This article originally appeared in the April 2023 issue of Security Business magazine. When sharing, don’t forget to mention Security Business magazine on LinkedIn and @SecBusinessMag on Twitter.
Last summer, my wife and I participated in a game show on a cruise ship in front of 1,200 people in a large theatre. The "Love and Marriage Show" was fun, but also a little embarrassing. My wife and I competed against two other couples and won. The show was recorded and broadcast in the days that followed on the ship's television channel; so, we were "ship famous" for the rest of the cruise. Everyone seemed to know a lot more about us than we knew about them.
When I was first introduced to the crowd, the host asked me what I do for a living. "I am a lawyer," I responded. This seemingly innocuous disclosure was greeted with boos from some in the crowd. Ouch. Perhaps I should have anticipated this occupational hazard. Not everyone likes lawyers. Perhaps I simply should have said, "I engage in conflict resolution". Yes, that could have worked. That is both accurate and sufficiently ambiguous to avoid being booed. Oh well. Maybe next cruise.
Conflict resolution in this context simply means problem solving. I am a problem solver.
Conflict resolution is also an important concept in contract law, as it is the procedure whereby counterparties agree which contract provisions govern in the event specific provisions in two or more written contracts conflict.
Consider it like the game "Paper, Scissors, Rock." Scissors beat paper, rock beats scissors, paper beats rock. There is an order to the game – and the players agree in advance what controls.
Conflict Resolution in Practice
Suppose you have a security services contract that you have used for years with many customers. The contract has key limiting terms, which are critical for mitigating your liability. It also has a provision which states that it represents the full agreement of the parties, supersedes all prior discussions, and controls in the event of a conflict with any other document.
Here is a rough example: This Agreement contains the entire agreement and understanding between the parties and supersedes all prior proposals, representations, agreements, and understandings, written or oral, concerning its subject matter. In the event of any conflict between the provisions of this Agreement and any other document, the terms of the Agreement shall control to the extent of such conflict. No amendment to this Agreement shall be effective unless it is in writing and signed by the parties.
You have a great opportunity with a new customer. They sign a contract that includes the foregoing conflict resolution provision. You rely on their signature and begin to perform under the contract; however, they present their own contract to you and request that you sign.
It has a conflict resolution provision as follows: In the event of any conflict or ambiguity between any of the terms or conditions of this Vendor Agreement and any other agreement, this Vendor Agreement shall control and supersede.
Worse, their agreement contains provisions which meaningfully conflict with and undermine the key limiting conditions of your security services contract. Despite this, you are eager to have their business. Can you sign their agreement? Which document controls? Are you at risk?
While the answers to these questions are subject to nuance and may require you to balance the risk against the business opportunity, the short answer is that you should not sign their agreement. If you do, that arguably constitutes an amendment to your agreement – which expressly allowed for an amendment – provided it was in writing and signed by the parties.
Even if it is not deemed an amendment to your agreement, you will have signed their agreement later in time, which could mean that their conflict resolution provision controls – and that any conflicts between the two agreements would be determined in favor of their agreement. Again, this could undermine the key limiting conditions of your contract and put your business at risk.
Best Practices
To avoid these circumstances, conduct regular reviews of your contract with legal counsel. Ensure that it is updated and contains an enforceable conflict resolution provision.
You should also avoid signing any other agreement with a customer unless it is clear that conflicts will be resolved in your favor, or if the business opportunity far outweighs the risk.
Of course, this is not an assessment that you should make alone. Instead, seek the guidance of capable counsel. Otherwise, your attempt at conflict resolution in the contract context may require conflict resolution in the courtroom.
This would surely require help from a lawyer…I mean a conflict resolution specialist like me…minus the booing and the buffet.
Timothy J. Pastore, Esq., is a Partner in the New York office of Montgomery McCracken Walker & Rhoads LLP (www.mmwr.com), where he is Vice-Chair of the Litigation Department. Before entering private practice, Mr. Pastore was an officer and Judge Advocate General (JAG) in the U.S. Air Force and a Special Assistant U.S. Attorney with the U.S. Department of Justice. Reach him at (212) 551-7707 or by e-mail at [email protected].
