Although the romantics amongst us wouln’t admit it, in some ways making a contract is just like getting married. Certainly, there is a general unwillingness to even admit the prospect of separation or divorce at the wedding ceremony, let alone discuss the exact terms and conditions of an eventual break-up with the vows of eternal togetherness. And so it is with contracts, too. Potential commercial partners, when courting in the intensive passion of the negotiations, spend little time to think what could happen if or when the end is nigh. Contracts do end. Just as they have a beginning so they will have an end. We should pay equal attention to both types of events and certainly have detailed provisions in the contract. When a contract starts  (the date of effectiveness and validity) should be clearly stated in the agreement. Similarly, we should have contract clauses, as applicable, on if, how and when a contract can be brought to an end by: a) the expiry of the contract term b) termination for breach or other events c) termination for convenience d) rescission ab initio so that the parties are returned to their starting position In some contract situations the parties may dare to briefly talk of termination, cancellation and rescission somewhere in the “Miscellaneous” section. But, the parties often do so without knowing exactly what they mean and realising that at law such words can have very different meanings and consequences. In the recent case of Hardy v Griffiths  [2014] EWHC 3947 (Ch) it was  held that the sellers of a property had in fact rescinded the contract ab initio (and not terminated it), with the unwanted result that they lost their rights to claim damages and to forfeiture of the deposit. Breaking up is made even more complicated by international relationships: so-called cross-system contracts in which law and language are mixed. Thus, a German law contract drafted and agreed in the English language only, will have a hard job with an English law term such as rescission? Does it mean Anfechtung, or could it be Aufhebung, but then again, what about Rücktritt or even Kündigung? These are examples of the pitfalls of cross-system transactions. Translate with care!   But, most importantly, make sure that you do consider from the very beginning and  set out exactly in your contract doucumentation the circumstances that can result in a contract ending, how it will end and the respective rights and duties of the parties. Separation can then also be a postive experience!      ...

                                 We have just completed another successful seminar workshop (Introduction to Working with Contracts) at the Hotel Victoria in the medieval city in Nuernberg. As always, it was a meeting for both lawyers and non-lawyers. Participants came from various parts of Europe but they all had in common a desire to improve how they draft, develop, negotiate and understand contracts from different legal systems. Our sessions involved identifying the pitfalls in both language and law. In particular, we dealt with cross-system business agreements. In the end we covered everything from drafting matters to issues of liability and the fifty shades of contract interpretation. I hope the contract overview will prove useful to the participants and they will take back lots of practical ideas for their work. Thank you for attending! My gratitude also goes out again to the wonderful team at Hotel Victoria: as always, great location, great hospitality and marvellous support! Thank you, and we look forward to seeing you at the next seminar! January, 2015 Stuart Bugg, Nuremberg P.S. Anybody interested in coming to Nuernberg to attend one of the seminars should check the programme for this year here in Facebook or in my blog (Bugg’s Lawspeak) or go to the Augustin & Bugg website at www.augustinbugg.com. Please note that places are limited to a maximum of ca. 16 at each seminar. So, please be sure to book...

Times change: we know that. What we tend to forget is that language changes, too. When I was being prompted by a menu on the Law Society website  (sorry, it is now is operated by the Solicitor’s Regulatory Authority ) to download and print out a hard copy of my new pdf-format practising certificate a few months ago, I had the chance to compare my rather pinkish print-out with the far more impressive printed version of the certificate the Law Society used to send out by post. I also thought about how the language has changed. Many of the words and phrases we use today in our daily work are either new or hijacked from other contexts. The office worker of the 1980’s would have major language problems today. When the green cathode tube monitor (not a television) first took over my desk along with a (non-musical) keyboard (and, much later, the amusing mouse) I had my first encounters with the desktop computer (and later the laptop). Of course, I now have a flatscreen monitor on my Apple and use a Blackberry, ipad or some other mobile device when travelling.Way back in the early days I used to receive most of my contract work with snail mail letters and usually had a bit of time to type in amendments and send a reply by post or make suggestions at a (face-to-face “real time“) meeting with the client. Today my work usually arrives by email attachment. Of course, I often have to send copies of my messages to interested parties as blind copies. I have even had to respond to items posted on social media on rare occasions. In  the New Zealand law firm I first worked in in the 1980’s we still had tea ladies appearing in front of the office door at 10:30 in the morning to serve hot tea and biscuits. On special days we were even supplied with chocolate biscuits. There were no coffee machines. Just tea ladies and tea breaks. Apart from telephone conversations, all discussions took place on a face-to-face basis. There were no Skype confrontations, no video conferences and, of course,  text messages (“SMS”), email and Facebook et al were all dreams from Star Trek and sci-fi writers. “Google” meant to stare at somebody and the internet was still being dreamt of in the minds of scientists. We had libraries and books instead. Telexes and telegrams were still used and the facsimile machine (fax) was a mysterious black-box device kept in a special room and used only by partners for special matters of great urgency. Telephones were very large, sitting on desks and connected by wires. Information was all in “hard copy” form and the clouds were only in the sky. Hardware had nothing to...

