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Business Law II Notes 9/4/
Contract Information (ending half)
Discharge: one’s contract duties are extinguished by; performance (most common), failure of a condition, other party’s material breach, agreement, court order
Strict vs. Substantial performance What could the performance criteria include?
- Defect rate
- Measurement tolerances
- Purity requirements – chemical company puts to many harmful chemicals or whatever
- (^) Response time
- Sampling procedure
- Down time
Time of the Essence- this language means contract deadlines strictly enforceable
- In NY, time of the essence is presumed in Ks between commercial parties not involving work or labor
- When K is not between commercial parties, there is no presumption
- Inclusion of a performance date does not make time of the essence
- The provision must be explicit to be enforceable Why do parties get into lawsuits over time of the essence clauses?
- say they can finish something faster than you can
- paying for the hotel/motel room until its finished can be expensive
- market changes- future, you or the client think you shouldn’t have signed it, if the other side doesn’t finish in time can get out,
Personal satisfaction contracts: contract obligations arise (or are discharged) only when the counterparty is personally satisfied
- Ex: loan hinges on a satisfactory credit report, or portrait accepted only when subject satisfied
- (^) Subjective standard: self portrait
- Objective standard: home alarm
Good Faith and Fair Dealing: most states, including NY, require the parties to a contract to perform it in good faith
- Don’t act in violation of community standards of decency, fairness, reasonableness
- Don’t act in a way that
Conditions: No magic language requires, BUT pay close attention to how the condition is worded (ex: when is a commission payable?) (know the difference between precedent & subsequent)
Precedent- something must happen before a duty arises (ex: you’ll get $500k for scoring 7 touchdowns this season) Subsequent- something must occur after a duty arises, or the duty is discharged (ex: we insure you, but only if you notify us within 90days of the accident) Concurrent- two things must happen concurrently for duties to arise (ex: I’ll deliver title on Friday if you have a cashier’s check for $500k)
Material Breach
- Substantially harms the non-breaching party
- Deprives the non-breaching party of benefit
- Hard to compensate for without a K discharge
Anticipatory Breach
- A party makes it unmistakably clear it will not honor a contract Ex: you learn that something you contracted to buy has been sold to someone else Ex: employer with which you have a two-year contract shuts its doors before you start date
No longer a good deal
- Can you be discharged from contract obligations because it is no longer a good deal for you?
True Impossibility
- It is literally impossible to perform:
- (^) Destruction of subject matter
- Death of promisor in personal services contract
- Illegality
Impracticability and Frustration
- Commercial Impracticability: because of unanticipated event, fulfilling the contract would be extraordinarily difficulty and unfair to one party (ex: air shipment becomes only option to deliver steel)
- Frustration of Purpose- because of unanticipated event, the contract now has no value for one party. (ex: if the buyers’ building project cancelled, so steel not needed, there may be an out)
Difficult to Establish
- Event must truly unanticipated
- Financial
- Force Majeure Clauses (NEED TO KNOW)
- Majeure = superior or overwhelming
- The parties negotiate a contract tern that defines the events that will discharge a contract duty
- What would be some examples in today’s environmrnt?
- (^) STRIKES
- HURICANS
- RIGHTS (CIVIL SERVICES)
Merchants: are those who routinely deal with the goods, or who have special knowledge or
agents with special knowledge. They frequently are the subject to higher standards or different rules
- Good Faith
- (^) Merchants- honest, reasonable commercial standards/ fairness (DON’T LIE)
- Non-merchants- honest in fact Unconscionability
- Provisions of a contract that are shockingly one-sided and fundamentally unfair are unconscionable and won’t be enforced by the courts
- Focus is on unequal bargaining power AND unfair contract terms
UCC’s prod eal approach the contracts
- Formed in any manner showing agreement
- Movement of making not critical
- Many terms can be left open
Price- reasonable price Methods of acceptance- any reasonable means Payment terms- at time and place of receipt Duration- any time
Statute of Frauds in the UCC
- Contracts for the sale of goods worth $500 or more must be evidenced a writing
- There’s no require] Merchant Exception under the UCC
- (^) Two merchants can make an enforceable oral contract for the sale goods worth >_ $500 if;
- Confirming memo sent within reasonable time
- Signed by the sender (email is ok)
- Memo is reasonably definite
- If it adequate to bond the sender it also binds the receiving party, unless the receiving party objects I writing within 10 days or receipt ■ Ex: contm yr order today- 500 tires catalog 869- catalog price
Specialty Goods Exception
- (^) If an buyer, merchant or not, orders goods that the seller has to specially make, then the oral agreement in enforceable
- Specially made goods are goods that can’t readily be sold to anyone else in ordinary course
- Why does this exception exists?
