TV One 2005/2006

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Specific Drafting Issues Endi Piper
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Common Drafting Rules
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Clear Writing Begins With Clear Thinking

• Know the subject matter.
• Research, research, research.
• Understand the objectives of the parties.
• Analyze the implications of each contractual
  term.
• Use simple, clear language.

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Shall, Must May and Will

• Shall and must are imperatives and cause a
  legal obligation to be imposed.
• May is permissive or discretionary.
• Will is predictive.
• Avoid the use of should because it can mean
  both must and would be desirable.

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Active Versus Passive Language

• Active voice is more precise than the passive
  voice.
• Example
• The rent shall be paid on the first of the month.
• Tenant shall pay the rent on the first of the
  month.

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Affirmative Versus Negative Language

• Where possible use affirmative language.
• Example
• The failure of Tenant to pay the rent on the
  first day of each month shall not be an incurable
  event in default.
• The Tenant may cure an event in default caused by
  its failure to pay the rent when due.

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Use of And and Or

• Items connected by and will be treated the same
  or in the conjunctive.
• Items connected by or will be treated
  alternatively or in the disjunctive.
• Avoid the use of and/or when referring to more
  than two items or parties.
• Example
• The fee shall be paid to the Talent and Agent or
  Manager.
• Who gets the fee?

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Use of Any, Each and No

• Use each when there is an obligation or duty to
  be imposed.
• Example
• Each Party shall pay its fees on May 1, 2008.
• Use may when there is discretion, a power or
  privilege to be accorded.
• Example
• Any Party may pay its fees on May 1, 2008.
• Use no where there is an obligation to refrain
  from acting.
• Example
• No Party shall pay its fees after May 1, 2008.

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Present Versus Future Tense

• Where possible, use the present tense.
• A contract is a living document that
  continuously governs the parties.
• Example
• If a Party should die
• If a Party dies.

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Other General Rules

• Use the number of days rather than months or
  years.
• 3 months is different than 90 days.
• Specify whether the number of days are calendar
  days or business days.
• Avoid legal doublets and triplets.
• E.g. null and void swear and affirm right,
  title and interest.
• Omit needless words overdressing your drafting
  makes it more difficult to understand.
• E.g. At that point in time then.
• Remember the rules of grammar. They served you
  well when you were younger, dont forget them now.

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Some Provisions that May Come in Handy
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Incorporate by Reference

• To incorporate provisions from one agreement into
  another, either
• Repeat verbatim the incorporated provisions
• OR
• Use incorporate by reference and specify what
  is specifically incorporated
• Example Talent agrees to be bound by all
  covenants in the Host Agreement dated May 22,
  2009, and all covenants are incorporated by
  reference as if set forth herein.

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Arms Length Basis

• Common restriction in transactions with
  affiliated companies
• Example The Company will not enter into any
  transaction with an affiliated company, except on
  an arms length basis.

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As Approved or Determined by the Board of
Directors

• Party will make their own actions contingent upon
  their own board approval
• Sometimes party will request that other partys
  action be subject to the other partys board
  approval

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Gross Negligence and Willful Misconduct

• Indemnitee not indemnified for results of his own
  behavior
• Example Company indemnifies Contractor for all
  damages incurredexcept for damages arising from
  Contractors gross negligence and willful
  misconduct

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Other Phrases You May Utilize

• From Time to Time to clarify an action
  required or permitted more than once.
• Example Company A may require Company B to
  provide a certificate of insurance from time to
  time for applicable events.
• 2. Respectively used to indicate that two
  series correspond to each other
• Example Company A, B, and C shall pay 1mil,
  2mil, and 3mil, respectively.

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Representations and Warranties Affirmative and
Negative Covenants
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Representations, Warranties, Covenants, Conditions
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Guaranties, Indemnities, Releases

• Guaranties
• A promise to perform a third party obligation.
• Guarantor someone who promises to perform is
  another party does not perform a duty.
• Note difference between guaranty and
  guarantee.
• Indemnity
• A collateral obligation where one party agrees to
  hold harmless another party from losses to third
  parties.
• Release
• The cancellation of a right to assert a right,
  claim or privilege.

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Enforceability Provisions

• Company must
• Be Duly organized and be a validly existing
  corp in good standing.
• Have power and authority to transact business
  and perform under this agreement.
• Have taken all necessary action with respect o
  its organizational documents and applicable law.
  
• Duly execute and deliver the agreement, meaning
  it has been signed by authorized signatory and
  has been delivered in accordance with the
  agreement.
• Confirm that there is no conflict with the
  agreement and any law, any other agreement, or
  companys Cert of Inc or bylaws.

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Affirmative and Negative Covenants

• Affirmative Covenant A promise or contract that
  requires a party to do specific acts.
• Example Borrower must pay taxes, comply with
  laws, and maintain insurance.
• Negative Covenant A promise or contract that
  requires a party to NOT do specific acts.
• Example Borrower may not incur more debt, make
  more investments, or sell assets except as
  specifically permitted in loan agreement.

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Conditions Precedent and Resolutive Conditions

• Condition Precedent
• A certain action must happen before a party is
  expected to perform a certain task.
• Resolutive ConditionTerminates all or some of
  the obligations in a contract upon occurrence of
  an event.

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Class Exercise
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