You just have to love boiler plate contract provisions. Especially when clients use them to piece together their own documents. For example, yesterday I met with a client who wanted to sue a former employee for competing in violation of three separate agreements. All three – an employment agreement, a bonus schedule agreement, and a covenant not to compete – had a provision governing post employment noncompetition obligations. Each one also had the same boiler plate paragraph which said that “In the event of conflict with any other document or agreement, the provisions of this agreements Shall control.” Each document’s noncompete provision was, of course, materially different. Hmmmmm.
Another businessperson who thought she was a lawyer got into a similar mess. She drafted her own agreement to lease an apartment. She went to the local hardware store and bought a form contract they were selling, and pulled out the provisions she thought she needed. She would have done fine if she realized the person who leased the property was the lessee, not the lessor.
However, those wayward “I don’t need a lawyer, this contract stuff is easy” clients, were no match for a lawyer friend of mine. We’ll call Spencer by the pseudonym “Norm” to protect his identity.
A month or so ago, “Norm” settled a hugely important case for his client on terms that Norm and his client preferred to keep out of the marketplace, the news, and his client’s children’s clutches. “Norm” thus made sure that the settlement agreement contained not one, but three, different nondisclosure provisions.
Unfortunately, somewhere along the way, however, his favorite provision – the one that said that not only the terms of the settlement, but also the fact that there had been a settlement in the first place, could not be disclosed – was modified.
As finally signed, the agreement prevented disclosure “… not only of the terms of settlement, but of any term of this settlement agreement as well.”
For some reason, long after the ink had dried, Norm felt something wasn’t quite right, and pulled out the document to take a look at it. It was only then that he realized that he could never sue the other side for violating the confidentiality clause because he and his client had agreed to never tell anyone there was an agreement not to disclose the settlement. The provision that prevented anyone from disclosing ANY TERM OF THIS SETTLEMENT AGREEMENT would include the confidentiality provision. Spence, err, Norm, had created the legal equivalent of the Lizard that caught its own tail.
You gotta love the law.
©2012 under analysis llc. Charles Kramer is a principal of the St Louis Missouri based law firm, Riezman Berger, PC. Under analysis is a nationally syndicated column of the Levison Group. Comments may be sent to comments@levisongroup.com.