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									Contract Law Basics
A Practical Approach to Contract
Review and Negotiations
Three Parts of The
Presentation
   Practical
   Educational
   Legal
The Practical
Critical Basics to Remember
Communication &
Common Sense
The stuff lawyers make confusing
and corporations hope you don’t
have!
Real Life Signs That Make
You Think “What Did You
Mean to Say” ?
   Seeing Eye Dogs Allowed
   Please Do Not Put Foreign Material in
    the Urinal.
   Hands Free Urinal
   AHO – HO
RULE NUMBER ONE

   Read each contract completely, ask
    questions and utilize additional
    resources if you need answers
Critical Basics to
Remember
   Who is the most commonly utilized
    resource that should NEVER be a
    resource unless all facts are verified?
Your well trained sales
advisor.
Contract “Sign On” Bonus

   The customer signs on and the vendor
    gets the bonus.
   Close the deal based on the needs of
    the hospital, not the sales promotion
    timetable of the needs of the sales
    person’s wallet.
Important Resources

   Corporate Compliance Officer
   Risk Manager
   JCAHO Team Leader
   Subject Expert
   Hospital Attorney
   Outside Review
Contract Review
Considerations
   Include hospital terms and conditions as an
    addendum to the vendors contract. It MUST
    be stated that hospital terms and conditions
    SUPERSCEDE vendor terms and conditions.
   Have an “authorized agent” of the company
    sign the hospital purchase order.
Contract Review
Considerations
   BEWARE of the third party
    confidentially clause.
   NEVER sign away the right for third
    party review!!!!!!!!!!!!!!!!!!!!!!!
Contract Review
Considerations
   Address automatic contract renewal,
    sometimes known as “Ever Green”
    clause.
   Review state law jurisdiction.
   Consider meditation clauses.
   Use historical data for volume
    commitment contracts & project
    conservatively.
Create a Negotiation Plan

   To negotiate the sky is the limit, but
    understand your essential needs.
   Utilize a subject expert.
   Set your time line, the best deal is the
    next one!
   Know when to “close”.
Items to Negotiate
   Extended Payment Terms or Discounted
    Quick Pay.
   Late Payment Terms, be very wary of % of
    sale!
   Buy out terms.
   Taxes and other fees.
   Freight, fuel charges, hazmat fees, if
    applicable.
   Price Increases.
Writing Your Addendum

   Clearly define expectations in writing.
   Craft your language clearly and easy
    to understand.
   The courts normally support the
    clearest definition of intent.
   GET THE LAST WORD IN!
The 800 pound guerilla
theory
   Corporate attorneys write one sided
    agreements, look for balance.
   Who has the bigger legal resources?
   Leverage Resources.
   Bring your own guerilla!
QUESTIONS ?
The Educational

   Suggested Resources and Practical
    Advice, Four Books to Read to Help
    Win with Contracting & Personal Life
Where to get contract
language, contract review
and template RFP, RFI, IFB.
   Utilize third party experts!
Getting to Yes
How to Negotiate Without Giving
In
What They Didn’t Teach
You at Harvard Business
School
   I don’t know
   I need help
   I’m sorry
The Four Agreements, A
Practical Guide To
Personal Freedom
   Assume nothing.
   Be true to your word.
   Always do your best.
   Don’t take anything personal.
Repacking Your Bags
Continue to grow and refine your
skill set!
The Legal
Stuff Written by a Real Attorney
I. What Is a Contract?

A.   Some concepts:
1.   A contract is an agreement between parties to perform or not
     perform certain acts in the future, the conduct is of a kind that the
     parties intend to be legally binding, and the agreement is such that
     a court may measure the loss suffered as a result of a breach.

2.   A contract is a promissory agreement between two or more persons
     that creates, modifies, or destroys a legal relation.

3.   A contract is an agreement upon sufficient consideration to do or
     not to do a particular thing.

4.   In order to be a contract, the promise made must be sufficiently
     definite “to justify a promisee in understanding that a commitment
     has been made.” Restatement (Second) of Contract § 2.
I. What Is a Contract?

