Ensure Online Signature Legitimateness for Leave of Absence Agreement in United States

How to eSign a document: online signature legitimateness for Leave of Absence Agreement in United States

welcome to the contract teardown show from law Insider where legal experts tear down contracts from some of the most well-known companies and high-profile Executives around the world in this episode hyperdraft's Sean graney talks about an independent contractor agreement with a Twist so let's tear it down [Music] Sean Grady welcome to the contract teardown show how are you today sir doing well my good man thanks for having me Mike absolutely we are nerding out a bit about an independent contractor agreement I want to share this for the folks at home this is between Big Five Corp and Rando dude uh before we dig into it Sean what is this document when are we going to see this kind of thing so you're going to see this this is an independent Services agreement it's an agreement that most folks enter into on a daily basis basically Big Five pork which is a sporting company is paying Rando dude to provide some services for them cool and uh what about you what brings you to documents like this so you know I'm I'm the general counsel of hyperdraft currently but I practice law uh for 15 years big law Boutique solo practitioner I've hit it from every single angle possible and these are the type of agreements that you deal with on a day-to-day basis so it's it's uh you come across it all the time we're going to be focused on some of the boilerplate provisions in the back so things you see in every document that you maybe don't think about from the angles we're going to be talking about today yeah unlike most documents we talk about on here this is the kind of contract I've actually signed before so I was supposed to read it first not saying I did that but I've definitely signed one so let's move down to section eight uh confidentiality um these relationships uh before we dig into it I I just want to ask you about this kind of document this kind of relationship tell me about what you're seeing in this document in terms of who the parties are and what they're after and then we'll start digging into the actual rules and principles in it yeah yeah so if I had to guess right Rando dude uh was a senior Vice president of buying for for Big Five Court my guess is this is what we would call a garden leave agreement is Rando guy was getting up there in age maybe looking to retire or maybe doesn't want to grind as hard as you know a younger person and big five comes and says yo man you're a senior vice president of buying you know where all the bodies are buried probably put a couple bodies in the ground yourself we're cool with you leaving but we don't want you to work for somebody else and in the United States we like people working we like people making money and so a lot of States like in California you can't have non-competes post-employment right so I can't join a law firm in California and then say yo if you work for us for one day you promise to never work for you know a law firm for two years after you quit here we know that's unenforceable and even in like you know more employee friendly States uh it's hard to do that right and so what you do is you put them on Garden level it's like listen you don't work here anymore I'm just gonna pay you to stay at home and tend to your garden if I'm paying you then I can say you can't work for a competitor so my guess is that's what this is so there's services and all that stuff he's probably never going to show up a day in his life he's just going to pay collect paychecks for two years until whatever bodies he knew are no longer relevant um or whatever information he has is kind of stale that's my guess what we're doing you've just identified my whole life I've been trying to find the perfect job and you finally Garden league right career day advisors back in high school would just be salivating at this conversation um so speaking of bodies being buried let's talk about section eight the confidentiality section I'm noticing in this it's fairly long for confidentiality So speaking to you know the kind of leave you're talking about uh tell me about what they're doing in Section 8 with confidentiality yeah so this confidentiality section is a little meaty and it's your snake so people watching this seem like Sean might I see confidentiality Provisions all the time this looks pretty standard and they're right big five is going to give Rando dude some sensitive information they're saying hey Rando guy don't tell nobody about it and you can only use it for for me right and then they've got some exceptions like hey but we agree these things aren't confidential information if it's already out in the public if it gets its way into the public through no fault of your own that's good right but what I want to focus people on and there's a mistake that a lot of lawyers make in their forms and it's about halfway down the section there's a sentence that starts and says additionally contractor May disclose confidence information to the extent required by law and you're thinking yourself well Sean I don't know what's so special about that that's pretty reasonable right I can't be in a situation where have agreed not to disclose it so on the one hand I promise Big Five I won't tell nobody about it but then Uncle Sam comes knocking and says hey Sean you got this information you got to share with me I can't choose between giving the finger to Uncle Sam or being a breach of this contract right so like this provision's very standard it's in every document but it's where they put it which is T they have it as a separate sentence which you see in a lot of forms is they'll include this provision as an exception to the definition of confidential information totally which means that confidential information does not include any information on unrequired disclosed by law which means if I disclose it one time by law it's no longer confidential information so even though I only had to disclose that one time it's now free for me to use I can blast it on the