Hot Topics in Contract Law: 5 Key Takeaways

Special thanks to those who were able to make it to our afternoon CLE session: “Top 3 Hot Topics in Contract Law,” at ACC Greater Philadelphia’s In-House Counsel Conference on April 24, 2019. Even if you weren’t able to make it, below are some key takeaways you might want to consider applying to your respective organizations.

1.) Develop a comprehensive incident response plan for a data breach

Data breaches are becoming increasingly frequent and costly, and data privacy regulations are becoming exponentially stricter as more jurisdictions model legislation after the European Union’s new General Data Protection Regulation (GDPR). Taking steps now towards compliance with anticipated changes in the law will help improve your risk profile and make achieving compliance less painful once stricter regulations take effect.

2.) Take reasonable steps to protect employee personal information

Courts are becoming more receptive to plaintiffs who complain that businesses are not doing enough to protect personal information. Under the Pennsylvania Supreme Court’s recent decision in Dittman v. UPMC, if you require employees (or others) to provide you with sensitive personal information, you have a legal duty to take reasonable steps to protect that information—even from unanticipated criminal attacks. It would not be a surprise if other states follow suit.

3.) Create standard checklists and intake forms for new/existing vendors

Make a list, check it twice! Business interactions with third-party vendors can be one of the weakest links in its data security. Developing standard checklists and intake forms for new and existing vendor relationships will help you identify who has access to your data, how much, and what additional steps you need to take to ensure that your business is protected from a data breach. See an example of one here.

4.) Craft an enforceable arbitration agreement

Imprecise draftsmanship can render your arbitration agreements either unenforceable or too narrow. An arbitration agreement that fails to specify an arbitral forum, or at least a method for the parties to select an arbitral forum, doesn’t give either side a fair understanding of what they are getting in exchange for agreeing to arbitrate. So it’s good practice to include in your agreements an arbitral forum whose rules you are familiar with and comfortable with (such as AAA or JAMS). It is also important to make sure that your arbitration agreement covers related entities, affiliates, or individuals who are likely to be involved in any litigation related to the underlying contract, even if they are not parties to the agreement. Otherwise, you could end up litigating (and incurring costs to litigate) in multiple court locations.

5.) Companies can require their employees to arbitrate disputes individually

The Supreme Court has struck a serious blow to the viability of class actions. In Lamps Plus, Inc. v. Varela, issued on April 24, the Court held that unless an arbitration agreement expressly permits the arbitration of claims on a class-wide basis, the parties are limited to arbitrating their individual claims. This also likely precludes parties to an arbitration agreement from separately filing a class action in court, unless their agreement expressly provides otherwise.