Consent Expressly Given – A New Look

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Sometimes a party has the right to withhold its consent when the other party requires that party’s consent. And, sometimes the right to deny consent is desired to be absolute and unconditional. In such cases, and for a very long time, Ruminations has been using a formulation saying that such consent “may be withheld for any reason or no reason at all.” We just read a June 28, 2019 Supreme Court of Texas decision possibly chastising us for wasting those words. After analyzing a contract provision stating simply that a party could not assign its rights “without the express written consent” of the other, that court wrote that the added words, “for any reason or no reason,” were surplusage. As that court wrote, consent-required provisions with or without the extra words have identical meaning. Accordingly, “the same can be said” as to a provision reading that consent “can be granted or withheld at [a party’s] sole discretion.”

Before every reader starts searching for an eraser to take to their form agreements, there is a caveat. This decision came out of the state of Texas. That’s not going to be the law in every jurisdiction. Also, it was based on the premise that a provision, in an oil and gas “farm-out” agreement saying that one a party could not assign its interest without the other’s consent, is “unambiguous.” [Viewing Wikipedia would tell you that “a farmout agreement is an agreement entered into by the owner of one or more mineral leases, called the ‘farmor,’ and another company who wishes to obtain a percentage of ownership of that lease or leases in exchange for providing services, called the ‘farmee.’”] When a court decides that an agreement’s provision is not ambiguous, it refuses to look outside of the agreement itself to aid in interpreting that provision. It accepts the “plain meaning” of the words. At most, it will refer to a dictionary of its own choice, sometimes, as Ruminations, has noted, one with a definition that supports an already decided conclusion. What a court won’t do is to look at prior discussions or negotiations to aid interpretation. [Read more…]

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What Is A “Reasonable Time”?

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What is a “reasonable time” for something to happen or to get done? Do we ask this question of ourselves when we use that phraseology in our leases and other agreements? We can’t avoid using concepts such as “reasonable,” “material,” “promptly,” and the like, but are we being as careful as we should be when sprinkling them around?

There are good reasons to use what Ruminations has called “weasel words” or “deliberate ambiguity.” [For earlier thoughts on this subject, click: HERE.] Basically, we don’t always know how long something should or will take, even when diligence is observed and proper efforts (whatever those are) are employed. After all, we may know that the time for something to happen may be affected by adverse weather, but we don’t know whether there will be any such weather. We might know that a particular repair, say a roof replacement, might take 30 days from beginning to end in the summer, but not how long it might take in a winter season five years hence. So, we use “reasonable” when setting a time limit for such work to take place. [Read more…]

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Are Waivers Enforceable?

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Are waivers enforceable? It depends. How unsatisfying is that answer? Generally speaking, absent duress or coercion, parties can waive what would otherwise be their right. How does one know if there is (was) coercion? Well, some situations, such as an actual gun to the head, are easy to identify. Others are not so simple. When it comes to agreements between commercial parties, there is a presumption that they are grown-ups, able to protect their own interests. The “bigger” they are, the less likely a cry of “coercion” will rule the day. Representation by an attorney will dull a party’s claim that it was improperly forced to agree to a waiver (or other contract terms). When courts reject a party’s plea that it was coerced, you’ll often see the “deal” as having been between “sophisticated parties that negotiated at arm’s length with apparent care and specificity, and represented by competent counsel.” All of those factors concern themselves with the character of the parties and how they arrived at their agreement. [Read more…]

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You Need To Know French To Choose Applicable Law For Your Agreement

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Today, we begin with a French lesson. The French word, “renvoi,” means “to return,” in the sense of “sending back.” In law, “Renvoi” is a doctrine, and what follows is why you’ll be pleased to know that.

Last week, we tackled the humdrum, excitement-lacking “boilerplate” of specifying, in a lease or other agreement, an exclusive venue for litigation. What we didn’t even hint at was that just because the parties are obligated to duke it out in a particular jurisdiction doesn’t mean that the law of that jurisdiction will apply to their fight. Often, but not always, parties are free to specify which jurisdiction’s (state’s) law will govern their dispute. As to the location (venue) for the match, though some states will allow contracting parties with no connection to those jurisdictions to avail themselves of that state’s courts, most still require the parties or the subject matter of the dispute to at least “touch” their state. For example, if a loan is made in State X on a property in State Y, but the lender or borrower is in State “Z,” it is likely that each of those three states would allow its courts to hear the dispute. But, which state’s law would apply? A less than comprehensive list of the factors a court will use in deciding to apply the law of a jurisdiction other than its own would be: the parties’ intent, their domiciles, where the lease or other agreement was executed, and where the property is located. In the case of “property,” a secondary analysis is made as to whether the property is primary or secondary to the agreement in front of the court. For example, a personal guaranty of a mortgage loan may only have an attenuated relationship to the property serving as collateral for the loan and the parties are able to call for jurisdiction where either the borrower or lender “resides.” It could also be, but isn’t required to be, where the property is located. [A separate issue is whether a party or either party can be served in other than its “home” state, but we’ll leave that for another day (if ever)]. [Read more…]

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Look At The Venue Language In Your Agreements

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After punishing loyal readers over the last two weeks with a two-part, 4,704-word exploration of rice, Oriental cuisine, and (yes) tenant exclusives, we will now retreat to a relatively simple, unconvoluted posting. It will be short. But, wise readers will want to look at a few sentences buried inside the boilerplate of their form agreements – leases, guarantees, and so forth.