- Mirror Image Rule
QUIZ TUESDAY SEPT 18 th^ - t/f, mc
Battle of Forms- (Sales of goods)
UCC’s Rule for NON-merchants
- Both parties are non-merchants
- The contract consists of the version in the offer unless,
- ex 1: “ill sell you my laptop for $700.” “I accept but the deal includes your track pad.” There is K, but pad not in deal.
- (^) ex 2: “ill sell you my laptop for $700.” “I accept provided you agree to throw in your track pad.” K only if offeror includes pad. UCCs Rule for Merchants
- both parties are merchants (additional terms)
- the offer expressly limits acceptance to its terms
- the additional term materially alters the deal
- the offeror objects to the additional terms within a reasonable time 3.a.ex: I accept your offer for 650lbs of turkey, trimmed and cleaned. The offer was silent on trimmed and cleaned. How could offeror ensure there are no additional terms? How could offeree protect itself from unwanted k?
- (^) In business terms of an acceptance frequently differ significantly from the terms of an offer. When both parties are merchants, the legal treatment of there different terms varies:
- did parties orally agree on one version?
- No contract- some situations
- Knockout rule- most states
- offer controls- some states
- NY and California: different terms treated same as additional terms
Sanders example in book of different terms under UCC (rule used-knockout rule)
Contract modifications
- At common law, fresh considerations are required for a K modifications
- Under the UCC, no consideration is required, as long as both parties agree.
- How are contracts often modified in business?
- How can a company protect itself from false modification claims?
International Sales of Goods
- United states convention on contracts fir the international sale of goods (CISG)
- CISG Provisions
- 75+ countries
- (^) applies to US export sales
- Pro seller
- No statute of Frauds requirement
- Merchant’s firm offer- irrevocable without signed writing
- Mailbox Rule for Acceptance not applicable
- 19 (1):
- a reply to an offer which purports to be an acceptance but contains additional, limitations or other modifications is considered to be a rejection
- Mirror Image rule
- 19 (2):
- (^) However, something contradicts it but the mostly just stay with the mirror image rule
Ownership at risk:
- Buying stolen goods
- Merchants who deal in goods of a particular kind have power to transfer all rights to a BIOC.
- BIOC status is available to the innocent buyer, who buys goods ONLY of the type normally sold by that merchant, not knowing that they belong to someone else.
- (^) Entrustment Scenarios: Charlies’ piano sold by the repair shop, Royal’s car sold off Acme’s lot to Pamela.
- Rights If there’s a security interest:
- Ordinary Sales- a buyer in the ordinary course of business may take the goods free and clear of the security interest.
- BULK SALE: involves most or all of store’s inventory- UCC Article 6 requires that: ■ The seller give the buyer a complete creditors list ■ The buyer notifies all creditors about the bulk sale in advance, so that the creditors may protect their security interests. Returnable goods
- (^) Sale on Approval
- A buyer takes goods intending to use them herself but has the right to decide not to accept them
- In a sale on approval, goods are not subject to buyer’s creditors until buyer accepts them.
- Sale or Return (and Consignment)
- When a buyer takes, goods intending to resell them, but has the right to return them.
- The goods are subject to the claims of the buyer’s creditors. Risk of Loss
- Parties often allocate the risk of loss by contract
- (^) Many merchants specify who bears the risk of loss by using common shipping terms under:
- UCC (domestic)
- INCOTERMS (international)
UCC: TERMS:
- FOB/ FAS (free alongside)- seller bears the risk until the goods are unloaded from the named ship***
- CIF or CF: cost, insurance and freight; cost & freight
UCC Gap Fillers
- If parties fail to allocate the risk:
- When neither party had breached, the risk of loss generally passes from seller to buyer when the seller has transported the goods as far as he is obligated to
- If the seller in a merchant, and no delivery or bailment involved, then risk passes to buyer when goods received.
- When a party has breached, the risk of the loss generally lies with that party
- Shipment Contract: seller arranges shipment of goods; risks passes when delivered to carrier
- Destination Contract: seller in responsible
Credit Terms (ALWAYS TESTED ON!!)
