United States Contract Law

MadelineWoodHRONE|SUITE603,ORIENTALCENTER,699WESTNANJINGROAD/31WUJIANGROAD,JINGANDISTRICT,SHANGHAI,CHINA.200041

United States Contract Law

MadelineWoodHRONE|SUITE603,ORIENTALCENTER,699WESTNANJINGROAD/31WUJIANGROAD,JINGANDISTRICT,SHANGHAI,CHINA.200041

United States Contract Law

2 Madeline Wood 2016 年 5 月 31 号

Contents

Glossary of Terms Acts, Laws, and Regulations

Table on Non-Disclosure, Non-Competition, & Non-Solicitation

Domestic Governing Bodies Contract Termination Employee Rights after termination Contract Modification Commercial Arbitration Contract Invalidity International Governing Bodies Table on Specific States Acceptance

3 3 4 14 14 14 14 15 16 17 18


United States Contract

Laws

Applicable Laws (Non-Disclosure, Non-Solicitation & Non-Compete Clauses)

Glossary of Terms

These are terms needed to understand the below

chart. Contract Law varies by state. There is no

unified standard.

Blue Pencil: permits a court to only sever or strike offending language from the contract, but the court cannot amend the contract. Reformation: allows for amendments and changes to the original contract with the consent of both parties. Statute of Limitations: the deadline for filing a lawsuit Restrictive Covenant: a clause in a deed or least to real property that limits what the owner of the land or lease can do with the property.

Acts, Laws, and Regulations

These are the applicable laws mentioned in the

below chart.

Defend Trade Secrets Act (DTSA) • Federalizes trade secret

law by providing a procedure for trade secret owners to file civil lawsuits in federal court

• Limits injunctions against former employees. Particularly when the previous employer seeks to prevent a former employee from entering into another employment relationship.

• Misappropriation protections

• Requires this notice of immunity in all NDA contracts:

“An individual shall not be held criminally or civilly liable under any federal…

Or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or is made in a complaint or other document filed in a lawsuit for the retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (i) files any document containing the trade secret under seal; and (ii) does not disclose the trade secret, except pursuant to court order.”



Laws


The Uniform Trade Secrets Act (UTSA) • A “model” act created by

lawyers, judges, and scholars in order to conform the rules of different states

• Still each state’s laws varies in regards to NDA agreements, but are more conformed than they were in the past.

“Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage. “Misappropriation” includes acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; disclosure or use of a trade secret of another without express or implied consent by that person who (A)…

Acts, Laws, and Regulations

Continued

Used improper means to acquire knowledge of the trade secret or (B) at the time of disclosure or use knew or had reason to know that this knowledge was (I) derived from or through a person who improperly acquired it, (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy of limit its use; or (C) before a material change of his position, knew or had reason to know that it was trade secret that knowledge of it had been acquired by mistake. “Trade Secret” means information, including a formula, pattern, compilation, program device, method, technique, or process that (i) derives independent economic value, actual, or potential, from not being generally known to, and not being…

Readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is subject of efforts that are reasonable under the circumstances to maintain its secrecy Severability: if any provision of this Act or its application to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application.


State Employee Non

Competes Allowable?

Applicable State Laws

Are Employee Non-Solicitation

Agreements Allowable

Are Customer Non-Solicitation Agreements Allowable?

Continued Employment

Consideration

Alabama Yes

Ala. Code §8-1-1; Amended statute becomes effective

1/1/2016

Yes Yes Yes (May not

be signed prior to employment)

Alaska Yes None Not yet decided Yes Not yet decided

Arizona Yes None Yes Yes Yes

Arkansas Yes

Ark. Code. E4-70-207

(Act 921) effective

8/6/2015

Yes Yes Yes

California No (with narrow exceptions)

Cal. Bus. and Prof. Code

§16600, 16601, 16602, and

16602.5

Yes Not typically, but there may be a trade secret

exception No

Colorado Yes Colo. Rev. Stat.

§8-2-113 Yes Yes Yes

Connecticut Yes C.G.S. 31–50b C.G.S. 31–50a

Not yet decided Yes Likely, yes

Delware Yes None Yes Yes Yes

DC Yes None Yes Yes Likely, yes

Flordia Yes Fla. Stat. Ann.