internet I can throw it up on the gram for everyone to use and so you never want to include it in that Litany of things that are are exceptions to confidence information it is a one-time exception to your obligation to not disclose it and only for that one time once you give it to the IRS whoever's asking for it it goes back to being confidential information and you can't use it so a lot of forms out there so I want everyone to hit pause on this right now go run and check your form ndas go run and check your foreign contractor agreements and make sure that you've got this as a separate sentence and not part of that litany that just this isn't confidential through information at all gosh that's a really smart I'm thinking in terms not to get to current eventsy but I'm thinking of certain individuals who used to be in positions of power who are now out of those positions of power and what they knew and when and how they handled information is being looked at by certain other powers and like thinking of the employees and what they signed and what you know whether there's totally going to be a back door to fight that's super interesting well let's before I get myself into trouble with the YouTube commenters let's go down to 10 to the work product um this uh this sounds like work for hire uh this is a pretty typical uh that you know most of my contracts include that that what I make is owned by whatever company hired lawyer Ford to create media what do you think about section 10 here in the way they wrote that you're dead on right this again just like confidentiality are you know our viewers are going like Sean Mike what the hell are you talking about we see this all the time and you're right but you don't always see it complete and they hit it just on the head right so if you pay anybody to make something for you I don't care what it is Art code marketing slogans whatever and you don't have these Provisions in there you can end up in a world of hurt and there's three things I like to include and then nail it one a statement is that I just own whatever you made for me and that's what's called work product in this agreement work product is I'm paying you for services Rando dude anything that you create part of those Services that's mine so one I own it two whatever rights you might have in it you assign it to me and that one is sometimes not always in there and that's where people get in trouble and the third prong is the catch-up not so much in the United States but in international law there's just some IP rights that they don't allow you to sign and so you start with saying I own it two you assign it to me and three for whatever weird reason you can't assign it to me you give me an exclusive license forever so I technically don't own it but I'm the only one in the whole wide world including you that can use it and when you couple those three together it works beautifully if you don't have it it will get flagged and diligence if you're going to sell your company and you just can't go running around when I was uh I was by side in a deal one time and we saw it they didn't have that assignment provision in it they had like we owned it they had the exclusive license provision but they didn't have the assignment provision and they had this was in the contract they had maybe like a thousand contractors on the same form you can't just go and get those contractors to sign an agreement saying oh yeah by the way I sign it courts will say but you didn't pay nothing for that and you're like well I paid on the agreement like that's a separate agreement you have to pay something extra to get that enforced so we had to go and make them pay a hundred bucks to each one of those contractors huge pain in the ass to just do yourself a favor drop those three things in there I own it you assign it and if you can assign it you exclusively license to me forever you got to make sure that's in every agreement yeah and I could say for me as somebody who creates under an agreement like this uh it makes me nervous seeing the the part about reproducing and creating derivative works because a lot of times you know if you're creating code or or in my case you're creating Media or whatever it is um we saw this with a previous agreement uh Shaquille O'Neal's agreement with uh is it Papa John's that he works with um you know how they were using derivative works and he got to approve those derivative works that that's actually a big decision because now you've taken the bit that Shaq Made For Hire right and if they get to just go do whatever the heck they want with it I mean they could really twist your image and or your code or your whatever and use it for purposes that you never would have imagined so it's actually I think that's a super important section well let's jump down to 13. uh the limitation of liability for the company here's where it gets shorter and much more direct the company knows exactly what it's trying to say here what do you think about 13. this this is one of those Provisions that is the most important clause in any Commerce a contract you ever do and it's funny because most Law Firm attorneys have zero clue what they're doing here if you ever did an m a deal right the most negotiated Clauses and demification because it includes deductibles and caps and all this stuff and they'll fight over that forever that's basically what this Clause is so think of it like a car insurance Mike you've got car insurance right yeah yeah uh you know that insurance doesn't cover all types of Damages right if you're if you're at a stoplight on the way to a job interview and somebody runs a red light and hits you they're going to cover that but you know in my case if the Dodgers lose to the Braves uh in the playoffs and I take a sledgehammer to my truck they're not going to cover that right there's exclusions there's also a Max on how much they're going to cover for any damages right if you get hit when you're at that stoplight you don't get all the money in the world right they might your policy might be one million two million and any damages above that so sorry not sorry like