- Parties often use a kind of shorthand to set forth credit terms (ex- 2/10, n/30)
- Why are these terms valuable and heavily negotiated?
Warranties and product liability!!!
(NEXT QUIZ MATERIAL)
Expressed Warranties by Words or Actions:
- some courts say the buyer must show the seller’s conduct must have been part of the BASIS OF THE BARGAIN Expressed Warranties by Description:
- ex: muscle milk, has no milk in it so they have to state that on the package- milk duds do have milk so they don’t have to write, contains no milk, on their package Puffery and Opinion- Puffery? “Extra sharp, high quality, low mileage used cars”
- puffery= Siri 4s commercial (nobody communicates that good with Siri besides the guy on the commercial
- (^) opinion= “chance to buy the most advanced car”
When is it Fact, Not Puffery?
- Specific and capable of being proven true or false
- Written
- Defects are not obvious
- Seller has greater expertise
Sample- something you can pick up and try (glasses) vs. Model- something that is on display (TVs at best buy)
Implied Warranties Under the UCC (implied by LAW)
- Merchantability
- MOST IMPORTANT implied warranty
- Automatically made by merchants of goods of the kind of goods sole
- = Goods for fit for normal purposes (you wouldn’t expect a rock in a Wendy’s burger)
- Fitness for Particular Purpose
- When the seller at the time of contracting knows about a PARTICULAR PURPOSE for which the buyer wants the goods, and knows that the buyer is RELYING ON THE SELLER’S SKILL AND JUDGEMENT, there an implied warranty that the goods are fit for the purpose (water proof camera)
- Title
- A seller of goods warrants that title is valid and that the goods are free of any security interests unknown to the buyer.
- Infringement
- Non-Infringement- Unless otherwise agrees, a merchant warrants that the goods are free of any rightful claim of copyright, patent, or trademark infringement
- They do NOT have to be agreed upon in order to be part of the deal
Case Study- How many warranties?
- Scuba hoses and adapters (3 warranties total)
Disclaimers and Defenses
- Negligent manufacture
- Failure to warn Strict Liability
- No need to prove unreasonableness:
- (^) Strict liability may be imposed if:
- The defective condition is unreasonably dangerous to the users
- Seller is in business to sell THIS product
- The product reaches the user without substantial change
- Strict liability may be imposed EVEN if:
- The seller exercised all reasonable care
- No contractual relationship
- Do I have to show negligence to a business if …… the answer is no
Types of Strict Liability:
- (^) Design: ex- car company puts gas tank in the back causing car to explode, need to figure out new design.
- Manufacture: ex- on the line someone forget a bolt or something causing the product to injury someone
- Warning: ex- labels on medicine bottles, commercials the fast talker
Tests for Liability: tests to measure design and warning cases include:
- Consumer expectation: if the design causes the product to be less safe than expected
Duty to Tender Conforming Goods
- (^) Speck, specification sheet- what you are making for the customer if your making something customized
- Seller must be tender to the Buyer conforming goods
- Conforming goods: goods that satisfy the contract terms.
- Tender: seller must make the goods available to the Buyer. Doesn’t mean seller has to force Buyer to take them in order to comply
- Perfect Tender Rule: Buyer may reject goods if they fail in any respect to conform to the contract. (but, the parties may agree to accept imperfection in the goods) - Restrictions on the perfect tender rule ■ Usage of trade: practices industry members expect to be part of their dealings ■ Course of dealing: pervious commercial transactions between the same parties.. ex: someone accepts goods the first three times but his goods are outside the speck, 4th^ time he CAN’T reject the offer because he’s already been doing business with them and accepted the defect previously ■ Course of performance: the history of dealings in this one contract. Applies to contracts involving an ongoing relationship. Ex: multiple delivers. Same as course of dealing Expect multiple deliveries on one contract!
Rights of Inspection
- Contract covers it: inspection rights often defined by contract
- Contract Silent: Buyers have reasonable time to inspect before payment/acceptance C.O.D- Cash on Delivery
- contracts can provide for C.O.D shipments, and if so payment must be made before the goods are in the Buyer’s hands and before there is a chance to inspect. Why call for C.O.D?
