In-House Counsel

3 Practical Business Contract Tips From Travelzoo GC Rachel Barnett

Traps, Pitfalls, and “Gotcha” Moments.

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When most of us think about contracts, the words “short” and “happy” rarely come to mind. But Rachel Barnett, general counsel of travel deal publisher Travelzoo, is here to change that. Her new book, The Short & Happy Guide to Business Contracts, modernizes contract law and applies legal concepts to the real corporate world. Loaded with practical tips and written in a conversational style, Barnett’s book is a must-read for any attorney who wants to improve their understanding of contracts.

Barnett sat down with us to share three of the most important clauses readers can learn about in The Short & Happy Guide to Business Contracts.

1. The “gotcha” moment: non-solicitation clauses

Everybody in business at one point in time will be handed a non-disclosure agreement (NDA) and asked to sign and send it back. “Most of the time, an NDA follows a similar, routine cookie-cutter format,” explains Barnett. “However, every once in a while a party will slip in a non-solicitation clause that prohibits the other party from soliciting or hiring anyone from their company.”

Sometimes these clauses make sense. “For example, during merger discussions, the seller may not want a potential buyer to steal its employees and then not buy its company,” she says. But Barnett warns that in most everyday business discussions, lawyers should “watch out for that provision. Then cross it out.”

2. The one to watch: termination clauses

“Putting aside risk allocation provisions (such as the limitation of liability and the indemnification clause), perhaps the most important clause in the contract is the termination clause,” Barnett emphasizes. “How else do you exit the relationship when things don’t work out?”

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She recommends that companies looking to purchase technology spend time with the IT team walking through every termination clause. “Down the road, the IT team will likely call the lawyer at some point in time and ask, ‘How do we get out of this contract?’” she explains. “You will want to prepare for this scenario ahead of time.” She also offers a back-up plan for difficult termination clause negotiations: “If you decide on a longer-term agreement without the ability to terminate easily, make sure you bargain for a discounted price for giving up those rights.”

3. The messy edit: mutual indemnification clauses

Barnett also identifies a major contract drafting mistake: the messy mutual identification clause. “One mistake that happens all the time is that attorneys try to simply change a few words in an indemnification clause in an attempt to make it ‘mutual,’” she says. “But many times the edited clause does not make sense.”

For example, Barnett shares, “In the online world, it is common that a party will supply a photo to another party, and then find out the hard way that someone else claims rights over that photo.” How should attorneys handle this situation? “In this case, you will want to ensure that the indemnification clause covers claims that the content or photo infringes any intellectual property right (including copyright),” says Barnett. “If you did not do so, but instead changed a few words in the indemnity language, for example, modifying simply the clause to “each party” will be indemnified for claims, you may not be covered for IP claims.”

Barnett’s book may be Short & Happy, but it’s loaded with even more practical tips for readers. “The book walks through the main mistakes that people make when reviewing a contract,” Barnett explains. “It also has an entire chapter on Ten Common Pitfalls in a Business Contract.” From new attorneys seeking a non-theoretical primer, to seasoned inside counsel who want real-world industry applications, The Short & Happy Guide to Business Contracts is a pain-free way to truly understand the business and commercial implications of any contract.

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Olga V. Mack is an award-winning general counsel, operations professional, startup advisor, public speaker, adjunct professor at Berkeley Law, and entrepreneur. Olga founded the Women Serve on Boards movement that advocates for women to serve on corporate boards of Fortune 500 companies. Olga also co-founded SunLaw to prepare women in-house attorneys become general counsel and legal leaders and WISE to help women law firm partners become rainmakers. She embraces the current disruption to the legal profession. Olga loves this change and is dedicated to improving and shaping the future of law. She is convinced that the legal profession will emerge even stronger, more resilient, and inclusive than before. You can email Olga at [email protected] or follow her on Twitter @olgavmack.

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