There may be a state courthouse in every county throughout the United States, but that’s not true about federal courthouses. [We’re not even sure that every U.S. County has its own courthouse. That’s something that requires “local” knowledge.] But, you don’t have to have a courthouse in your county to be subject to a federal court’s jurisdiction. There is something called, “venue.” That’s the county or district housing the courthouse where criminal or civil cases must be heard. Courthouses are “venued” in a particular location even though they can have jurisdiction over a much larger area than just their county of venue. The trick is that the boundaries of a “district” and that of a “county” are not the same. With perhaps a very small number of exceptions (known to some readers located in those places), a federal court’s “district” encompasses a number of counties (in Louisiana, “parishes”). For example, New Jersey has one Federal “District,” the “District of New Jersey,” but it effectively has three (lower case) “districts” with courthouses in Camden, Newark, and Trenton. California and New York each have four (upper case) “Districts,” but a lot more courthouses. For example, in New York, there are 11 federal courthouses. [Read more…]

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Exclusive Use Rights: Common Language Knowledge May Not Work

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We doubt that our next paragraph, let alone the rest of today’s blog posting, will make much sense to readers who haven’t seen last week’s posting. So, if that means you, we suggest you click: HERE.

After receiving a number of “off-line” comments from readers, we took a look at the various types of rice in our pantry and found the following: Carnaroli, Jasmin, Wild Rice, Arborio, California Sushi, Basmati Light Brown, Brown Jasmin, Extra Long Grain Rice, Brown Rice, and a Rice Blend (something that offers the look of much more expensive Wild Rice, but, with some white rice in the blend, is not as expensive). Who knew? Yes, to the eye some of these types clearly are “white”; some are not; some are “different minds will differ.” Thus, an expert organoleptically examining our pantry’s selection, would call some versions “white” and call others “brown.” But, when these, other than Long Grain White Rice and the straightforward Brown Rice, were offered for sale, the merchants wanted them to be seen as something other than “white” or “brown” rice. Those two boring descriptions imply “commodity” rice. Carnaroli Rice, which by the way we highly recommend over Arborio rice, for preparing risotto, costs the consumer more even though its production costs might not support that “bump.” [Read more…]

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When It Comes To Tenant Exclusives, Forget What You Think You Know

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Ruminations has always had an interest in understanding the “why” of things. That includes understanding why we do certain things certain ways and especially how we can get led astray. We double down when it comes to the subject of exclusive uses. That’s why a July 5, 2018 decision out of the Superior Court of Rhode Island caught our interest. The original lawsuit was filed in 2005 and the dispute, one that started no later than in 2000, had already made two trips to the Rhode Island Supreme Court. Here’s the opening line from the 2018 decision, one that will probably intrigue readers: “Before this Court is the sticky question of which competing food-court vendors had the right to sell certain oriental foods – primarily various types of rice – at the [subject shopping center].” As long as we are quoting the Court, we’ll let you know that it characterized the case before it (for over 15 years) as a “saga.” Similarly, today’s posting will be a “saga,” and will conclude next week when we’ll reveal our pithy “take-aways.” [Read more…]

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Jack Of All Trades, Master Of None – Avoiding Hubris

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Several Ruminations blog posts over the years have posited that many of us, this writer included, don’t listen very well to what the person on the other end of the deal is actually saying. We already know what we think we ought to know and, certainly, that person, a/k/a “our adversary,” is only seeking an advantage over us. We don’t even play a purely intellectual game by taking the other side’s “position” in our head and rolling it over (and over). We’ve even seen this, more than a handful of times, when that other person is really trying to help us avoid a mistake. An appropriate word for this might be “hubris.” That means excessive pride or excessive self-confidence. According to one source, in Greek tragedy it means “excessive pride toward or defiance of the gods, leading to nemesis.” That same source lists these synonyms: “arrogance, conceit, conceitedness, haughtiness, pride, vanity, self-importance, self-conceit, pomposity, superciliousness, feeling of superiority.” While we are at it, that still same source defines “nemesis” as: “the inescapable agent of someone’s or something’s downfall.” [Read more…]

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