MY QUICK TAKE

We tend to think about and explain risk in terms of legal concepts. But our business clients think about these issues differently. They measure business objectives with numbers. While we are talking about limitations of liability and indemnification exposure, our clients are more focused on project budgets, revenue recognition, and product runway.

AI CONTRACT LESSON

Model training provisions target one of the biggest worries experienced by AI product customers. This language sets limits around what the vendor and the underlying model can and can’t do with the input and system data associated with the customer’s use. This week’s lesson includes two ways to improve your approach to these provisions: a downloadable PDF and video recording from one of our AI drafting webinars.

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MEME OF THE WEEK

Never underestimate the power of an adverbial prepositional phrase containing a passive clause functioning conditionally. (I have no idea what that means, but Claude said that's what "except as otherwise provided herein" is.)

#TheContractStruggleIsReal

CONTRACT TIPS

This contract tip is about the strategic use of recitals.

Recitals provide basic context about the contract. A typical recital reads:

"Whereas, Seller makes widgets and desires to sell them to Buyer. Whereas, Buyer desires to buy widgets from Seller. Now, therefore,..."

Yawn.

This approach states the obvious and feels so pointless.

But recitals can be used more creatively to advance your client's goals by using recitals to tell our version of the deal.

Consider this different approach to the same recital:

"Buyer desires to engage Seller to design, manufacture, supply, and service Widgets for integration into Buyer's fire-resistant residential roof safety products."

With this draft, the buyer has included a description of its intended use of the widget IN THE CONTRACT.

Yes, there's probably a disclaimer of any implied warranty of fitness for a particular purpose. And yes, parol evidence rules may prevent or limit evidence of what was discussed during negotiations about the buyer's intended use.

But we don't always need to rely upon a warranty or parol evidence admission to help our client's case. We've got it in front of the executives, judge, or arbitrator. And, even more importantly, this characterization was agreed to by the seller in a signed contract.

Always consider what story you want your recitals to tell.

Do you have any other techniques you like to use when writing recitals?

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