risks? (Defer to international panel, later today.)
• How do different contexts matter?
– M&A
– Licensing and other commercial contracts
– Consumer terms
• Can the business arrangement be altered by the venue clause?
Highly Strategic – Assignment Clauses
“Limitations on Assignment and Delegation. The Parties agree
that neither of them will have the right or ability to assign to any
third party some or all of its rights under this Contract, nor to
delegate to any third party some or all of it its duties. A Party
may waive enforcement of this provision only in a writing signed
by its representative that expressly indicates its consent to the
other Party’s assignment or delegation.”
Highly Strategic – Assignment Clauses
“Limitations on Assignment and Delegation. The Parties agree
that neither of them will have the right or ability to assign to any
third party some or all of its rights under this Contract, nor to
delegate to any third party some or all of it its duties. Any
document, instrument or act that claims to make such an
assignment or delegation will be interpreted as wholly
ineffective and will be disregarded. A Party may waive
enforcement of this provision only in a writing signed by its
representative that expressly indicates its consent to the other
Party’s assignment or delegation.”
Highly Strategic – Assignment Clauses
“Limitations on Assignment and Delegation. The Parties agree that neither
of them will have the right or ability to assign to any third party some or all of
its rights under this Contract, nor to delegate to any third party some or all of
it its duties. Any document, instrument or act that claims to make such an
assignment or delegation will be interpreted as wholly ineffective and will be
disregarded. A Party may waive enforcement of this provision only in a
writing signed by its representative that expressly indicates its consent to the
other Party’s assignment or delegation. As an exception to the provisions of
this paragraph, either Party may, without needing to obtain consent, assign
this Contract to the surviving entity of a merger to which it is a party, or it
may assign this Contract as part of an assignment of substantially all of its
business related to this Contract.”
Highly Strategic – Assignment Clauses
“Limitations on Assignment and Delegation. The Parties agree that
neither of them will have the right or ability to assign [...] As an
exception to the provisions of this paragraph, either Party may,
without needing to obtain consent, assign this Contract to the
surviving entity of a merger to which it is a party, or it may assign this
Contract as part of an assignment of substantially all of its business
related to this Contract. However, in either of those cases the
assigning Party may only assign the Contract in its entirety, not in part,
and it must require the assignee to agree in writing to assume all of
the assignor’s accrued and future obligations and liabilities under this
Contract. A Party may also assign its right to receive payments under
this Contract without requiring consent from the other Party, but it
must provide notice of that assignment to the other Party before the
assignment will be considered effective.”
 Analysis of Assignment Clause…
• Standard Purpose?
• Context matters a great deal when assessing
assignability of a contract:
– M&A Context?
– Reseller Context?
– Government Contractor performance services?
– Software License?
• The context of buyer versus seller…
• How does the assignment clause affect the business?
Care & Feeding of Merger/Integration
Clauses
“Entire Agreement. The Parties agree that the provisions of this
Contract are the entire agreement between them regarding the
matters that this Contract addresses. The Parties also agree
that any prior agreements about those same matters, whether
written or oral, are superseded by this Contract, and previous
oral agreements about those matters do not have any legally
binding force.”
 Merger/Integration
• Standard Purpose: Know what the deal is.
• Context matters:
– In the M&A context or license context, what other documents
or agreements might be incorporated or superseded?
– NDA study: what terms are being incorporated?
• Sample incorporation by reference of prior NDA
• Sample terms of NDA governing info for limited period
(“confidentiality period”)
• Query: For commercial agreements outliving the confidentiality
period, does incorporation by reference extend application of the
confidentiality provision?
• Let’s look at a sample…
 NDAs + Integration Clauses:
“Term; Incorporation by External Document. This Agreement will
become effective after both Parties have executed it. It will remain in
effect for a period of one (1) year and thereafter expire, provided that
either Party may terminate the Agreement sooner by giving written
notice. However, if the Parties enter into a separate written
agreement incorporating the terms of this Agreement, this Agreement
will be deemed to continue in effect for so long as the incorporating
agreement remains in effect, and any warranties regarding
Proprietary Information given by that separate agreement will apply,
notwithstanding the disclaimers set forth above. Any information,
including Proprietary Information, disclosed after termination or
expiration will not be subject to this Agreement, and neither Party will
have any rights and duties regarding such information by virtue of this
Agreement.”
Let’s look at the handout.
 Playing games with boilerplate…
• Placing disclaimers and limitations of liability
in the boilerplate?
• IP provisions in the boilerplate?
• Other?
• Impact upon arguments that the terms have
been fully reviewed, fully agreed?
 Summary
• Our practice mantra: “There is no such thing as a
legal issue. Every issue is a business issue or an
ethical issue.”
• Evaluating boilerplate is a matter of assessing
business risk, and that assessment is always
context-driven. By understanding our context
and our business goals, we can make strategic
use of boilerplate to achieve greater contractual
certainty and more certain enforcement.
Discussion?