Contract Interpretation and the Importance of Unambiguous Terms: Part 2 of 3

In part one of this series, we began our discussion of contract interpretation. This installment delves a bit deeper into several of the principles of contract construction that judges and arbitrators rely on to discern the meaning of ambiguous contract terms.

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Contract Interpretation and the Importance of Unambiguous Terms: Part 1 of 3

Most folks in the contracting world would agree that contract drafting is an art form. The negotiations involve a lot of push and pull in an attempt to find balance and stable ground, but it is the language of the contract itself that must clearly explain the precise bargain that was struck. As a result, the individuals who turn the negotiated terms into the actual words that make up the contract, usually attorneys, must carefully analyze every single word, sentence, paragraph, and piece of punctuation.

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Analyzing the Cost of Poor Contracting

Poor contracting can take many forms. It may relate to imbalanced negotiating power, hasty and careless drafting, or inadequate oversight during performance. Regardless of when or why a contracting relationship deteriorates, there are going to be negative consequences for both parties, and this impact is always detrimental to the companies' bottom line. According to the International Association for Contract and Commercial Management (IACCM) “the average cost of poor contracting is 9.2% of an organisation's annual income - and even higher for large capital projects, up to 15% of the contract value.” Here are some of the costs associated with poor contracting and ways to avoid them:

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Important Elements in Intellectual Property-Related Contracts

Contracts are used to formalize virtually all business transactions. Of course, they are appropriate instruments in situations beyond traditional buy/sell arrangements and employment agreements. Any circumstance that involves a mutual exchange of promises likely necessitates a formal, written contract. This is particularly true when there is valuable intellectual property (IP) at stake. Companies with important IP must utilize contracts to ensure that their internal staff and any external vendors or consultants with access to their IP information will act appropriately, irrespective of the timing and duration of that access. And, for employees engaged in or responsible for developing IP, it is imperative for companies to make it clear which party has the proprietary rights.

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Contract Management Software For the Entertainment Industry: Why You Need It Now

The entertainment industry is contract-heavy and required to stay current on artist agreements, contracts outlining royalty rights, freelance contracts, outside media relations, and other time-sensitive and detailed contracts. Compromising contract confidentiality and missing crucial deadlines are common problems that plague the entertainment business, and have severe consequences that can be eliminated with efficient contract management. Here are three ways that contract management software can benefit the entertainement industry. 

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A CFO's Role in Contracting

The CFO, while not always a primary party to the comany's contracting, has an obvious interest in the outcomes and value of contracting. Here are some important reasons that CFOs need to actively partake in their companies’ contracting process:

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In-House Counsel and Cybersecurity: The Need to Lead

For most companies, the in-house attorneys’ roles and responsibilities are not exactly delineated within a concrete list. Instead, their day-to-day duties, and the areas in which they are involved, tend to expand and shift, depending on the existing needs of the company. Obviously, the in-house team spends quite a bit of time reviewing contracts, crafting both internal and external documents and agreements, and helping the executive board make strategic decisions in a manner that mitigates risk.

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Tips to Effectively Structure a Non-Disclosure Agreement

Simply put, a non-disclosure agreement is intended to protect sensitive information and is usually a contract formed between two parties with an understanding that information will not be relayed to other parties. Usually outlined in the early stages of a business relationship, an NDA reinforces keeping vital information confidential for a certain length of time. Without an NDA, any exchange of information could result in giving away ideas that are integral to your company’s IP, and therefore are a must when communicating valuable data.

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Contracting: Understanding the Buyer's Perspective

In a business transaction that involves the sale and purchase of some good or service, the seller of that good or service usually has a bit more power and influence when it comes to shaping the contract between the parties. However, to ensure a positive working relationship, not to mention one that will endure beyond the initial transaction, it is important for sellers to take into consideration what most buyers want from their vendors. Here are several things to keep in mind:

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Is There an Optimal Contract Duration?

There is a fair amount of discussion and disagreement on this topic, but the simplest answer to this question is, “it depends.” The length of a contracting relationship is contingent on so many variables, including the complexity of the agreement, as well as the resources and investment at stake. In a vast number of business transactions, these agreements last between two to five years. Although there is no hard and fast rule with respect to the optimal contract duration, there are several things to take into consideration when deciding on this matter.

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