Plenty of Room for Improvement: IBM’s New Two-Page Cloud-Services Contract - Adams on Contract Drafting

IBM’s New Two-Page Cloud-Services Contract

Assuming that you get rid of the dead wood, make appropriate trade-offs, and don’t lose anything vital, shorter is good. Apparently the response has been positive. Indeed, the new contract resulted in IBM’s being named a finalist in IACCM’s Innovation Awards, in the operational improvement category.

The article quotes the head of the IBM team as saying that the new contract uses “concise, plain language.” Doubtless it’s more concise and plainer than what came before, but there’s plenty of room for improvement. How much room? [Updated December 29, 2014: At the request of @tieguy, I created PDFs that includes all the comments. Go here for a PDF with the comments on separate pages; go here for a PDF with connector lines between the comments and the related text, but with smaller text as a result.] Go here to see my annotated PDF. Thanks to dozens of comments, it’s awash with fluorescence. (To read my comments, you’ll have to download the PDF and open it with whatever PDF-reading software you prefer. In the comments, “MSCD” refers to the third edition of A Manual of Style for Contract Drafting.)


My comments address a full range of issues, many of them minor, some less so. The minor stuff is fair game, for two reasons. First, the IBM team built something new, so expediency didn’t come into it—nothing prevented them from using only the clearest language. And second, get enough minor stuff wrong in a contract and you waste the reader’s time and attention.
One general comment that isn’t reflected in my annotations: The IBM contract refers to IBM as “IBM” (mostly) and the customer as “you.” It also uses will (mostly) to express obligations, rather than shall. Those are legitimate choices, but they’re ones that I’d be reluctant to make. Dispensing with shall allows drafters to congratulate themselves on their modernity, but it comes at a price—it muddies the categories of contract language. (That’s something I describe in this article.) And sure enough, the categories of contract language are handled haphazardly in the IBM contract. (If you use shall, you pretty much have to refer to the parties using the third person.)
What conclusion do I suggest you draw from my markup? That contract language is specialized—it’s best left to specialists. Knowing your company’s transactions doesn’t make you a specialist. And many years of being steeped in traditional contract language doesn’t make you a specialist. You become a specialist only by making a concerted and disciplined attempt to familiarize yourself with the building blocks of contract language, the good and the not-so-good.

IBM’s Cloud-Services Contract

If you’re not a specialist, you’re a dilettante. Those responsible for IBM’s new cloud services contract are presumably knowledgeable, enthusiastic, and hard-working, but when it comes to contract language, the shortcomings in the new contract suggest that they’re dilettantes. That’s to be expected. In fact, the contracts ecosystem would work better if contract language were left in the hands of a limited number of “legal knowledge engineers” (to use Susskind’s clunky but apt phrase) working closely with those who have a broader understanding of the business and legal issues. [Updated December 21, 2014: Elaborating on a point he makes in this post on his blog, in an email to me Tim Cummings suggested that nothing mandates using “legal” in the phrase “legal knowledge engineer.” I agree: that’s something I discuss in this 2011 post.]

Some of you might be wondering why the heck I go through this sort of exercise. I do it because only through constant public scrutiny do we stand a chance of improving general standards for contract language. Anything that offers itself as an advance in contract drafting is an obvious candidate for this sort of scrutiny. And besides, I enjoy picking over contract language.
I’m not trying to pillory anyone. I sent the appropriate person at IBM two polite LinkedIn messages mentioning that I had reviewed their contract and asking whether they would be interested in chatting with me about my comments. I didn’t receive a reply, so the obvious next option was to post my analysis on this blog.

By the way, please consider my markup a think piece and a work in progress. I devoted a couple of hours to it, and if I were to look at it again in a few weeks, I’d doubtless make changes. And I didn’t think about broader deal issues.

Deals of the day- Mergers and acquisitions

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Jan 20 (Reuters) - The following bids, mergers, acquisitions and disposals were reported by 2200 GMT on Monday:

 

** Anheuser-Busch InBev SA, the world's largest brewer, has agreed to buy South Korea's Oriental Brewery Co Ltd for $5.8 billion including debt, regaining ownership of a key Asian asset at a time of strong industry growth across the region.

** Oil major Royal Dutch Shell Plc said it had agreed to sell stakes in a gas project in Western Australia for $1.14 billion as part of a drive to improve return on investment.

** General Electric Co has agreed to buy flow equipment provider Cameron International Corp's reciprocating compression division for $550 million as it looks to benefit from the boom in the development of shale oil and gas fields.

** French carmaker PSA Peugeot PA has taken a decisive step towards a tie-up with China's Dongfeng Motor Group Co Ltd as the board approved the outlines of a contentious survival plan that divided the founding Peugeot family.

