Defenses · Nov 11
Premise. Two parties are negotiating the sale of a closely held business. Three issues: a representation about pending litigation when the seller knows of a minor employment complaint; no provision for material misstatement in inventory records the seller keeps loosely; the buyer wants a personal guarantee for indemnification up to the full purchase price.
Your task. Pick Buyer's counsel or Seller's counsel. Prepare a one-page memo to your client that, for each issue, names the legal risk, the contractual mechanism that protects your client (representation carve-out, indemnification cap, escrow, basket-and-cap), and where you are willing to give ground to get the protection.
Mode. Instructor discretion: 45-min in-class roleplay paired across sides, or one-week take-home memo, or skip. Counts toward Class Participation.
What this lab teaches. Pre-contractual due diligence and disclosure obligations. The line between aggressive negotiation and misrepresentation (R2d §§ 159-164). Indemnification and risk allocation. The discipline of distinguishing what you want from what you can give up to get it.
Back to the regular sequence: Defenses.
Today's negotiation memo asked you to allocate three risks at the deal-design stage. The next class reads Hill v. Jones: what happens when one party knows something the other does not, and stays silent? Misrepresentation and nondisclosure are the doctrinal frame for what you were just negotiating around.