B.   Historically, the concept involved promises to be
     kept -- pacta sunt servando -- “That every man
     kept his given word”.
1.   The concept is at least as old as the covenant between Israel and
     God .

2.   The concept of “social contract” is the basis of the Constitution --
     government by the mutual consent of the governed. The principles
     of justice supporting the basic structure of society (i) are the object
     of the original agreement which formed the government, (ii)
     regulate all further agreements and (iii) specify the forms of
     government that can be established. J. Rawls, A Theory of Justice
     11 (1971).

3.   Early American jurisprudence regarded contract rights as a natural
     product of the immutable principles that preceded human law.
I. What Is a Contract?

C. Requirements for a contract:
1.   Promise: A commitment that something will or will not be
     done in the future. It must be definite enough to qualify as
     a promissory.

2.   Exchange: Something of value (“consideration”) is
     exchanged between the parties.

3.   Enforcement: The parties intend to be bound. Failure to
     abide by the promise results in legal sanctions.
I. What Is a Contract?

D.   Sometimes “contract” is thought only to be
     the writing between the parties. The
     writing itself is not the contract. Certain
     types of contracts must be evidenced by a
     writing, but other contracts that are
     evidenced by oral communications or
     conduct may be enforceable. A contract is
     an “abstract legal relationship between the
     parties.” J. E. Murray, Jr., Contracts: Cases
     and Materials, 5.
I. What Is a Contract?

E.   Importantly, a contract is whatever the court says it is. Case
     law has modified, elaborated, refined and expanded general
     common law principles and has construed and interpreted
     statutory requirements. Legal research may find case law
     that will determine the applicability of these basic concepts
     to any given situation Promise: A commitment that
     something will or will not be done in the future. It must be
     definite enough to qualify as a promissory.

     1. An “implied contract” or “quasi-contract” is an obligation imposed by law
     for the purpose of bringing about justice and equity, without reference to
     the parties’ intention. Although it is not a contract, it is treated as a
     contract. Restitution and unjust enrichment are two important principles: a
     person who has been unjustly enriched at the expense of another is
     required to make restitution to the other.
II. Promise: Offer and Acceptance

A.   An offer is a promise to perform,
     conditional on receiving acceptance.

     1. Sometime there is “lack of mutuality”: one party may
     have made no promise at all or made a promise that will
     permit that party to decline to perform. In this case, the
     contract is “illusory” because one party is not under any
     obligation at all.
II. Promise: Offer and Acceptance

B.   An advertisement is usually not considered
     to be an offer. Consider the problems with
     mass advertising if each flyer were
     considered to be an offer. Advertisements
     are seen as invitations for the buyer to
     submit an offer.
II. Promise: Offer and Acceptance

C.   A price quote could be an offer or may be viewed
     as “inviting an offer rather than as making one.”
     Restatement on Contracts (Second) § 26,
     comment (c). The seller quotes a price or bid
     for a product, and the buyer notifies the seller
     that it wants the product. This may be seen as
     an invitation to make an offer (seller) and the
     offer (the buyer). But, if the seller started
     supplying the product, and then increased its
     price, the buyer may be able to argue that there
     was a valid contract, as evidenced by the seller’s
     conduct.
II. Promise: Offer and Acceptance


D.   Acceptance: may be made verbally, in
     writing, or it may be inferred from silence
     or conduct.
II. Promise: Offer and Acceptance


E.   To be enforceable, the promise must be
     definite.
II. Promise: Offer and Acceptance

F.    An offer may be revoked before
      acceptance, unless it is a firm offer, under
      the Uniform Commercial Code, § 8.2-205                                                            [1]:



      An offer by a merchant to buy or sell goods in a signed
      writing which by its terms gives assurance that it will be held
      open is not revocable, for lack of consideration, during the
      time stated or if no time is stated for a reasonable time, but
      in no event may such period of irrevocability exceed three
      months; but any such term of assurance on a form supplied
      by the offeree must be separately signed by the offeror.
[1] In Virginia, Article 2, the Uniform Commercial Code, codified at Title 8.2 of the Code of Virginia, governs
      contracts for the sale of goods. This Article will be referenced throughout this presentation as UCC §
      8.2-xxx.
II. Promise: Offer and Acceptance

Example 1: “This offer will remain open for six
   months from the date of this letter. Sincerely, X”
   (The statute permits a firm offer to be open for
   just three months.)