§542.335 Yes Yes Likely, yes


Georgia

Yes, but ability to enforce

restriction varies based on when the agreement

was signed

Ga. Code Ann. §13-8-50

Yes Yes (for all periods) Yes (for all periods)

Hawaii Yes, except for

Technology Workers

Haw. Rev. Stat. §480(c)

Yes, except for Technology Workers

Yes, except for Technology Workers

Likely, no

Idaho Yes Idaho Code

§§44-2701 to -2704

Yes Yes Yes

Illinois Yes None Yes Yes

Yes, may depend on the

length of employment (At least 2 years, questioned by Federal Court

Indiana Yes None Not yet decided Yes Yes

Iowa Yes None Yes Yes Yes

Kansas Yes None Not yet decided Yes Likely, yes

Kentucky Yes None Yes Yes No

Louisiana Yes La. Rev. Stat. Ann. §23:921

Yes Yes Unclear

Maine Yes None Not yet decided Yes Yes

Maryland Yes None Yes Yes Yes

Massachusetts Yes None Yes Yes Yes

Michigan Yes Mich. Comp. Laws

§445.774a Not yet decided Yes Yes


Minnesota Yes None Not yet decided Yes No

Mississippi Yes Mo. Stat. Ann. §431.202

Yes Yes Yes

Missouri Yes None Yes Yes Generally, yes

Montana Yes Mont. Code Ann. §§28-2-703 to -

705 Yes Yes Yes

Nebraska Yes None Not yet decided Yes Yes

Nevada Yes Nev. Rev. Stat.

§613.200 Yes Yes Yes

New Hampshire Yes NH RSA 275:70

(notice requirement)

Not yet decided Yes Yes

New Jersey Yes None Yes Yes Yes

New Mexico Yes None Not yet decided Yes Likely, yes but

not yet explicitly addressed

New York Yes None Yes Yes Yes

North Carolina Yes N.C. Gen. Stat. §75-4

Yes Yes No

North Dakota Yes N.D. Cent. Code

§9-08-06 No No

No, but yes with respect to non-

disclosure agreements

Ohio Yes Ohio Rev. Code Ann. §1313.02

Not yet decided Yes Yes


Oklahoma Generally Prohibited

Okla. Stat. tit. 15, §219A Yes Yes Not yet decided

Oregon Yes (some limitations)

Or. Rev. Stat. §653.295 (notice

requirement); Amended statute becomes effective

1/1/2016

Yes Yes No

Pennslyvania Yes None Yes Yes No

Rhode Island Yes None Not yet decided Yes

Yes per Superior Court; undecided by RI Supreme Court

South Carolina Yes None Yes Yes No

South Dakota Yes S.D. Codified

Laws §53-9-8 Not yet decided Yes Yes

Tennessee Yes None Yes Yes Yes

Texas Yes Tex. Bus. & Com. Code §15.50-.52

Yes Yes No

Utah Yes Not yet decided Not yet decided Yes Yes

Vermont Yes None Not yet decided Yes Yes

Virginia Yes None Yes Yes Yes


Washington Yes None Not yet decided Yes No

West Virginia Yes None Not yet decided Yes No

Wisconsin Yes Wiss. Stat. Ann. §103.465

Yes Yes Yes

Wyoming Yes None Not yet decided Yes No

State

Reformation or Blue Pencil

Possible?

Enforceable Against

Discharged Employees

Adopted UTSA

Applicable Statute of Limitations

(UTSA and Breach of Contract)

Adopted Inevitable Disclosure Doctrine?

Restrictive Covenants

Extended for Violations?

Alabama Reformation

Never specifically addressed,

but likely yes

Ala. Code. §8-27-1

2 years (ATSA); 6 years (breach of

contract)

Not yet decided Yes

Alaska Reformation Not yet decided

Ala. Stat. §45.50.910


contract)

Not yet decided

Not yet decided

Arizona Blue Pencil Unclear Ariz. Rev. Stat. Ann. §§44-401

to 44-407


contract)

Not yet decided

Unclear

Arkansas Blue Pencil Undecided Ark. Stat. Ann. §4-75-601 et

seq.


contract) Yes Undecided

California

No, in employment context; blue pencil with respect to

narrow exceptions

No, with respect to

non-competes; yes with

respect to non-

solicitation

Cal. Civ. Code §3426

3 years (CUTSA); 4 years (breach of

contract) No

Not yet decided

Colorado Blue Pencil Not yet decided

Col. Rev. Stat. §7-74-101

3 years (CTSA); 3 years (breach of

contract)

Not yet decided No


Connecticut Blue Pencil Yes Conn. Genl. Stat.

§35-50

3 years (CTSA); 6 years (breach of

contract)

Yes, but only when the employee was bound by a non-compete

No

Delware Reformation Yes Del. Code Ann. Title 6 §2001

3 years (DSTA); 3 years (breach of

contract) Yes Yes

DC Unclear No D.C. Code Ann.