Places (participants limited to 14 per seminar) are still available in the following seminars: 1. Update 2014: Masterclass on Developments in English Contract Law 5-6 December 2014 Hotel Victoria Nürnberg 2. Introduction to Working with Contracts 23-24 January 2015 Hotel Victoria Nürnberg 3. Sales and Distribution Contracts in English 6-7 February 2015 Hotel Victoria Nürnberg 4. Contract Management and Boilerplate Clauses 17-18 April 2015 Hotel Victoria Nürnberg 5. German Contracts in English 17-18 July 2015 Hotel Victoria Nürnberg 6. Introduction to Common Law and Legal English 11-12 September 2015 Hotel Victoria Nürnberg 7. Masterclass: Contract Law Update 2015 4-5 December 2015 Hotel Victoria Nürnberg REGISTRATION FORMS etc.: augustinbugg.com/en/we-do/seminars/ For further information on the above seminars and workshops please contact us by telephone +49 (0) 911 945 8867 or by email seminar@augustinbugg.com or see our homepage at augustinbugg.com/en/we-do/seminars/ for further details and seminar...

Question: What are “cross-system” contracts? Are they the same as “cross-border” contracts ? Answer: Yes and no! Some contracts may fall into both categories as the definitions (sometimes) overlap to describe the same document: Cross-system contracts are legally-binding agreements (usually in writing or electronic form) that use one legal system for the applicable law (e.g. German Law) but which are written or developed in another language than the official language(s) used for that choice of law e.g. a German Law agreement with the binding language of the contract being English. In short, we mix the choice of law and language. Such agreements are very common today. A cross-border contract usually means an agreement with an international component such as, for example, the parties coming from different countries or the performance taking place in different jurisdictions or goods being delivered across an international...

At the commencement of negotiations or in particular types of deals such as M&A or IP or R&D it is always advisable to use extensive confidentiality agreements either as stand-alone contracts (non-disclosure agreements) or as long-form (extended) clauses in other documents e.g. in a letter of intent, LOI. You will need to take time and great care, particularly if you are a potential disclosing party, when drafting provisions on dealing with your organisation’s information. Information is knowledge and knowledge is power and, at the end of the day, a valuable commercial asset. Below you will find the beginnings of such an extended non-disclosure boilerplate clause as is often employed under English law. A full-form clause contrasts with shorter form versions (see Confidentiality in brief ) because of its length and its attention to details  and definitions. Here is a useful checklist for such extended non-disclosure clauses/agreements. Depending on your party’s position and interests, confidentiality agreements should contain: 1. a full definition of the material covered (confidential information); see text below, 2. a set of exclusions for information disclosed in particularly circumstances (e.g. as required by law or court order) or, for particular types of information (e.g. already in the public domain), 3. an explanation of exactly how and for what purposes information may be disclosed to third parties or employees etc. (e.g. for the purpose of contract performance only), 4. an express exclusion of any transfer of IP rights to information, 5. a description of what is to happen at the ending of the contract/application of the clause, 6. an exclusion of (implied/express) warranties and representations related to the accuracy or  completeness of information disclosed or its fitness for purpose,   7. a definition of the exact period of effectiveness of the confidentiality undertakings (e.g. survival clause) 8. a definition of the parties covered (e.g. affiliates, subcontractors, employees etc.) and an undertaking to make such subject to the confidentiality obligations/rights. The first point of the checkpoint mentions a definition of confidential information. This is the foundation on which the rest of a confidentiality clause is built. Here is an example of such a long-form definition: Confidentiality1.1 “Confidential Information” means all confidential information (in whatever tangible or intangible form and however recorded or preserved, stored or otherwise retained) which is disclosed directly or indirectly by one Party (“Disclosing Party”) through or by its employees, officers, agents, representatives or advisers (hereinafter all referred to as “Representatives”) to the other Party or that Party’s Representatives whether before or after the date of this Agreement in connection with [DESCRIBE EXACTLY THE TRANSACTION OR CONTRACT] concerning:(a) the existence and terms of this Agreement [ and DESCRIBE ANY OTHER AFFECTED CONTRACTS](b) any information that would be regarded...