** China's Lenovo Group Ltd has resumed discussions to buy International Business Machines Corp's low-end server unit, a source familiar with the matter told Reuters.

** French utility GDF Suez SA had takeover approaches for Canada-based Talisman Energy Inc rebuffed late last year as it seeks acquisitions worth as much as $10 to $20 billion outside Europe, banking and industrial sources said.

** Activist investor Elliott Management Corp has raised its stake in German drug distributor Celesio AG and now controls shares equivalent to 24.08 percent of voting rights, regulatory filings to the Frankfurt Stock Exchange on Monday showed.

** TransCanada Corp, Canada's No. 2 pipeline company, said it will sell its Cancarb Ltd unit, a carbon black manufacturer, to Japan's Tokai Carbon Co Ltd for C$190 million ($173 million) in order to focus on expanding its pipeline business.

** Osisko Mining Corp rejected an unsolicited C$2.6 billion ($2.37 billion) takeover bid from rival Goldcorp Inc , saying the offer was financially inadequate and not in the best interests of its shareholders.

** French state-controlled nuclear group A reva SA and Spanish wind turbine maker Gamesa have agreed a preliminary deal to create one of the biggest players in offshore wind energy.

** Qatar's Barwa Real Estate Co QSC said it had agreed to sell its 37.34 percent stake in unlisted Barwa Bank for 2.39 billion riyals ($656 million) as part of a wider deal to help the property developer cope with its debt burden.

** Deutsche Bank AG said it expected the long-planned sale of its BHF-Bank unit to happen early in 2014, according to presentation slides. Deutsche Bank, which is selling BHF to financial investor RHJ International SA , wrote nearly 200 million euros ($271.15 million) off the value of the unit in the fourth quarter.

 

** China National Nuclear Corp has agreed to buy a 25 percent stake in Australian miner Paladin Energy Ltd's uranium mine in Namibia for $190 million, locking in supplies as Beijing builds new nuclear plants for cleaner energy.

** Britain's Co-operative Group has scrapped the sale of its general insurance business following a restructuring deal which means it does not have to contribute as much capital to its struggling bank as initially envisaged.

** Bahrain-based investment firm Gulf Finance House BSC said it was offloading 75 percent of English soccer club Leeds United to a consortium of British investors and would retain a 10 percent stake following the sale.

** Shares in Perusahaan Gas Negara surged as much as nearly 9 percent after reports said the Indonesian parliament had rejected a planned acquisition of the gas utility firm by state energy company Pertamina.

 

** Private equity firm Electra Private Equity Plc will acquire footwear retailer Hotter Shoes in a deal valued at 200 million pounds ($327 million), The Telegraph reported on Sunday.

** Abu Dhabi National Energy Co (Taqa) plans to invest about $1.2 billion developing the Atrush oil and gas block in the autonomous Kurdistan region, the head of Taqa's Iraq operations said.

** The board of Norwegian Car Carriers ASA will recommend that shareholders reject a bid for the firm made by Car Carrier Investments, board member Atle Bergshaven told Reuters.

** Dubai district cooling firm Empower bought Palm Utilities from a unit of Dubai World for $500 million on Sunday, part of a shuffle of assets between companies ultimately owned by Dubai's government or the emirate's ruler.

** Tesco Plc considered a bid for mother and baby products retailer Mothercare Plc to help reinvigorate its British hypermarkets, the Sunday Times reported. Citing retail sources, the newspaper said Tesco examined a bid six months ago but has put the plan on hold.

** Royal Dutch Shell and Mubadala Petroleum have swapped equity stakes in two exploration blocks off Malaysia, the companies said on Sunday. Mubadala has taken a 20 percent interest in the Shell-operated deepwater Block 2B and Shell has taken a 20 percent interest in the Mubadala-operated Block SK320 in return.

** Bahrain's Investcorp Bank BSC and the founders of TDX Group have agreed to sell their stakes in the British technology firm to U.S. credit reporting agency Equifax Inc for 200 million pounds, according to a filing at Bahrain's bourse.

** Eaton Corp on Monday said it would sell its aerospace power distribution unit to Safran SA for $270 million, in a deal that is expected to close in the first half of 2014.

** Indian drugmaker Aurobindo Pharma Ltd said on Saturday it agreed to buy Actavis Plc's commercial operations in seven Western European countries for about 30 million euros, in a bid to increase its international footprint.

HKTDC SME Start-up Programme | HKTDC

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State Emblems, and Names, Abbreviations and Emblems of International Intergovernmental Organizations under Article 6ter of the Paris Convention

Search of the World Intellectual Property Organization (WIPO) notifications of state emblems, names, abbreviation and emblems of international intergovernmental organizations protected under Article 6ter of the Paris Convention can be conducted at http://www.wipo.int/ipdl/en/search/6ter/search-struct.jsp . This hyperlink is made with the permission of WIPO. The copyright of data from the website of WIPO is owned by WIPO. The Secretariat of WIPO assumes no liability or responsibility with regard to the transformation or translation of the data.