- Might lose the customer
- (^) If it’s a major part if they stop selling to her she wont be able to sell items and make her product and make profit so she will never be able to pay them back
- Because they haven’t paid (missed a couple payments) why would you still want them as a customer? You probably won’t get any of the money back she owes you
- Under C.O.D acceptance occurs when:
- Buyer says goods conform, and I accept them
- Buyer says goods don’t confirm, but still accepts them
- After reasonable opportunity to inspect, buyer fails to reject the goods
- Buyer acts as if she owns goods. Ex: altering or re-selling Partial Acceptances:
- (^) Partially Destroyed: if identified goods are partially destroyed, the buyer may choose whether to accept the goods at a reduced price or void the contract
- Partially Conforming: buyers can choose to accept the portion of a tender that is conforming if goods divisible into commercial units. Rejection before Acceptance
- Rejection- buyer rejects nonconforming goods Seller’s Rights to Cure
- Cure: seller can tender again with conforming goods
- Timing of Seller’s Right to Cure under the UCC:
- Before the contract deadline
- (^) Within a reasonable time after deadline IF: ■ Seller reasonably believed first tender conformed ■ Seller gives prompt notice of intent to cure within reasonable time
- EX: supposed to be deliver to mark on oct 2 but they are delivered sept 25, he inspects and realizes it’s not good, calls people and says it doesn’t match what he order, the seller can say “no problem we have more conforming goods and we will deliver them to you on oct2” Rejection and Cure Example in the book!
Rejecting an Installment
- (^) It substantially impairs the value of the installment
- It cannot be cured
When buyer accepts (other side of the chart) Revocation After Acceptance
- A buyer can revoke an acceptance if it:
- Learns of defects substantially impairing goods’ value
- Had a good reason for the acceptance ■ Ex: defects were not initially visible, or seller promised to cure and didn’t
- Seller might have a reasonable period to cure Buyer’s Remedies
- Cancel the contract (if there is no cure)
- Recover money paid
- … security interest, then Charlie gets the table free and clear. So a merchant may lose its rights.
- Buying for business not personal, would be subject to the lean still. Can take it back because it wasn’t used form consumer purposes (MIDTERM)
Priorities Among Creditors (read over different scenarios)
- RULES WILL BE ON MIDTERM- MEMORIZE THEM
- The UCC provides elaborate priority rules: (rock, paper, scissors rule)
- Secured creditors collect before unsecured creditors
- Perfected security interests beat unperfected ones
- Between two unperfected security interests, first to attach wins
- Between two perfected security interest, first to perfect wins
- Sometimes perfected PMSIs (purchase money security interest) beat interests perfected earlier (Exception) Exceptions to Priority Rules
- Creditors with PMSI in debtor’s inventory that have: 1.a.Notified other secured creditors AND 1.b. Perfected by filing before takes possession
- Creditors with PMSIs in non-inventory assets that have: 1.c.Perfected by filing before or within 20 days of debtor’s taking possession
(end of the scenarios) Acme Stumbles
- The market for widgets drops and Acme is overextended. Who are their creditors? (SUMMARY OF IT IN THE SLIDES)
- (^) Once perfected, some PMSIs may have priority over prior perfected security interests in the same goods if the creditor takes the right steps. Why does the code provide this?- very important between creditors to see who’s first under collateral, feel protected to have the PMSI, encourages investment so the business can grow.