Example 2: “We can offer you this product at $100.
  This is a firm offer. Sincerely, X”(This offer will
  remain open for three months.)

Example 3: “We offer you this product at $100.
   Sincerely, X” (This is not a firm offer).
II. Promise: Offer and Acceptance


G.   Acceptance may be evidenced by a party’s
     conduct
III. “Mirror Image Rule” and the
“Battle of the Forms”


A.   Under the common law “Mirror Image
     Rule”, the acceptance has to be exactly the
     same as the offer or there was no contract.
     A party’s reply changing or adding terms
     not in the offer constitutes a counteroffer .
III. “Mirror Image Rule” and the
“Battle of the Forms”

B.   This results in the “Battle of the Forms”.
     The Mirror Image Rule, in transactions
     involving goods between merchants, has
     been modified by the Uniform Commercial
     Code (“UCC”) § 8.2-207:

     § 8.2-207. Additional terms in acceptance or
     confirmation
III. “Mirror Image Rule” and the
“Battle of the Forms”
(1)   A definite and seasonable expression of acceptance or a written
      confirmation which is sent within a reasonable time operates as an
      acceptance even though it states terms additional to or different from
      those offered or agreed upon, unless acceptance is expressly made
      conditional on assent to the additional or different terms.

(2)   The additional terms are to be construed as proposals for addition to the
      contract. Between merchants such terms become part of the contract
      unless:
      (a) the offer expressly limits acceptance to the terms of the offer;
      (b) they materially alter it; or
      (c) notification of objection to them has already been given or is given
      within a reasonable time after notice of them is received.

(3)   Conduct by both parties, which recognizes the existence of a contract is
      sufficient to establish a contract for sale although the writings of the
      parties do not otherwise establish a contract. In such case the terms of
      the particular contract consist of those terms on which the writings of the
      parties agree, together with any supplementary terms incorporated under
      any other provisions of this act.
III. “Mirror Image Rule” and the
“Battle of the Forms”
C.   Pursuant to UCC § 8.2-104, "Merchant" means a
     person who deals in goods of the kind or otherwise
     by his occupation holds himself out as having
     knowledge or skill peculiar to the practices or
     goods involved in the transaction or to whom such
     knowledge or skill may be attributed by his
     employment of an agent or broker or other
     intermediary who by his occupation holds himself
     out as having such knowledge or skill. “Between
     merchants” means in any transaction with respect
     to which both parties are chargeable with the
     knowledge or skill of merchants.
III. “Mirror Image Rule” and the
“Battle of the Forms”
D.   UCC § 8.2-207 was designed to regulate the
     conduct whereby each party sent back preprinted
     forms with different terms. Now, the mere
     presence of additional terms in one of the parties’
     forms will not prevent the formation of the
     contract.
1.   If no contract is recognized, under 2-207 (1), then the transaction
     is nullified.

2.   If performance by both parties evidences the intent to be bound by
     a contract, then under 2-207(3), the conduct is sufficient to
     establish a contract.
III. “Mirror Image Rule” and the
“Battle of the Forms”
3.   If there is a contract, the terms are those upon which the parties
     agree and any additional ones supplemented by the UCC.

