Don’t Choose Delaware Law Unless You’re in Delaware

Posted on August 22, 2011 by

In a recent IT contract negotiation, the other party’s lawyer insisted that the choice of law clause call for Delaware law and courts. His client wasn’t based in Delaware and neither was mine. And our IT project wasn’t happening in Delaware. Why then choose Delaware law? Because Valerie Bertinelli comes from there–or because it was the first state to nominate a self-declared witch to the U.S. Senate? No. “Delaware has the best laws,” replied my negotiating counterpart. That’s a claim you hear a fair amount, but it’s based on a misunderstanding. Delaware has a special claim to quality corporate laws. But the Delaware advantage doesn’t apply to the laws governing IT contracts. Continue reading →

Posted in Choice of Law, Supporting Clauses | Tagged , , , , , | 4 Comments

“Mirror Indemnities” Don’t Work

Posted on August 20, 2011 by

Imagine an IT contract negotiation. One party asks the other to indemnify and defend it against certain suits by third parties. Maybe it’s a customer asking its vendor for an IP indemnity. Or maybe it’s a distributor asking its supplier for an indemnity against product liability suits. Either way, the party receiving the request says, “OK, but only if the suit’s our fault–and only if you indemnify us against suits caused by your fault.” That sounds fair, so the requesting party agrees, and the two draft a two-way or “mirror” indemnity. The clause says the party at fault for the third party suit indemnifies and defends the other party. And everybody’s happy, right? Continue reading →

Posted in General Clauses, Indemnity | Tagged , , , , , , , , | 1 Comment