Basic Priority Rules Special Priority Rules -Acme sells goods on credit to steel corp. and steel corp. gives a note and security agreement (promising to repay + interest) only safe place for biz bank to store this is in the vault (chattel paper)
- If biz bank doesn’t put it in the vault and Wells Fargo comes in and says it wants them so they will end up coming in first since biz bank didn’t take possession. Defaulting on Security Agreement
- Default
- Triggers ■ Debtor fails to make payment when due ■ Debtor enters bankruptcy * ■ Occurrence of an event of default
- Seller’s Remedies after Default ■ Take possession of the collateral ■ (^) Sue for the Amount Owed ■ Bankruptcy involves further steps since there’s an automatic stay*
- Taking possession of the collateral
■ Seize the collateral without breaching the peace (slide in power points that describes breaching the peace in NY) ■ Seize the car when it is parked
- With court order ■ (^) If debtor refuses to cooperate, then creditor must sue
- Relief from Automatic Stat ■ If debtor bankrupt creditor can ask for relief from the stay
- Disposing of the collateral
- Give debtor reasonable notice and details of the sale
- Give debtor a chance to buy the collateral back at the sale
- Sell the collateral
- Apply proceeds first to creditor’s repo and sale costs
- Apply the balance to the amount due on the loan
- Deficiency: debtor is still liable if the sale price doesn’t cover the costs and the loan balance
- (^) Surplus: buyer gets the rest in the rare cases where there is money left over after the costs and the loan balance paid
- Unreasonable sale: may cause the amount of the deficiency or surplus to be adjusted to reflect
- Accepting collateral: a creditor may notify debtor that it wants to accept the collateral in full or partial satisfaction
- Right of Redemption
- Termination Statement: generated when the debt is paid in full
- Consumer debt
- Other debt
Tophat 363695
10/11/ How to perfect for boat or car. (always on midterm!!- in the slides)- big paper
Demonstration: searching for Judgments and Mortgages in county clerk’s office
**How is a mortgage different then a security interest? Property ownership, mortgage there is a lien, you borrowed against it
Other liens in NY against property (survive bankruptcy even if the debt is discharged):
- Construction or Mechanics Lien: by those improving real property filed in county clerk’s office- good for one year
- Artisan’s Lien: by those improving personal property possession necessary- no filing needed
- Garage Keeper’s Lien: by those improving/ towing cars possession necessary, no filing needed
- Judgment Lien: results from a lawsuit, often a collection action filed in county clerk’s office- good for 10 years
*** Under the UCC Secured Transactions article, which of the following actions will best perfect a security interest in a negotiable instrument against any other party?
- taking possession of the instrument
- Fully secured creditors are not required to file proofs of claims (proof of the claim just sets forth the creditor’s name and amount owed)
- Unsecured creditors who do not file lose the right to be repaid
Jackson vs. Holiday Furniture
Exempt Property & Exempt Property Reforms
- Exempt property in NY
- Home equity (150K downstate, $75k upstate)
- Car- 4k
- Domestic animals- 1k
- Tools of the trade
- Food
Student Loan debt (just review slides)
- Brunner Test
- Based on current income/ expenses, you can’t maintain a minimal standard of living
Chapter 7- Order of Relief
Priority Claim Subcategories- check slides Unsecured Claim Subcategories A voluntary petition filed under the liquidation provisions of chapter 7 of the federal code:
Chapter 11
- Reorganization
- A Creditor’s Committee watches over the creditors interest.
- Sometimes, as in Kodak’s case, a Retirees’ Committee is appointed to look after pension holders’ interest
- A Committee of Equity Security Holders may be appointed to watch out for the interests of the shareholders. Often, as in Kodak’s bankruptcy, this is not done.. WHY?
- Process
- Plan of Reorganization
- (^) The DIP has 120 days to create a Plan of Reorganization acceptable to the Creditors’ Committee, and prepare a disclosure statement.
- Usually, creditors accept the DIP’s plan
- Confirmation of the Plan
- Confirmation hearing is held to determine whether the plan should be accepted
- The court usually will approve a plan if a majority of each class of creditors votes in favor of it.
- Effect of Plan Approval
- Typical plan gives some current assets to the creditors and promises to pay them a portion of the future earnings
- (^) The DIP now owns the assets in the bankrupt estate
- Chapter 11 small business- DO NOT NEED TO KNOW
Chapter 13
- Consumer Reorganization
- Wage Earner’s Plan (for individual debtors with regular income)
- Purpose: Rehabilitation, available only to debtors with less than $383,175 in unsecured debt or $1,149,525 in secured debt
- (^) Trustee is appointed
- Creditors cannot force a debtor into Chapter 13
- The debtor remains in possession of all assets
- Plan of Payment
- Must be summited by the debtor within 15 days filing the petition
- The plan must be: feasible, not extend beyond 3 years in most cases-never more than 5, show debtor’s good faith and reasonable efforts to pay obligations, creditors can comment but not vote
- If the plan does NOT pay the debts in full, it must allocate all of debtor’s disposable income for the nest 5 years to creditors
- (^) Debtor pays the trustee who pays the creditors
- Why do Chapter 13?
- Can’t pass the Means Test for Chapter 7 liquidation
- Have regular income, but can’t keep up their debt payments
- Have substantial non-dischargeable debt
- Have substantial non-exempt assets they want
- Discharge
- Binding
- Timing of Discharge: the debtor is washed clean of all pre-petition debts expect those provided for in the plan, but the debts are not permanently discharged until the debtor
- Changed Circumstances
- Scope of Discharge
- Students loans NOT dischargeable under Chapter 13
- What happens to the Shareholders?
