Assignment of Noncompetition Agreements in an Asset Purchase

U.S. 8th Circuit Contract Cases
Personal Services

The 8th Circuit held, in Symphony Diagnostic Services No. 1 Inc. v. Greenbaum, that certain noncompetition and confidentiality agreements were assignable without consent in the context of a business acquisition.

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Liquidated Damages in Missouri

Contract Law Basics and Tips
liquidated damages

Liquidated damages clauses stipulate in advance the amount of damages a party will have to pay if it breaches a contract. Because a breach of contract action requires proof of damages, liquidated damages provisions can be a useful tool in circumstances where proving damages would be difficult. Examples of liquidated damages clauses include assessment of an administrative fee for late payment, per diem damages for late completion of a construction contract, and an earnest money deposit in a real estate contract. [click to continue…]

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Online Terms … Ugh!!

E-Contracting
boilerplate

Do you have an uneasy feeling when you “agree” to legal terms on websites, your iPhone, apps, and the like? You feel like you should be reading the terms before you accept them, but you don’t have time. Plus, you wouldn’t understand them if you read them. Plus, you have no choice but to agree to the terms, so why not save some brain cells and just click “I agree” and get on with your life?

When I do presentations on electronic contracting, I ask the audience how many read online terms before they agree to them (none), whether they think the terms they click on are enforceable (yes), and whether they think they should read them (yes). [click to continue…]

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Attorney Fees in Contracts

Sample Contract Language
attorney fees

I’ve advised clients on whether to sue for breach of contract many times over the past several years. In most cases the other side had clearly breached the contract, and my clients would have a solid case. However, they often decide not to bring suit, because the cost of suing would be excessive compared to the amount at stake.

As I discuss in my 2013 post Recovering Attorneys’ Fees, parties to litigation generally have to pay their own legal fees even if they win the litigation. So if someone has a $10,000 claim and it would cost $5,000 to sue, they’re probably not going to sue because it wouldn’t be worth it financially.

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Court Holds Panera Bread to Its Bonus Program

U.S. 8th Circuit Contract Cases
Panera Bread

The 8th Circuit held yesterday that Panera Bread breached contractual obligations owed to its general managers when the company unilaterally placed a cap on their bonuses. The case is unusually interesting in that it deals with a number of contract issues, including unilateral versus bilateral contracts, what constitutes consideration supporting contracts with at-will employees, commercial frustration, novations, and more. The case is Boswell v. Panera Bread Company. [click to continue…]

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Drafting Clearer Contracts 2017

Miscellany
Drafting Clearer Contracts

Yesterday, I finally had the opportunity to attend Ken Adams’s Drafting Clearer Contracts seminar, when he brought his world tour to St. Louis. I’ve known Ken from the blogosphere and Twitter for several years, but we’d not met until this week. I thoroughly enjoyed the seminar and came away inspired and motivated to continue to up my contract-drafting game.

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Whelan Security Co. v. Kennebrew Update: Noncompetes in Missouri

Missouri Contract Cases
Noncompetition Agreement

In this 2013 post, I blogged about Whelan Security Co. v Kennebrew, an important Missouri case involving an employee noncompetition agreement. In that case, the Missouri Supreme Court enforced a general noncompetition agreement and modified a non-solicitation agreement against out-of-state former employees.

Specifically, the Court held that a general restriction on competition within a 50-mile radius was enforceable. However, a covenant restricting the employees from soliciting the employer’s customers for two years after termination of employment was too broad as written, because the covenant was not limited geographically and there was no other language that would have limited the scope of the provision (such as restricting the prohibition to customers with which the employees had contact during the course of their employment). The Court modified the covenant accordingly. The Court also held that a covenant restricting the employees from soliciting prospective customers was too broad, not to mention the fact that the Missouri Supreme Court questioned in Healthcare Services of the Ozarks, Inc. v. Copeland whether an employer has a legitimate interest in prospective customers.

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Signing a Personal Guarantee Can Be Surprisingly Costly

Missouri Contract Cases
on the hook

When you own a small business, signing personal guarantees often seems like a necessary evil. Unless your company has strong credit, landlords, lenders, and others will often require you to personally guarantee your company’s obligations to them. One of the most harrowing experiences I had when I set up my own law firm was signing a merchant services agreement so I could accept payment by credit card — which of course required a personal guarantee.

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Signing Quotations

Battle of the Forms
quotation

I’ve advised people for years not to sign the other side’s purchase orders, acceptances, quotations, and other ordering documents unless the documents have been fully negotiated. That’s because it puts you at a huge disadvantage in the battle of the forms.

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Revisiting Liquidated Damages

Missouri Contract Cases
liquidated damages

Last week I discussed a case in which a Missouri appellate court upheld personal guarantees when the purported guarantors had signed a promissory note under the words “Personal Guaranty and Acceptance of Terms.” In that same case, the court held that a “late fee” was an unenforceable penalty, rather than an enforceable liquidated damages clause.

I’ve discussed liquidated damages provisions in these virtual pages before. In Liquidated Damages Provisions Can Be Your Friend, But Don’t Overreach, I talk about the difference between enforceable liquidated damages provisions and unenforceable penalties. So many people followed Google to that piece looking for sample contract language that I later posted a Liquidated Damages Clause Example.
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