that's that's your out of pocket that's what this Clause does so you've negotiated this beautiful agreement you've got your reps and warranties and your indemnification and all these obligations and then you slip to this clause and it's like yo by the way I'm not I'm not paying you for nothing and I'm capping it at the amount of fees I paid in an agreement which may be like 25 50 000 bucks you know and so this one is huge right because you and it's different contract to contract and it's one of those Provisions it's really a business provision that masquerades as the legal plus because it's got all this legal crap in it but really at the end of the day you got to sit down with your Finance team and say hey what are we getting out of this agreement Revenue benefit whatever versus what do we what's our risk liability and they've got to make a decision you know maybe the aggregate amount of fees which is the cap here isn't right maybe that's too much like all this guy's doing is painting the building right like I don't want to be potentially on the hook front for millions of dollars and so it's one of those Provisions where where you know you gotta have it um and and sit down with your Finance team and make sure you get that risk profile just right let me ask you a child's question uh as I want to do so say in this situation I am an engineer and I created some code and hey high five way to go us and then I leave this company now has rights to use derivatives of that code so they use that code to put it into a nuclear launch hacking software or whatever we blow up uh planet and uh then there's some liability associated with blowing up a planet and uh and so they come after me because I wrote the code is what this saying is like even though the company went and took the derivative work that used my code like their liability might be capped the value of this particular contract after they use my code first Mike that is not a child's question that is that is Advanced options because you nailed it if we read this agreement there's only one party's liability that's capped in this agreement the engineers is not and so uh the company their Max liability out of this product this thing is just whatever I paid you right but if you promised me that your engineering code wouldn't blow up anything or that it was like you know didn't infringe anything and you leave and you're done and someone hits me with a lawsuit I'm taking your house and taking everything because it's not a mutual provision right now maybe Randall guy's lawyer goes like hey wait a minute I'm like no no no no no no it's not we got to make this Mutual right like why am I eating uncapped liability I'm writing an insurance policy with that covers all damages into the moon and fees so let's cap it and then the company comes back on like oh crap man our only obligation is to pay you in this agreement so it makes sense to cap our liability you're writing code that's going to run the Death Star um maybe we want more liability right like we're at greater risk here and it's a negotiation back and forth you don't have to have the same cap um you know you can have a bigger cap for the engineer something that makes them feel better um to keep working on the Death Star maybe a lower for the company in this situation something I want are our listeners of this one to take think about when you put a clause in an agreement the common thing that the other side's lawyer is going to do is just make it Mutual zero thought they're like oh the company gets a liability cap I don't let's make it Mutual because in this situation all we're really doing is paying Rando dude that's our only obligation to me he's got a bunch of crap coming to us but we're just paying him money maybe when you sit down with your business team to make sure they're cool with it maybe I delete the liability cap because my risk profile here is small to begin with and I don't even want them thinking about oh let's make it Mutual right I want engineer guy maybe to have uncapped liability just in case right he had a design flaw um where there's a vent where if you happen to shoot you know one bullet and you blow the whole uh my gosh I was totally going down a road one generoso's dad's story you know I think we pulled this back to the important stuff all right let's jump down to termination 15-1 uh by the company uh what do you think about the termination section so in this one right the only way determination is a huge huge part of any contract right this is how you turn the agreement off it for whatever reason you want if you notice this one the company only can get out of this agreement if if there's breach by Rando guy so Rando guy's not doing his job that's it right so they have a four cause termination this one I highlighted because it's what's not stated right and they don't put in a termination for convenience which means I can shut this agreement off for any time for any reason maybe I'll give you some notice kind of deal and and I want I want people to think about like maybe sometimes you don't want to include it or maybe they try to include it and got an it got negotiated out because you know random guy if this is a garden leave agreement I don't really care about a termination for convenience because my whole goal is to keep you locked up in this agreement paying you so you can just tend to like soybean and corn instead of going rolling to a competitor and telling them all my pricing and customers and things like that and so but I want people to think that sometimes though you do want a termination for convenience in there maybe it's in my favorite of like I don't want to wait for you to breach maybe sometimes I need to get out but then just like limited educational liability if you drop that in there you're going to get the other side thinking like well maybe we want to get out as well and you have to think about how vital is this contract to me I can't have you terminate for 30 days because you're not just Garden leaves like you basically made like the financial Software System and if you shut me off in 30 days I'm screwed so maybe I need