§48-501

3 years (DUSTA); 3 years (breach of

contract)

Not yet decided Yes

Flordia Reformation Unclear Fla. Stat Ann.

§688.001

3 years (FUTSA); 5 years (breach of

contract)

Not yet decided Unclear

Georgia

Varies based on when the agreement was signed

Yes Ga. C.A. §10-1-

760

5 years (GUSTA); 6 years (breach of

contract) No No

Hawaii Reformation Not yet decided

Haw. Rev. Stat. §482B-1

3 years (trade secret act); 6 years (breach

of contract)

Not yet decided

Unclear

Idaho Blue Pencil Yes Idaho Code §48-

801

3 years (ITSA); 5 years (breach of

contract)

Not yet decided

Unclear

Illinois Reformation

No, if without causes,

unclear with cause

Ill. Ann. Stat. ch. 140 §351-59

5 years (ITSA); 10 years (breach of

contract) Yes Generally, no

Indiana Blue Pencil Yes Ind. Code. Ann.

§24-3-1

3 years (IUTSA) 10 years (breach of

contract) Generally, no No

Iowa Blue Pencil Yes 1990 90 Acts,

ch. 1201 §550.1

3 years (IUTSA) 10 years (breach of

contract) Yes Generally, no

Kansas Reformation Yes Kan. Stat. Ann.

§60-3320

3 years (KUTSA) 5 years (breach of

contract) No Generally, no


Kentucky Reformation Not yet decided

Ky. R.S. §365.880

3 years (KTSA) 15 years (breach of

contract)

Not yet decided, but

likely no Yes

Louisiana Blue Pencil Yes La. Rev. Stat. Ann. §51:1431

3 years (trade secret act) 10 years (breach

of contract) No No

Maine Reformation Likely, yes M.R.S.A. Title 10 §1541 et seq


of contract)

Not yet decided

Not yet decided

Maryland Blue Pencil Generally, no Md. Com. L. Code

§11-1201

3 years (MUTSA) 3 years (breach of

contract) No No

Massachusetts Reformation Yes No

3 years (Mass. Gen. Laws ch. 260 §2A) 6

years (breach of contract)

Yes, in federal court, state courts

have recognized its existence but have not adopted it

Generally no

Michigan Reformation Yes M.C.L.A.

§445.1901 to 445.1910


contract) Unclear Yes

Minnesota Reformation Yes Minn. Stat Ann.

§325C.01


contract)

Not explicitly accpted, but

likely, yes Very rarely

Mississippi Yes M.C.A. §75-26-1 3 years (MUTSA) 6 years (breach of

contract)

Not yet decided

No

Missouri Reformation Yes Mo. Stat.

§417.450 to 417.467


contract) Unclear No

Montana

Not yet decided in

employment context

Generally, no Mont. Code Ann.

§30-14-401


contract)

Not yet decided

Not yet decided

Nebraska No Not yet decided

Neb. Rev. Stat. §87-501

4 years (NTSA) 5 years (breach of

contract)

Not yet decided

No

Nevada Reformation Not yet decided

Nev. Rev. Stat. §600A.010


of contract)

Not yet decided

Yes

New Hampshire Reformation Not yet decided

N.H. R.S.A. §350-B:1 et seq.

3 years (NHUTSA) 3 years (breach of

contract)

Not yet decided

No


New Jersey Reformation Yes N.J. S-2456/A921

3 years (NJUTSA) 6 years (breach of

contract) Yes No

New Mexico Not yet decided

Undecided N.M. Stat. Ann. §57-3A-1

3 years (NMUTSA) 6 years (breach of

contract)

Not yet decided

No

New York Reformation Yes, only with

cause No

3 years (tort) 6 years (breach of contract)

More likely to be accpeted

in federal than state

court

Within discretion of

the Court

North Carolina Blue Pencil Likely N.C. Gen. Stat.

§66-152

3 years (NCTSPA) 3 years (breach of

contract)

Not yet decided

Generally no

North Dakota Reformation Not

applicable N.D. Cent. Code §47-25.1-01

3 years (NDUTSA) 6 years (breach of

contract)

Not yet decided Not applicable

Ohio Reformation Yes R.C.Secs. 1333.61

4 years (OUTSA) 8 years (breach of

contract) No Yes

Oklahoma No Not yet decided

Okl. Stat. tlt. 78 §§85–9


written contract) 3 years (oral/implied)

Not yet decided

No

Oregon Reformation Yes Or. Rev. Stat.