4.   Example: One party’s “acceptance” had arbitration terms. The
     parties did not agree to arbitration inasmuch as the forms did not
     match. But both parties performed. There was a breach. Is
     arbitration required? Since there was no agreement as to the
     arbitration terms, the question is whether the UCC allows the
     parties to supplement that term under some other UCC provision.
     Some courts have held that the only supplemental terms that are
     allowed are those that are the “gap filler” provisions in Article 2,
     such as
                            place of delivery (UCC § 8.2-308)
                            time for shipment (UCC § 8.2-309)
                            time payment is due (UCC §8.2-310)

     Other courts may allow a reasonable price term to be substituted, under
     UCC § 8.2 2-305 if there was no agreement as to price.
III. “Mirror Image Rule” and the
“Battle of the Forms”
E.   The italics in the statute above clarifies that when
     an acceptance (absent conditional language in the
     acceptance) adds additional terms, those
     additional terms become part of the contract
     unless the terms listed in 2 (a)-(c) apply. Under
     section 2, the additional terms proposed by the
     buyer are deemed to be proposals for new terms
     to the contract.
III. “Mirror Image Rule” and the
“Battle of the Forms”
F.   If the acceptance of the additional terms is
     required for a contract to be formed, then a party
     can prevent the other’s terms from prevailing, but
     there is no contract. Look for the following
     wording to see whether additional terms constitute
     a counteroffer as contemplated by section (1):

Examples: “Acceptance of this offer must be made on the exact terms
   set forth herein. If additional terms are proposed, these terms will
   constitute a counteroffer, and no contract will be formed without
   offeror’s assent to the counteroffer.”

“This response supersedes any conflicting written or verbal terms of
    purchase.”
III. “Mirror Image Rule” and the
“Battle of the Forms”

G.   If there are differences in the terms, and the
     parties have performed, look to subsection (3) of
     the statute. The contract consists of the terms
     that match and any that may be supplemented by
     the UCC default provisions.

     Example: UCC § 8.2-305 provides that if there is no price term, the
     contract would be for a reasonable price for the product.
III. “Mirror Image Rule” and the
“Battle of the Forms”

H.   Section 8.2-207 is inadequately drafted.
     Frequently, there are two alternatives, but the
     statute only addresses one.
     1. An acceptance containing additional terms may be a valid
     acceptance if it is “definite”. If the terms are substantially different
     (price, description of goods, quantity) is it definite?

     2. What if the acceptance states that the agreement is subject to
     the conditions printed on the reverse side of “this form”? Is that a
     conditional acceptance?

     3. Section (3) controls a contract established by conduct. This
     could be a problem for the offeror because the UCC may establish
     terms more favorable to the offeree. The UCC warranty terms, for
     example, are probably more favorable to the buyer.
III. “Mirror Image Rule” and the
“Battle of the Forms”
 4. What is an “additional” term? Is it the same as a “different”
 term?
      a. Not necessarily.

       b. The courts are split, but the better view is that
 documentation containing significantly different material terms is not
 an acceptance, but beware. Each party should ensure that the
 party’s intentions are clear. Consider the following language:

           “Acceptance. Acceptance of this offer must be made on its
           exact terms and if additional or different terms are
 proposed by Seller, its response will constitute a counteroffer, and
 no contract will come into existence without offeror’s assent to
           the counteroffer.”
III. “Mirror Image Rule” and the
“Battle of the Forms”

I.   Make sure that the material terms match.
     Generally, price, quantity, date of delivery,
     payment terms are material, but each contract is
     fact-specific. If it’s important, make sure the term
     is expressly written in the final agreement, or
     restated as a condition to the contract in the
     acceptance.
III. “Mirror Image Rule” and the
“Battle of the Forms”

J.   As a buyer, if you have a PO or a RFP that has
     terms that are essential and material, make the PO
     or the RFP part of the final contract. You can do
     this by stating:

       “The Purchase Order (or RFP) of (date) is incorporated
       herein by reference and is made a part of this Agreement
       as if set forth and restated herein.”
IV. Intention to be Bound


A.   Many parties fail to adequately express their
     intention to enter into a contract and to be so
     bound. Sometimes a party does not intend that its
     offer be accepted without further negotiation. If
     so, the offeror should make this clear by indicating
     that the “offer” is only an invitation to negotiate.
IV. Intention to be Bound

B.   Frequently, the parties carelessly draft a “letter of
     intent” that turns out to be a “letter agreement”--
     even though the parties fully intended that further
     drafting/negotiation follow. The following type of
     language should be included in a letter of intent:
       “In order to be enforceable, the parties must enter into a written
        agreement signed by both parties.”

