Pub. 2 2013 Issue 1

Summer 2013 17 understandable that a service provider may not be able to perform if its union goes on strike, who should take that risk and pay the price for finding an alternative supplier of your necessary goods or services? A force majeure provision shifts that risk from them to you (or vice versa depending on who has the performance obligation). Still further, at some point should the party who is not getting their contract performed have the right to cancel the contract if the event giving the other party the right not to perform continues for an unreasonable period of time? 4. Governing Law; Submission to Jurisdiction/Venue. Nowadays, we all seem to be contracting with people in different jurisdictions and each jurisdiction has its own laws. If there is a dispute in connection with a contract, that contract will need to be interpreted under the laws of one jurisdiction and the dispute will need a location. Although the laws relating to the proper law or location for disputes can be complicated, usually the parties can agree on thesematters in a contract. It is important to think about both the law that will govern the contract and where a dispute will take place. Agreeing to a foreign law in a place far away from your business and home may entail hiring a new lawyer, having the contract interpreted in ways you did not expect and traveling long distances either to defend yourself under the contract or to enforce your rights. Alternatively, forcing the other party to do so may discourage them from making frivolous claims. 5. Limitations of Liability. Generally the parties to a contract can negotiate terms that limit one party’s liability vis-a-vis the other. The scope of such provisions can vary greatly. It is not uncommon for parties to agree to limit one party’s liability to either a specific dollar amount, to the amount of their fees on the project, or whichever of the two is greater. It is very important to consider that such provision could prevent you from receiving the damages for a breach of the contract necessary to put you back in the position you would have been in if the contract was not breached, which is generally the goal of most people. Alternatively, if you are the one limiting your liability, it can be a great way to limit your potential liability. A savvy auto dealer will always look to minimize its risk. One easy way to minimize risk is to include beneficial terms in your contracts and to remove or alter terms that increase your liability or exposure. An attorney familiar with general contractual matters can assist in those efforts and a small investment in retaining one prior to entering into an important contract could be a prudent investment. Chad R. Ensz is a Partner at McKenna Long & Aldridge LLP, an international lawfirmwithmore than575attorneys andpublicpolicyadvisors in15offices and 13 markets. The firm is uniquely positioned at the intersection of law, business andgovernment, representing clients in the areas of complex litiga- tion, corporate law, energy, environment, finance, government contracts, health care, infrastructure, insurance, intellectual property, private client services, public policy, real estate, and technology. For more information, please visit http://www.mckennalong.com/professionals-ChadEnsz.html. Please note this article has been prepared for informational purposes only and is not to be considered legal advice. We suggest that you speak directly with counsel regarding the matters discussed.