New York choice-of-law cheat sheet for contract negotiators

Assignment of a government contract requires agency consent, on pain of forfeiture

New York’s State Finance Law art. 9, § 138 requires prior agency consent to any assignment of a contract by a contractor.

If the contractor fails to obtain the consent, the agency “shall revoke and annul such contract,” with the contractor to forfeit all payments except that needed to pay employees.

See also this 2002 State Comptroller memo.

Automatic renewal may require certified-mail notice within a specific time frame

New York General Obligation Law § 5-903 is not the most clearly-drafted provision; contract drafters should consider whether it might apply to contracts providing for automatic renewal (for example, a software maintenance agreement):

§ 5-903. Automatic renewal provision of contract for service, maintenance or repair unenforceable by contractor unless notice thereof given to recipient of services.

1. As used in this section, “person” means an individual, firm, company, partnership or corporation.

2. No provision of a contract for service, maintenance or repair to or for any real or personal property

which states that

• the term of the contract shall be deemed renewed for a specified additional period
• unless the person receiving the service, maintenance or repair gives notice to the person furnishing such contract service, maintenance or repair of his intention to terminate the contract at the expiration of such term,

shall be enforceable against the person receiving the service, maintenance or repair,

unless the person furnishing the service, maintenance or repair,

at least fifteen days and not more than thirty days previous to the time specified for serving such notice upon him,

shall give to the person receiving the service, maintenance or repair written notice,

served personally or by certified mail,

calling the attention of that person to the existence of such provision in the contract.

3. Nothing herein contained shall be construed to apply to a contract in which the automatic renewal period specified is one month or less.

(Extra paragraphing and bullets added.) (Suggested by “randomjohn”)

Resale price maintenance (“vertical price fixing”) can cause serious trouble under state law

Drafters of distributor- and reseller agreements should be extremely cautious about agreeing to the pricing that the “downstream” party will charge to its own customers. See a spring 2010 article by Scott Martin of Greenberg Traurig at http://goo.gl/eAky.

Discovery before, and in aid of, arbitration may be available

Section 3102(c) of New York’s Civil Practice and Law Rules provides that “Before an action is commenced, disclosure to aid in bringing an action, to preserve information or to aid in arbitration, may be obtained, but only by court order. The court may appoint a referee to take testimony.”

In April 2009, a New York state court granted a petition for the issuance of subpoenas to help the petitioners “ascertain the identity of other potential parties to the contemplated arbitration proceeding.” In re VTrader Pro LLC, No. 102334/09 (N.Y. Sup. Ct. Apr. 21, 2009). (Hat tip: Brian Perryman via Paul Lurie)

Powers of attorney executed by individuals may require “magic language”

See this Haynes & Boone memo. [ADDED 2009-10-05]