§646.461


contract)

Not yet decided

No

Pennsylvania Reformation

Yes per lower courts;

undecided by PA Supreme

Court

12 Pa. Cons. Stats §5392

3 years (PUTSA) 4 years (breach of

contract)

Not yet decided, but

superior courts have treated the

idea favorably

No

Rhode Island

Blue Pencil normally,

reformation rarely

Not yet decided

R.I. Gen. Laws §6-41-1

3 years (RIUTSA) 10 years (breach of

contract)

Not yet decided

Yes

South Carolina Blue Pencil, unlikely

Undecided S.C. C.A. §39-8-1 3 years (SCUTSA) 3

years (breach of contract)

Not yet decided

Not yet decided


South Dakota Blue Pencil Yes S.D. Cod. Laws §37-29-1

3 years (SDUTSA) 6 years (breach of

contract)

Not yet decided

Not yet decided

Tennessee Reformation Unclear Yes; Tenn. Code §47-25-1701 et

al.


of contract)

Not yet decided

Unclear

Texas Reformation Yes

Yes, effective 9/1/13 Tex. GV. Prac+Rem Code §§134A.001 et

seq.

3 years (Tex Civ. Prac. & Rem. Code Ann. §16.010) 4 years (breach of

contract)

Unclear Possibly (not against Texas

policy)

Utah Not yet decided

Yes Utah Code Ann.

§13-24-1

3 years (UUTSA) 6 years (breach of

contract) Yes

Not yet decided

Vermont Unclear Yes Ch. 143 §4601 3 years (VTSA) 6 years (breach of

contract)

Not yet decided

No

Virginia No Yes Va. Code. Ann.

§59.1-336

3 years (VUTSA) 5 years (breach of

contract) No Yes

Washington Reformation Yes Wash. Rev. Code

§19.108.011 to .940

3 years (WUTSA) 6 years (breach of

contract) Unclear Unclear

West Virginia Reformation Not yet decided

d W. Va. Code §47-22-1

3 years (WVUTSA) 10 years (breach of

contract)

Not yet decided

No

Wisconsin Not likely Undecided Wis. Stat. §134.90


contract)

Not yet decided

Not yet decided

Wyoming Yes Yes Wyo. Stat. §§40-24-101 to 110


contract)

Not yet decided

Unclear



Laws


Each locality has its own dispute courts. Each state

has its own appeals courts. There are 11

federal appeals courts that absorb cases from states.

Domestic Governing

Bodies

• Public Policy Exception oAt Will Employees are

considered “wrongfully discharged” if their firing contravened some explicit well established public policy of the state in which they work • Getting fired for filing a

workers’ compensation claim after being injured on the job

• Refusal to break the law at the request of employer

• See below table • The Implied Contract

Exception oEmployers’ stated policies,

either orally or in writing, regulating dismissals in the workplace or other rules are implied contracts

oSee below table • The Covenant of Good-Faith

Exception oIn every employment

relationship there is the understanding employees should be terminated for “just cause”

oSee below table

Contract Termination

Contract termination is regulated federally. It generally favors the

employer rather than the employee.

1. “At Will Employees” This person can be fired for any reason at any time and can leave their job for any reason at any time without notice. • Subject to Anti-

Discrimination laws: no employee can be terminated on the basis of race, gender, religion, color, national origin, and disability. oSee below table

2. “Just Cause Employees” This person can only be dismissed for not performing their job duties correctly or non-arbitrary reasons relating to violations of workplace conduct or policy.

Employee Rights after Termination

Employee benefits are listed in the document titled “United States Employment Benefits

HRone”.

Contract Modification

When negotiating a contract or after a contract

has been signed parties may wish to change the

contract.

Modifying a Contract Before Signing it

• Minor modifications can be made to the document



Laws


• If the party agrees to the changes they will acknowledge their acceptance of each individual change and by signing the entire contract. Modifying a Contract After

Signing It • Both parties must agree to

the modifications • Some contracts may

specifically state when modifications can be made

Commercial Arbitration

Arbitration is an alternative method to dispute

resolution and is widely used in a variety of

contexts.