- Voidable Preferences: trustees can void a transfer that meets all of the following requirements:
- Fraudulent Transfers
- If made within a year before a petition is filed and its purpose is to hinder, delay, or defraud creditors
- A trustee cannot void pre-petition payments made in the ordinary course of business, as opposed to those for pre-existing debts.
- Reaffirmation
- To be valid you MUST: ■ Not violate laws for fraud, duress or unconscionability ■ Be filed in court ■ Include the detailed disclosure statement ■ Clearly state that the debtor has the right to rescind within 60 days
Decal Corp. incurred substantial operating losses for the past three years. Unable to meet its current obligations, Decal filed a petition of reorganization under chapter 11 of the federal bankruptcy code. Which one statement is correct?
- A creditors’ committee, if appointed, will consist of unsecured creditors
■ Be payable to order or to bearer
- Negotiation ■ An instrument has been transferred to the holder by someone other than the issuer - (^) MUST: - Order paper: must first be indorsed, and then delivered to the transferee - Bearer Paper: must simply be delivered to the transferee; no indorsement is required
- Indorsement ■ The signature of the payee ■ Blank Indorsement: does not designate a new payee; becomes bearer paper ■ Special Indorsement: does designate a new payee; only that person may cash the check ■ (^) Restrictive Indorsement: limits the check to one particular use (such as deposit into a particular account)
- Holder in Due Course
- Receive payment for a negotiable instruments are in UCC ARTICLE 3 ■ A holder ■ Who has given value for the instrument ■ In good faith ■ Without notice of outstanding claims or other defects.
- Holder: anyone in possession of the instrument that: ■ Is payable to her ■ (^) Is indorsed to her ■ If bearer paper, just possession makes one a holder
- Good faith ■ Subjective: did the holder believe the transaction was honest in fact?
- The pure heart and empty head doctrine
- NY only follows the first one (subjective) ■ Objective: did the transaction appear to be commercially reasonable?
- Notice of Outstanding Claims or Other Defects ■ The instrument is overdue, dishonored, altered, forged
NEW FROM LAST QUIZ
Business People and Lawyers
How to read a contract
- Pre-reading:
- The first read:
- What-ifs:
- The second read:
- Who drafts the contract? Your side wants to draft first so you know exactly what’s in it and you set the bases, set the topic for the whole discussion. (advantage)
- Key definitions:
- Material Breach: deprives the other party value of the contract
- Good Faith: honest
- Reasonable: court decides what’s reasonable
- Sole Discretion: up to the company/seller
- Best efforts/ reasonable best efforts/ commercially reasonable efforts: doesn’t promise a commitment, only saying you’re going to try really hard Amending a Contract
- Separate Amendment: change that both parties must agree and sign
- Notation on the contract: typo and term to clarify, cross it out hand write the correction, initial it and date it- other party initial and date (only if the contract hasn’t been signed it)
- Amended and Restated contracts: long-term contract, if had a lot of amendments- restate the contract- both parties sign Preventing Mistakes on contracts
- Don’t over document
- Don’t create a losing deal for the other side (because you want the other company to be able to still perform)
- (^) Read key terms out loud
- Look for missing/inverted numbers
- Pay attention to attachments/schedules
- Notice what is “incorporated by reference”
- Scrivener’s Error: writing error- fix by reforming the contracting
- Reformation
- Clear and convincing evidence Be careful with Form Contracts
- Form may not be right for your deal
- Form may contain extraneous language
- (^) Form may favor buyer or seller
- Form may be a result of other negotiations Ambiguity
- Arson and vandalism appear in a list
- Example: insurance contract excluded coverage for vandalism. Is arson considered vandalism? No, two different things which causes ambiguity
- Elsewhere in the contract the words fine Vagueness
- Parties deliberately include an unclear provision
- “we’ll fight about it later, if we have to.”
- (^) Example: “Artist acknowledges required participation in nude scenes” or “artist shall not be required.. rest in slides Introduction and Definitions: beginning of the contract where the parties that are going to be included are stated Recitals (“whereas Clauses”)- rest of the language for the contract are put in here to set up the stage Representation and Warranties
- Example: “artist warrants that he is a member of the Screen Actors Guild.” Covenants: promise you will do something
- Example: “until artist completes all services required hereunder, he shall not pilot an airplane.”
- Reciprocal covenants are a problem
- Conditional covenants are best
- Event of a Default (someone doesn’t follow directions or uses illegal drug use)