       “Among the conditions of closing the contemplated transaction,
        is the execution of a definitive agreement containing appropriate
        representations and warranties and requisite corporate
        approvals.”
IV. Intention to be Bound

C.   Under the common law parties who “agree to
     agree” at a later date did not have a contract.
     Under the UCC, however, parties may contract for
     the sale of goods by leaving terms open, according
     to UCC § 8.2-204(3):
       § 8.2-204. Formation in general.

       1) A contract for sale of goods may be made in any manner
       sufficient to show agreement, including conduct by both parties
       which recognizes the existence of such a contract.

       (2) An agreement sufficient to constitute a contract for sale may
       be found even though the moment of its making is
       undetermined.

       (3) Even though one or more terms are left open a contract for
       sale does not fail for indefiniteness if the parties have intended
V. Consideration


A.   A contract requires a bargain in which there is a
     manifestation of mutual assent to the exchange
     and a consideration.
V. Consideration

B.   Consideration is what a party receives in exchange
     for his consideration or his promise.

1. It may be an act, a forbearance, or the creation, modification
   or destruction of a legal relation (e.g. a separation
   agreement between spouses).
        a. Mutual promises can be consideration. Look at each
     contract to determine consideration on both sides.
         b. It’s okay if the number of exchanges are not “equal”
     or the consideration is not equivalent.
        c But the consideration has to be adequate.
V. Consideration


   Without consideration, a promise to
    perform is a “gift promise” and is not
    enforceable.
         Example: Although I promise to give you half my house,
    without consideration or an exchange to me on your part,
    this is an unenforceable gift promise.
VI. Parol Evidence

A.   It is important that the parties are able to rely on
     the expression of their intent as stated in the
     written contract or, in the case of an oral
     contract, in their verbal expression.

     1. It is wrong, however, to have a partially written and a
     partially verbal agreement if the contract is intended, or
     appears to be intended, to be entirely in writing.
VI. Parol Evidence

B.   The “Parol Evidence Rule”: When the parties to a contract
     embody their agreement in a writing, and intend that the
     writing is the final expression of their agreement, the terms
     of the writing may not be contradicted by evidence of a prior
     agreement.
     1. Example: The parties had an agreement. Subsequently, there was
     another agreement. A party argues that the second agreement was
     intended to be the final and complete expression of the parties’ intention,
     replacing the first agreement. A court would decide the question of fact: Did
     the parties intend the second agreement to be the final, complete
     (“integrated”) agreement, or did they intend that the terms of both
     agreements be operative?

           a. Extrinsic (outside the 4-corners of the document) or parol (oral) evidence can
     be used to determine the meaning of their manifestations of intent, or the
     interpretation of their outward manifestations.

          b. Extrinsic or parol evidence cannot be offered to vary, add to, or contradict the
     terms of a written agreement.
VI. Parol Evidence

C.   The parol evidence rule applies to prior or
     contemporaneous agreements and does not have
     any application to subsequent modifications. The
     parties are free to modify contracts.
     1. UCC § 2-209 (1) allows good faith modifications to be effective
     without additional consideration.