six months to roll out to find another vendor so this one was highlighted of there's a couple ways to come about a termination for convenience termination for the Clause if if you can get it throw termination in for convenience and for you because it's always nice to get out of a contract but think about what they're going to ask for too and are you willing to have that negotiation are you willing to have that fight you know and just just make a good decision all right finally let's jump down to 16-6 uh this is in sort of the general points um it says no assignment what does that mean in this situation who would he be assigning to like an LLC he owns or something right so so as written here right it's one way makes sense this is big fives agreement right they're gonna shove it down Randall guy's throat it says Hey Rando guy you're the one who knows where the bodies are buried I want to get to a contract with you and you can't assign this agreement to anybody else and this Clause alone works because Rando guys signing his individual capacity right if if my court enters into an agreement with me for these services and you just want me to do it because I'm the best at it I can't then go send it you know sign it to my boy tank and be like yo Mike you talk to this guy now Tank's a beautiful human being he's really smart but he can't do what I can do right so it works in this context but what if Mike Corp enters into me and I say yo run it through my LLC so now you've entered into an agreement with Mike Corp and Sean LLC and I agree agreements without Sean LLC I won't let anybody else have it but I sell Sean LLC to my boy tank and you come to me and say Sean what happened man like you know you assign the agreement it's like no I didn't the contract is still with Sean LLC it's just Under New Management and so what I wanted to point out here is most courts we call that a change in control I didn't assign the agreement it's still with my company I just don't own it anymore so what we call that a change in control my my company wanted change and control courts will hold that if you want your no assignment Clause to apply to changing controls you need to say change control so this alone would not cover you so you would need to say you can't assign it without my permission oh and by the way we agree that change of control that's an assignment and so you want to drop that in there without it you you there's a loophole right when you're dealing with companies so again maybe you don't need it maybe you don't care about it but I just want everyone to be thinking that there's different ways to come at Provisions that you just kind of when you get to this part you're at the end of the agreement you're rifling through because you want to be done stop for two seconds and say yo do I need to drop a change of control provisioning here because I don't want these guys I don't want to be dealing with Under New Management because they may not be providing what I need them to provide all right I'm going to ask you a pop quiz Hot Shot question who do you think after reading this contract and of course we're extrapolating and guessing who would you say was probably the party with the power in the negotiations and why is this is Big Five 100 um and and my guess is is this dude I'm guessing was retiring right and they said hey Rando guy man listen let us pay you you know 150 Grand each year for two years for you to sell in your garden um but you gotta sign this really really one-sided agreement but you don't care because you're not actually providing Services there's really risk so like just take the money um and tend to tend to your garden and so that that's why but usually for contract agreements with individuals it's always the company that has it because the individual is probably a solo shop and they just want to make money and so they eat a lot of risk that either they don't know about or they just don't care at the end of the day they just want to make paid but yeah this is big five 10 out of 10 times well and you assume the company is probably drafting it because they've got the in-house legal team and uh Rando guy does not so unless you know he could hire me I could like Garden by day and then you know draft contracts by night and I'd do that for him call me Rando guy well uh this is great I appreciate you Sean uh we will post this document uh as well as your contact information over over at lionsider.com resources just tell people at home if they want to reach out to you what's the best way to connect with you to learn more about what you do yeah hit me up on our web our website we're .hyperdraft.ai Best in Class docgen solution just a quick Shameless plug Michael Cooley shame I like that information listen so you got this contract agreement maybe you've got your own form of garden leave agreement the way you normally do is you got a template a bunch of blanks insert name here insert date here delete this paragraph if you're using this paragraph I always got time to go through that we've got a software we take your forms we make them smart we automate them so all we're doing is just clicking buttons filling the numbers generates beautifully formatted Word documents we integrate with your doc management system your email Outlook what usually takes you hours takes you minutes so now you've got more free time to do more Biz Dev you know spend time with your kids or you know tend to your garden like Rando guy you know your time well I appreciate that we'll make sure to link uh to information on hyperdraft and on Sean uh like I said over at linesider.com resources and if you want to be a guest on the contract teardown show just email us we are at Community lawinsider.com thank you again Sean we'll see you guys next time absolutely take care thanks so much for tuning in to this episode of the contract teardown show from law Insider if you're enjoying the show please feel free to rate subscribe and leave a review wherever you listen to your podcasts that helps others find the show we really appreciate it thanks again for listening and we'll catch you in the next episode