TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

Complexity in sourcing transactions relates to the interdependence between the parties executing a program. However, “complexity” can be a surprisingly nuanced concept whose meaning can vary under different circumstances. Here are a couple of these nuances.

What Is Complexity?

If you are buying a physical product, the transaction is not truly “complex” if it can be described completely in the contract, although the product itself may be complicated. For example, a rocket ship is a complicated product, but with specifications that can (and probably should) be described in perfect detail, there is no requirement for an overly complicated contract structure, and the relationship between the parties may not be complex. Contrast this with an engagement that involves business process redesign accompanied by software development and implementation like an enterprise resource planning (ERP) implementation, or a large-scale robotic process automation (RPA) initiative. Although the contract can specify the desired result, in many cases the results will depend on both parties working together to realize that result. This interdependency makes the relationship complex and requires a more nuanced procurement and contracting process.

Even with the standard independent contractor provision in a Master Services Agreement, when employees of the contractor work at a client's site, there can be a heightened risk for joint employment liability, especially where such employees were hired by the contractor as part of an outsourcing arrangement. The US Department of Labor (DOL) recently issued a Notice of Proposed Rulemaking (NPRM) to update its interpretation of the standard for establishing joint-employer liability under the Fair Labor Standards Act (FLSA). The proposal is “designed to promote certainty for employers and employees, reduce litigation, promote greater uniformity among court decisions, and encourage innovation in the economy” by making clear employers’ and joint employers’ respective obligations to pay the appropriate employee wages and overtime for a workweek.

Since the US Supreme Court’s June 21, 2018, decision in South Dakota vs. Wayfair, Inc. , many of the 45 sales tax-collecting states have been making moves to put laws and processes in place for tax collections for out-of-state online sales. Given the general complexity of state tax laws and the inconsistency from state to state, as well as the uncertainty as to whether or when uniformity across states may come to pass, businesses with online sales need to carefully monitor both the legal landscape and the processes established for administration and compliance for out-of-state transactions.

Agile development methodology has shaken up the technology market in recent years. During their webinar, Exploring Agile Development Methodology, our partner, Vito Petretti, and Jon Lightman, a partner with ISG, will discuss the benefits and downsides of this methodology, especially when a service provider is involved in an agile process. Topics will include the following:

  • An introduction to agile development methodology
  • The reason agile is becoming a dominant methodology
  • The resulting impact on both the development and contracting processes

The hour-long webinar will be held on Wednesday, June 5, 2019, at 12:00 pm ET.

Register for the webinar.

More than 1,000 Support Anti-Terrorism by Fostering Effective Technologies Act (SAFETY Act) of 2,002 approvals have been granted by the US Department of Homeland Security (DHS) since the act’s inception. Many professional sports teams in the National Football League, Major League Baseball, and National Basketball Association have had their venues certified under the SAFETY Act. For example, New Era Field for the Buffalo Bills became the 14th NFL stadium to receive a SAFETY Act certification in October 2018. However, professional sports leagues do not have a monopoly on large sporting events that garner huge crowds—some universities have football stadiums with capacity for more than 100,000 people.

No one knows at the moment what the relationship will be between the United Kingdom and the European Union the day after Brexit on 31 October.

The life sciences sector is arguably the most closely harmonized within the European Union. Both medicinal products and medical devices are very much subject to Brussels-driven legislation. In addition to the regulatory issues that would result from Brexit, there could be substantial supply chain interference.

New York has increased its effort to enforce cybersecurity by creating a new unit designed to combat cybercrime and protect individuals’ sensitive data from attacks.

On May 22, New York appointed former federal prosecutor Justin Herring to lead the state’s newly created Cybersecurity Division at the New York Department of Financial Services (DFS).

In 2018, the esports industry experienced remarkable growth. Poised to become the next multibillion-dollar industry, the esports industry has become a part of mainstream sports. For example, the League of Legends World Championships attracted almost 100 million unique viewers for the finals. In comparison, the 2018 Super Bowl saw viewership numbers of 103 million. According to a major sports news network, more than 50 colleges now have varsity esports programs. Esports revenue grew to $865 million in 2018, according to Newzoo, a global leader in games and esports analysis, and Newzoo projects that the global esports market will exceed $1.6 billion by 2021.

In Part 1, we discussed how, despite widespread usage, termination in the event of bankruptcy clauses (“ipso facto” clauses) are generally unenforceable pursuant to the bankruptcy code. In this second part, we discuss why these clauses are still prevalent in commercial transactions and the exceptions that allow for enforceability in certain situations.

Why Do Ipso Facto Clauses Remain in Most Contracts?

Practically all commercial transactions, including licenses, services agreements, and supply agreements, contain a provision that triggers termination rights, without notice, to a party whenever the other party files for bankruptcy or experiences other insolvency-related event. In Part 1 of a two-part series, we discuss how the commonly used termination-on-insolvency clauses are generally unenforceable despite their widespread use.