Using Deal Points™

Use Deal Points when you have a form contract to review ideally, or some sort of written deal you intend to be bound by or bind others. Know the risk continuum of deals, most risky are unwritten and unspoken contracts but those gauged by prior performance – the safest are attorney drafted contracts catered to your deal that you reviewed with your attorney point by point using Deal Points™. This can be used as checklist to review or an agenda to prompt you for meetings with your legal counsel, insurer, banker or financial advisor to discuss the relevancy of each section.

PRIMARY GOAL: Covering all Potential Considerations.

A primary function of Deal Points™ is rigorousness of deal considerations. When going into a transaction, it is sound advice not to draft a contract from a blank sheet of paper at the beginning. While certain business models and transactions absolutely require the engagement of an attorney to draft a new contract out of “whole cloth,” most transactions have a handful of common transaction issues that must be addressed: purchase of equipment, real estate, invention assignments, and confidentiality, to name a few. This being the case, most people start with a form contract, either their standard, one from a collection or one drafted by their attorney. These contracts will contain a number of clauses or issues. That is what Deal Points™ provides, a list of all potential considerations. This does not mean that every transaction has to have every clause, but deal-relevant clauses may be included. For example, some confidentiality agreements have a fixed term, throughout which the parties cannot disclose any information. This clause, the “term” or “termination” clause, makes no sense when dealing with trade secrets (things we keep secret, that we hold secret, that give us a competitive or economic advantage, potentially for an indefinite duration). If we can disclose a trade secret, it is no longer secret and therefore gets no legal protection– imagine if the Coca Cola formula, a trade secret for over 100 years, was only allowed to be confidential for five years!

USE: Compare your contract with the list. Is something missing, and if so, is it important to the deal? If the answer is yes, you may want to negotiate that clause into the contract or ensure it is there. Attorneys using this tool should discuss addition or omission of relevant clauses from the contract. Discuss the pros and cons with your attorney.

An important function of Deal Points™ is the relative risk assessment. That is the purpose of the radio buttons. The reviewer can rank the clauses in reviewing the contract. For example, getting insurance on a bill of sale for a lawn mower is probably a low priority as the risk is low if it is offered without warranty “AS IS” so you will click on the green button, for low risk. However, requiring title insurance on a house purchase for a quitclaim deed is probably a high risk to close that transaction without insurance is a high risk, so you should click on the red button.

The best approach is for objective evidence on risk. For example, the Department of Justice publishes some metrics on contract dispute causes of action, likelihood of success in a dispute in federal court, probable payoff, etc. If no objective risk assessment is available, then experience and judgment, subjective elements are better than a guess.

USE: Select the radio button that best represents your assessment of the deal. Is the risk unknown, high, medium or low? A review of the entire deal by looking down the column will let the reviewer know the overall risk of the deal.

PRIMARY GOAL: Assess the position that serves your interest and plan strategically in the negotiation.

The Function describes the basic function of the clause (which again, is not a comprehensive legal treatise). Many of these clauses are covered by entire volumes. They are mere flags to trigger a discussion upon which an assessment can be made.

The italics sentence in the “Extreme Position 1 v. Extreme Position 2” shows some potential basic extremes on the range of the negotiation positions. There may be interim positions, and these positions are for guidance and do not detail the universe of possibilities.

USE: Think about your position and negotiate towards that end.

When using a Deal Points™ guide, comparing what you have as a form contract to the list, will help ensure you are thorough and allow you to select the things that your value.

PRIMARY GOAL: Convenience and reference.

This is a reference for the section of the specific contract you are using Deal Points™ to help you, available for your convenience.

USE: Put the section of the number you are referring to.

This is the field where reviewers can input rationale on why or why not they should include, exclude or modify contract clauses. It can trigger discussions with management or your client, or flag the need for further investigation or risk assessment.

USE: Write questions for your counterpart and your attorney to discuss. Ask questions such as, should you have this clause in the contract? Why? Why not?