     2. Frequently, the parties have agreed that oral modifications are
     not permitted. An example of this “private statute of frauds” is:
            “All changes or modifications of this Agreement shall be in
     writing signed by the party against whom enforcement of any
     waiver, change, modification, extension or discharge is sought.”
VII. Merger Clauses

A.   Merger clauses (a/k/a “integration clauses” or
     “zipper clauses”) are contract clauses that read
     substantially as follows:
     1. “This Agreement contains the whole agreement between the
     Seller and Buyer and there are no other terms, obligations,
     covenants, representations, statements or conditions, oral or
     otherwise of any kind whatsoever”; or

     2. “This Agreement sets forth the entire understanding between
     the parties hereto and supersedes all other prior agreements
     between the parties with respect to the subject matter hereof.
     Each party acknowledges that no representations, inducements,
     promises or agreements, orally or otherwise, have been made by
     any party, or anyone acting on behalf of any party, that are not
     embodied in this Agreement, and that no other agreement or
     promise not contained in this Agreement shall be valid or binding
     as between Company and Client.”
VII. Merger Clauses


B.   Merger clauses are usually interpreted to
     determine that the agreement is completely
     integrated. There is, however, minority opinion
     refusing to give such clauses exclusionary effect, if
     the clause is not negotiated and on a preprinted
     form.
VIII. Contract Interpretation

A.   Some principles of contract construction
     1. Purpose of the parties. Make it clear what the purpose of
     the contract is, and the purpose the parties intended to
     effect.
     2. The contract should be construed as a whole. Courts
     favor interpretations that make sense when the contract is
     viewed as a whole.
     3. The contract speaks for itself”. This traditional view
     considers that the contract says what it means, not what the
     parties say it means. A more modern view is:
     4. The contract should be viewed in context.” The contract
     is part of the entire situation, the entire context or
     environment, all of which can be used to interpret the
VIII. Contract Interpretation

  5. Expressio Unius Est Exclusio Alterius. (The inclusion of
  one is        the exclusion of all others). If a clause in a
  contract lists specific        items, other items not included
  will probably be excluded.
     a. Use of the wording “including but not limited to” makes it clear that any list of
     particulars/specifics is not inclusive.

  6. The contract is construed against the party drafting it.
  The drafter is disadvantaged when courts consider the
  meaning of contractual       terms, interpreting the terms in
  favor of the non-drafting party.
  7. The reasonable, lawful meaning will be chosen over the
      unreasonable, farfetched or unlawful meaning. The
  interpretation      supporting public policy arguments will
  be favored.
  8. Ejusdem Generis. (“Of the same kind.”) If general
  contract  language is followed by specific items, the
VIII. Contract Interpretation

  9. A word or phrase used twice will be interpreted the same
  way for    each usage.
  10. Handwritten terms are favored over typed; typed are
  favored over printed; separately negotiated terms will be
  favored over preprinted forms.
  11. The parties are presumed to have read the contract, all
  of it, even the small print on the reverse of the forms.
  12. Conjunctive and Disjunctive. “And” can be used in a
  “several” sense (Dogs and Cats, either separately or
  together) or in a “joint” sense (Dogs and Cats, together
  only). “Or” may be inclusive (Dogs or Cats, or both), but
  sometimes it is used in an exclusive sense. (Dogs or Cats,
  but not both together). Be aware of the ambiguity and
  rewrite.
VIII. Contract Interpretation

B.   If you want to:                          Use this language:
       Create a right                           “entitled to”
       Create a requirement or duty             “shall”
       Create a discretionary choice or to
             indicate a exercise of a right     “may”
       Create a condition precedent             “must”
IX. Oral or Written?

 An oral contract or a contract evidenced by conduct may be
 perfectly enforceable if the other essentials for contract
 formation exist. Under English law, law, however, certain
 exceptions were created by the State of Frauds, in 1677 and
 to a large extent apply today. The following contracts, among
 others, should be evidenced by a writing:
        Promise to marry (e.g. prenuptial agreements)
        Contract which cannot be performed within a year
        Contracts for the sale of land, or interest in land
        Contracts or promises made by an executor
        Sale of goods worth over $500 (UCC § 8.2-201):


 Except as otherwise provided in this section a contract for the sale of goods for the price
 of $500 or more is not enforceable by way of action or defense unless there is some
 writing sufficient to indicate that a contract for sale has been made between the parties
 and signed by the party against whom enforcement is sought or by his authorized agent
 or broker
X. Breach

 Disputes arising out of contracts for the sale of
 goods can be very complex. Proper analysis
 requires detailed knowledge of the UCC, Article 2.
 Here are some of the UCC statutes implicated by
 disputes (failure to perform; supply of defective
 goods) in the sale of goods. Be careful and seek
 legal counsel when disputes arise.

