Up in Arms Prepare for litigation with these weapons of mass discussion.
By Marc Diener
Opinions expressed by BIZ Experiences contributors are their own.
Planning for possible litigation is one of the mostuncomfortable issues in business negotiation. Many contract clausesare designed to give one side superior firepower in court.Here's the standard arsenal:
- Service ofprocess: This is a fancy term for the formal notice you owethe other side before you haul it into court. The rules aretechnical and bear directly on a court's legal authority todecide a case. So if your adversary is the type to hide when theprocess server comes a-knockin', you may have a problem. Aservice of process clause designates a "who" and"how" for service, and gets your lawsuit off on the rightfoot.
- Choice of lawforum: When one side is from Maine, and the other is fromArizona, and they're building in Iowa with materials fromAlaska, where do you sue? Choice of forum clauses set out whichcourt the parties will use, and a choice of law clause specifieswhich state's laws will apply. When used effectively, theseclauses start you off with the court and body of law most favorableto you.
- Attorney's feesclause: This clause makes the loser of a lawsuit responsiblefor the winner's legal fees as well as his or her own. In somecases, attorney's fees are awarded by statute. Of course, ifyou're the one more likely to get sued and to lose, don'tadd this clause to your contract.
- A waiver:This refers to the release of a right or privilege. It's agreat way to stack the deck. Your fantasy contract will cementevery right you may, should, could or would have, while having youropponent waive every legal defense. A lot is possible, but knowthat a court won't honor every waiver you bludgeon the otherside into signing, such as waivers of constitutional rights. Seeyour attorney for details.
- Equitableremedies: Our law still sustains the traditional Englishdistinction between actions at law and in equity. Theformer are lawsuits for damages; the latter ask the court to dosomething fairer when money just isn't enough. An injunction, acourt ordering someone not to do something, is one kind ofequitable relief. Others include the rescission or reformation of acontract, or even specific performance-a court's forcinga party to go through with the deal. With this in mind, cleverdeal-makers try to control equitable remedies by getting theiropponents to either waive or agree to specific ones from theget-go. Sometimes, it's permissible. At other times, it'spresumptuous, but you've got nothing to lose by trying.
- Representation: Finally, aclause in which one side acknowledges that they were represented byan attorney or knowingly waived that right can help establish thatparty's mental capacity and equal bargaining power. This willpreclude their arguement that you took advantage of them.
A speaker and attorney in Los Angeles, is author of Deal Power.