Federal Arbitration Act (FAA) • Controlling body of

arbitration law at both the state and federal level

• Single standard judicial review regardless of whether it’s a domestic or international dispute

• Provides groundwork for arbitration

• Compels courts to honor contractual covenants to arbitrate disputes

New York Convention - 1958 • Applies to all foreign

arbitration agreements • Countries can limit

application of its enforcement on the basis of reciprocity (the place where the arbitration is conducted and the award is rendered)

• Created a uniform standard for recognition and enforcement

• Sets forth criteria that must be satisfied to determine the validity of the Arbitration Agreement

Panama Convention - 1990 • If parties do not agree to

specific procedural rules to govern the arbitration, the rules of the Panama Convention apply

• Does not offer reciprocity reservation

• Only applies to arbitration agreements as to commercial transactions

State Laws and FAA’s Preemption

• FAA does not preclude state arbitration law, even in interstate cases

• When parties agree to arbitrate all questions arising under a contract, state laws have primary jurisdiction (Preston v. Ferrer)

AAA-Commercial Arbitration Rules & International Dispute

Resolution • American Arbitration

Association (AAA) is a public service organization that offers a broad range of dispute resolution services

• Parties can easily provide for arbitration of future dispute by inserting these clauses: o"Any controversy or claim

arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the AAA, and judgement on the award rendered by the arbitrator(s) may be


• Lack of Capacity oBoth parties should have

the ability to understand the agreement § Person is too young § Mental problems

• Duress or Coercion oWhen a subject is

threatened into making the agreement

• Undue Influence oWhen A enters into

agreement with B, because B has a particularly persuasive relationship with A

o“excessive pressure” • Misrepresentation oCommonly occur when a

party says something false or in some way conceals or misrepresents a state of affairs

• Nondisclosure • Unconscionability oA term in the contract was

so shockingly unfair that the contract simply cannot be allowed to stand as is § Courts consider whether

one side has grossly

Entered in any court having jurisdiction thereof.” • AAA- Commercial

Arbitration Rule – R-7. Jurisdiction provides that: o“The arbitrator shall have

the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement”

o“The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.”

o“A party must object to the jurisdiction of the arbitrator or to the arbitrarily of a claim or counterclaim no later than


Laws


The filing of the answering statement to the claim or counterclaim that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award.”

United Nations General Assembly Resolution 225

(UNCITRAL) • Created to harmonize

international arbitration procedure among nations

• Three state test oParties have places of

business in different countries

oThe place of contract performance or the place of arbitration is outside the parties’ home country

oThe parties’ selection to treat the proceedings as international

• Contains a well-developed set of default provisions systematically addressing many arbitration issues.

This describes what actions cause invalidity.

Contract Invalidity



Laws


Unequal bargaining power § Whether one side had

difficulty understanding the terms of the agreement

§ Whether the terms themselves were unfair

• Public Policy • Mistake • Impossibility oWhen it is impossible or

impracticable to carry out its terms § Too difficult § Too expensive

International

Governing Bodies

International businesses have a variety of options

regarding dispute settlement. They can

resolve them internationally, federally,

or by applicable state laws.

American International Commercial Arbitration Court

Phone: +12 024700848 E-mail: [email protected]

United States Council for International Business (USCIB) Phone: +1 6466995700 E-mail: [email protected]

United Nations General Assembly Resolution 225

(UNCITRAL) Phone: 43-(1) 260604060 Email: http://www.uncitral.org/uncitral/contact_us.html

American Arbitration Association (AAA)

Phone: +1 8007787879 Email: https://www.adr.org/aaa/faces/s/contact?_afrLoop=947172604076115&_afrWindowMode=0&_afrWindowId=null#%40%3F_afrWindowId%3Dnull%26_afrLoop%3D947172604076115%26_afrWindowMode%3D0%26_adf.ctrl-state%3Ducc9h6pvn_45


State PublicPolicy

ImpliedConsent

GoodFaith

Alabama no yes yesAlaska yes yes yesArizona yes yes yes

Arkansas yes yes noCalifornia yes yes yesColorado yes yes no

Connecticut yes yes noDelware yes no yes

DC yes yes noFlordia no no noGeorgia no no noHawaii yes yes noIdaho yes yes yesIllinois yes yes noIndiana yes no no

Iowa yes yes noKansas yes yes no

Kentucky yes yes noLouisiana no no no

Maine no yes noMaryland yes yes no

Massachusetts yes no yesMichigan yes yes no

Minnesota yes yes noMississippi yes yes noMissouri yes no noMontana yes no yesNebraska no yes noNevada yes yes yes

New Hampshire yes yes noNew Jersey yes yes no


Laws

Table on States’ Acceptance

19 Madeline Wood 2016 年 5 月 31 号 New Mexico yes yes noNew York no yes no

North Carolina yes no noNorth Dakota yes yes no

Ohio yes yes noOklahoma yes yes noOregon yes yes no

Pennslyvania yes no noRhode Island no no no

South Carolina yes yes noSouth Dakota yes yes noTennessee yes yes no

Texas yes no noUtah yes yes yes

Vermont yes yes noVirginia yes no no

Washington yes yes noWest Virginia yes yes no

Wisconsin yes yes noWyoming yes yes yes

Documents

United States Contract Law