     Rejection of nonconforming goods: UCC § 8.2-601
     Anticipatory Repudiation: UCC §8.2-610
     Retraction of Anticipatory Repudication: UCC § 8.2-611
     Right to Cure: UCC § 8.2-508
     Liquidated Damages: UCC § 8.2-718 (1)
     Buyer’s Remedies: UCC § 8.2-711
     Right to “cover”: UCC § 8.2-712
     Seller’s Remedies: UCC § 8.2-703
XI. Indemnification

A.   Indemnify means “to save harmless; to secure
     against loss or damage; to give security for the
     reimbursement of a person in case of any
     anticipated loss falling upon him.” An
     indemnification clause in a contract is like a
     private insurance policy: one party (the
     indemnitor) promises to pay the damages, and
     sometimes, the legal expenses, of the other party
     (the indemnitee), arising out of the contractual
     relationship or transaction. The indemnification
     clause usually covers claims by third-parties.
XI. Indemnification

B.   Under what circumstance does the indemnitor
     have to pay? It depends on the language in the
     indemnification clause:
     1. The indemnitor may be obligated to pay if the
     indemnitee is simply sued as a result of the transaction.
     2. Sometimes it’s an absolute requirement to pay “all
     claims”, period:
         “The customer agrees to defend, indemnify and hold harmless XYZ Container
        Corporation from and against any and all claims for loss or damage to property, or
        injury to or death of person or persons resulting from or arising in any manner out
     of customer’s use, operation or possession of the equipment furnished under the
     Agreement.”

         Sometimes the indemnification provision is triggered if negligence is
     claimed; sometimes, the indemnification is triggered if the lawsuit is
     premised on the indemnitor’s intentional or reckless conduct. Or,
     depending on the language, the obligation is triggered if the legal action
     is successful.
XI. Indemnification

 3. If the indemnification provision has the requirement “to
 defend”, it usually means the indemnitor has to pay the legal
 costs of the other party, but frequently may be able to chose
 the indemnitee’s legal counsel.

  4. Frequently, the indemnification clause is written so it is
 triggered only if the claims have been successful.
XII. Warranty

A.   The UCC has transformed the law of warranties
     with respect to the sale of goods. UCC § 8.2-313,
     -314, -315.
B.   The express warranty is a warranty crated by a
     promise or affirmation of fact by the seller in
     relation to some quality or feature of the goods
     which are the subject matter of the sale of goods.
     UCC § 8.2-313(1)(a)
     1. Trade usage, course of dealing or course of performance may
     affecct the interpreation.

     2. Express warranties may be created by model or sample; oral or
     written      representations of fact; plans or blueprints; technical
     specifications;       reference to official standards; products
     supplied in the past.
XII. Warranty

C.   The implied warranty of merchantability” is the
     basic quality of goods that the buyer is entitled to
     receive -- goods fit for the ordinary purposes of
     such goods. The buyer may not be entitled to
     perfect goods, but those which a reasonable
     buyer would normally expect to receive. UCC
     §8.2-314 (2)(c)

D.   The implied warranty of fitness for a particular
     purpose” applies when the seller has reason to
     know of a particular purpose which the buyer
     expects the goods to fulfill. The seller may also
     know that the buyer is relying on his particular
     judgment and expertise and skill in supplying
XII. Warranty

E.   Disclaimers
     1. Express warranties
        a. “Seller warrants that the goods are as described in this
                 agreement, but no other warranty is made.’
        b. “There are no express warranties.”


     2. Specific or general disclaimer to disclaim implied
     warranties
        a. UCC §§ 8.2-316 (2) or (3)
        b. “As Is”
        c. “Conspicuousness” requirement of UCC

								
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