February 2013

Last week I posted a sample contract and asked for feedback. I’ve made a few changes, most of which are in response to reader comments. You can see the changes in this redline, and here’s a quick recap:

1. Simplified price clause. Section 1 provided that “the Buyer shall pay any manufacturer’s tax, retailer’s occupation tax, use tax, sales tax, excise tax, value-added tax, duty, customs agent or broker fees, inspection or testing fees, freight costs, insurance, or any other tax, fee, or charge of any nature imposed on, in connection with, or measured by the transaction contemplated by this agreement in addition to the prices set forth on Exhibit A.” It bothered me to include such a list in simplified “Minimum Effective Legal Protection” contract. Ultimately, I decided that the list covered three areas: taxes, export expenses, and third-party expenses. Since the form is only meant for domestic transactions, export expenses don’t apply. I revised the sentence to read: “the Buyer shall pay all taxes and third-party expenses imposed on, in connection with, or measured by the transaction contemplated by this agreement in addition to the prices set forth on Exhibit A.” It doubtless needs more work, but I think it’s an improvement. [click to continue…]

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I’ve downloaded a couple of precedent contracts over the past few months from the crowd-sourced contract application Docracy for use in my legal practice. When I needed a simple contract for the sale of goods today, I checked in to see what was available. Finding no such agreement, I decided to finally make a contribution. You can see my handiwork here.

Several weeks ago I explored the idea of minimum effective legal protection in my post Considering a Contract’s Legal-Battle Rating. The gist is that in any given situation there’s a minimum level of legal protection that a contract — or a clause — should provide. Falling below that level leaves a party overly exposed to business and legal risks. When I drafted the sample I contributed to Docracy, I sought to achieve a seller-friendly MELP version of a simple business-to-business contract for the sale of goods to be used when there’s no special reason to think that the agreement will be litigated.

I’ve inserted the sample agreement below. What do you think? Would the document provide effective protection for a low-stakes run-of-the-mill B2B sale of goods, or have I omitted a clause that would leave my sale-side client unduly exposed? Is there any dead weight I could throw overboard?

[click to continue…]

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