The boilerplate below (Confidential Information) is a typical short form confidentiality clause for use in general commercial contracts. It is based on English law. The attraction of its brevity shall not be allowed to hide the obvious lack of a comprehensive definition of confidential information. At the same time your contract may require a more detailed set of exceptions. In such case a longer form will be required. (see Confidentiality: the long but not the short of it later in Bugg’s Boilerplates). Indeed for specific types of contracts where non-disclosure is essential (e.g. IP or M&A) obviously far more comprehensive agreements will be required. But remember always that such clauses or agreements are no replacement for a pro-active non-disclosure policy and set of procedures. 1. Confidential Information 1.1 Each Party undertakes that it shall not [at any time /at any time during the term of this Agreement, and for a period of [three] years after termination of this Agreement,] disclose to any person any information obtained from the other Party [or of any member of the group of companies to which the other Party belongs] any information concerning the business, activities, plans, affairs, customers, clients or suppliers of the other Party [or of any member of the group of companies to which the other Party belongs](Confidential Information), except as expressly permitted by clause 1.2. 1.2 Either Party may disclose the other Party’s Confidential Information  a) to its employees, officers, representatives, agents or advisers where such need to know such information for the purposes of carrying out the respective Party’s obligations under this Agreement provided that each Party shall arrange that its employees, officers, representatives, agents or advisers to whom it discloses the other Party’s Confidential Information comply with this clause 1 or, b) as may be required by applicable mandatory law, a court of competent jurisdiction or any governmental or regulatory authority, provided that the Party whose Confidential Information is to be disclosed shall be notified of such by the disclosing Party as soon as possible to allow the opportunity for such disclosure to be appealed against, prevented or delayed as the case may allow. 1.3 No Party shall use any other Party’s Confidential Information for any purpose other than to perform its obligations under this...

When should we be silent? Children used to be told that they should be seen but not heard, but approaches to child-rearing appear to have changed in the meantime.  In the business world some things never change. One of those things that hasn’t altered over the centuries is the need to be able to trust and rely on the fact that your business partner will not tell the world your confidential information. Confidentiality, or keeping information secret, is a necessary element of much commercial work and in many areas such as M&A, technology development, design or research, the safe-guarding of data is critical. From the very first contact with a potential partner it is often of supreme importance to ensure that any material or concepts revealed are treated in a confidential manner. Controlling your own information can give a company a competitive edge. One of the most common methods of seeking to preserve such secrecy is to use confidentiality agreements. But this has resulted in an over-reliance and an unjustified faith in such contractual obligations. In practical situations it is very risky to rely solely on an undertaking in a confidentiality clause or non-disclosure agreement. Such agreements may, in limited circumstances where the plaintiff can prove causation and actual damage, allow claims for  damages in the event of wrongful use or disclosure. In U.S. jurisdictions it may even be possible to avoid the difficulties of proving the damage by claiming liquidated damages (subject to a suitable clause to this effective being expressly agreed to). However, contractual damages are not a business solution even if they can be claimed successfully. They are certainly not preventative and once information is released, it usually cannot be called back in.  It may be a case of “closing the stable door after the horse has bolted.”  The damage has already been done.  We need to do more to prevent it occuring. Thus, in practical terms we should be using a much broader range of measures to protect against and deal with potential disclosure situations. We should not abandon the well-drafted non-disclosure agreement, but we need to supplement it with other procedures: 1. Clearly identify and record all confidential information and wherever possible label it as such. 2. Ensure that all employees are aware of the importance of such information and are trained in related procedures, policy and documentation. 3. Store all confidential information so that it is inaccessible to unauthorised persons. 4. Any communication of confidential information should only be by secure means and in an approved manner. 5. Recipients of confidential information must be expressly informed in each case that such information is confidential 6. From the very first contact and before any...