In-Class Exercise: Negotiation Simulation

A skills lab, not a doctrine class. The point is to practice the contracting move — drafting around a risk before it becomes a dispute — rather than to litigate one after the fact.

The exercise

You represent either Buyer’s counsel or Seller’s counsel in the sale of a closely held business. Three issues are on the table:

1. a representation about pending litigation when the seller knows of a minor employment complaint;
2. no provision for material misstatements in inventory records the seller keeps loosely; and
3. the buyer’s demand for a personal guarantee on indemnification up to the full purchase price.

For each issue, name the legal risk, identify the contractual mechanism that protects your client (a representation carve-out, an indemnification cap, escrow, a basket-and-cap), and decide where you are willing to give ground to get the protection you most need.

Roles and mode

Pick a side; you do not self-select your counterpart. The instructor decides each semester whether the lab runs as a 45-minute in-class roleplay paired across sides, as a one-week take-home memo, or not at all. Any work submitted counts toward Class Participation — there is no separate grade.

Debrief: why this is a contracts exercise

The reps-and-warranties carve-out you draft today is the move that prevents the litigation you would otherwise read about. The skills connect directly to the misrepresentation and nondisclosure doctrine in the regular sequence (R2d §§ 159–164): the line between aggressive negotiation and actionable misrepresentation, and the discipline of separating what you want from what you can give up to get it. The next class reads Hill v. Jones — silence about a known defect — which is exactly what good drafting forecloses.