5 Myths of International Mergers and Acquisitions

There are many misconceptions about international mergers, acquisitions, and divestitures.

 

The five biggest myths are:

That cross border transactions are not worth the effort.

Cross border transactions can be very productive and profitable whether you’re on the buy or sell side – depending on the opportunity. Many companies like to expand into new markets and do well; for example, Illinois Tool Works, the multi-billion dollar US company has made over 30 acquisitions in Brazil alone. Obviously, they have the vision and resources to complete these deals and would have stopped long ago if they were unprofitable.

That foreign buyers always pay more when acquiring a company.

Foreign buyers sometimes pay more for an acquisition in a different country to buy their way into a market. But, that’s not always the case. Many foreign buyers are careful buyers and only pay for value.

That a cross border transactions will take an impossibly long time.

Cross border transactions can take extra time as sometimes due diligence will be slowed down by the need to translate documents, to obtain the necessary approvals, understand local customs, etc. However, for an organized buyer these extra steps only add a modest amount of time, not the unreasonably long time that many envision.

That foreign buyers or sellers are impossible to work with.

Many people believe that foreign buyers or sellers are difficult to work with. There is absolutely no truth to that. People are people and that’s the same around the world. The percentage of people that are difficult to work with is probably the same in every country. That’s a simple fact of life. And, many foreigners doing international mergers and acquisitions are actually a pleasure to work with.

That foreign sellers always try to cheat the buyers.

Foreign sellers, despite some beliefs to the contrary, are not out to cheat the buyers of their companies. Many countries use different accounting conventions, which do not mean the accounting data has been “cooked.” Frequently, buyers think that whatever is happening in the transaction is directed towards them. Most of the time, it’s just that the buyer doesn’t understand the local customs.

As with any transaction, foreign or domestic, the key to success is thorough due diligence.

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5 Strong Buy Healthcare Funds to Bet on

When markets are passing through choppy waters, investors often rely on the healthcare sector to safeguard their investments. This is because the demand for healthcare services does not vary with market conditions, making them a safe haven during difficult times. Many pharmacy companies also generate regular dividends, which go a long way in softening the blow dealt by plummeting share prices. Mutual funds are the perfect choice for investors looking to enter this sector since they possess the advantages of wide diversification and analytical insight.

Below we will share with you 5 top rated health mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all health funds, investors can click here to see the complete list of funds.

Fidelity Select Medical Delivery Portfolio (FSHCX - MF report) invests largely in companies that own or are involved in operating hospital and nursing homes, and are related to health care services sector. The fund focuses on acquiring common stocks of both U.S. and non U.S. companies. This healthcare mutual fund is non-diversified and returned 26.3% over the last one year period.

The fund has an expense ratio of 0.82% as compared to category average of 1.39%.

Vanguard Health Care Index Admiral (VHCIX - MF report) seeks to provide returns identical to that of the MSCI US Investable Market Index (IMI)/Health Care 25/50 index. The fund invests in almost all or all of the stocks which are included in the index. The index includes domestic health care companies. This healthcare mutual fund is non-diversified and returned 28.3% over the last one year period.

As of July 2014, this fund held 312 issues with 10.14% of its assets invested in Johnson & Johnson.

Fidelity Select Medical Equipment & Systems (FSMEX - MF report) invests a lion’s share of its assets in companies that are primarily involved in medical equipment and devices and related technologies sector. The fund invests in both US and non-US companies. This healthcare mutual fund is non-diversified and returned 27.8% over the last one year period.

Edward Yoon is the fund manager and has managed this healthcare mutual fund since 2007.

Fidelity Select Health Care (FSPHX - MF report) seeks capital growth over the long run. It invests a majority of its assets in companies whose principal operations include production, design and marketing of health care related products or services. The fund focuses on acquiring common stocks and purchases both domestic and foreign securities depending on factors such as financial strength and economic conditions. This non-diversified fund returned 41.3% over the last one year period.

The fund has an expense ratio of 0.76% as compared to category average of 1.39%.

 

Fidelity Select Pharmaceuticals (FPHAX - MF report) invests heavily in firms all over the globe whose primary operations are related to manufacturing, selling, developing or distributing pharmaceuticals and drugs. The fund invests in the pharma sector taking into consideration the industry position and the financial condition of the issuer. This healthcare mutual fund is non-diversified and returned 33.9% over the last one year period.

As of July 2014, this fund held 89 issues with 8.53% of its assets invested in Actavis PLC

To view the Zacks Rank and past performance of all health mutual funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center.