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Master Servicer Agreements Can Streamline Contracting, but Steer Clear of Pitfalls

Retailers often use master service agreements (“MSAs”) to repeatedly contract for the same services.  MSAs spell out most but not all of the terms between the parties. Their purpose is to speed up and simplify future contracts because the initial negotiation process is done once, at the beginning of the relationship.

Retailers should keep the following mind when preparing and using MSAs:

  • A MSA may not be appropriate for all projects. MSAs are usually generic. The terms may or may not be appropriate for each project.
  • Have as few MSA forms as possible.
  • Standardize MSA terms among parties working on the same project to minimize conflicts in common terms (especially indemnity provisions).
  • Specifically state that field personnel are not permitted to agree to any fundamental changes in the risk allocation scheme for a particular operation or job.
  • Additional terms may need to be added for highly specialized projects or scopes of work.
  • Practitioners should review the terms of the MSA with particular attention to the needs of the client and the project, and identify commercial and legal risks and provisions that should be incorporated into the change order or purchase order, as applicable.
  • Any modifications to the MSA should be in writing.

Interested in learning more? Join a re-broadcast of “Master Service Agreements: What You Need to Know,” a two-hour CLE on November 3, 2017 at 2:00 p.m. Eastern by clicking here, or contact the authors and presenters, Patrick McKey at (312) 602-5702 or Patrick.mckey@bryancave.com, or Maria Vathis at (312)

Businesses Beat Lawsuits Alleging Website Terms Violate New Jersey Law

Every retailer that does business in New Jersey needs to know about New Jersey’s Truth in Consumer Contract, Warranty and Notice Act (“TCCWNA”), which was passed in 1981 to protect the rights of consumers from allegedly deceptive practices in consumer contracts, warranties, notices and signs. Recently, however, the TCCWNA has been the basis of a flurry of pre-suit demand letters to retailers and class action lawsuits filed in state and federal courts in New Jersey.

The TCCWNA’s prohibition of the use of certain terms or disclaimers in warranties, consumer contracts, and other consumer-facing  materials  has been interpreted to include language typically used by retailers in their websites’ terms and conditions, rules of use, on social media, and in contracts – such as commonly used provisions seeking to hold the retailer harmless/limit liability, requiring the customer to assume risks, provisions waiving certain fees and costs, and cost-shifting language.  A general disclaimer directed to New Jersey residents has been deemed insufficient to satisfy the requirements of the statute.

However, businesses have had some recent success in defeating TCCWNA claims.  For example, in Palomino v. Facebook, Inc., No. 16-cv-04329-HSG, (N.D. Cal. Jan. 9, 2017), Facebook was successful in dismissing a putative class action against it alleging a violation of the TCCWNA based on the choice-of-law clause in its website’s terms of service.  Read further case analysis by clicking here.  

More recently, in Norris Hite v. Lush Internet, Inc., Case No. 16-1533 (D. N.J. March 22, 2017), Lush Internet, Inc. was successful in

Online Seller Wins Dismissal of RICO Claims in Counterfeiting Action by Fashion Retailers

A New York federal court recently held that defendant Alibaba Group Holding Ltd. (“Alibaba”), which is notorious for allegedly enabling the sale of counterfeit products, did not violate federal racketeering law by selling allegedly counterfeit products on its e-commerce venues.

Alibaba owns and operates the popular shopping sites Alibaba.com, Taobao.com, and AliExpress.com, and generated $248 billion in gross merchandise volume in 2014 – more than Amazon and eBay combined. Luxury fashion retailers, including Gucci and Yves Saint Laurent, filed suit against Alibabi and seven other corporate entities that had roles in online platforms through which Chinese merchants could connect with consumers worldwide.

The lawsuit alleges that fourteen Chinese merchants, also named as defendants, sold counterfeit products bearing plaintiffs’ marks in the Alibaba marketplaces. It further alleges that the Alibaba defendants provided the online marketing, data collection, payment processing, financing, and shipping services necessary to sell the products, even though they knew or should have known that the merchant defendants were selling counterfeit goods.

On August 4, 2016, the U.S. District Court for the Southern District of New York granted the Alibaba defendants’ motion to dismiss two claims asserted against them under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1961 et seq. (“RICO”).

Plaintiffs’ first RICO claim was a substantive RICO claim brought pursuant to Section 1962(c), which makes it “unlawful for any person employed by or associated with any enterprise engaged in…interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s

The Hidden Danger for Retailers Doing Business in New Jersey: Alert Regarding the Truth-in-Consumer Contract, Warranty and Notice Act

A New Jersey statute intended to prevent deceptive practices in consumer contracts recently has become a focus for litigation in the state.

The Truth-in-Consumer Contract, Warranty and Notice Act, N.J.S.A. §56:12-14 et seq., (“TCCWNA”) prohibits the use of illegal terms in consumer contracts and also provides that consumer contracts may not state that any of its provisions are void, unenforceable or inapplicable in some jurisdictions “without specifying which provisions are or are not void, unenforceable or inapplicable within the State of New Jersey.” See TCCWNA at §56:12-16. In other words, a general disclaimer regarding a consumer contract that is directed to New Jersey residents is not sufficient. Instead, it appears the customer-facing language used by a retailer should identify the specific provisions of its contracts, warranties, notices, loyalty programs, signs, etc. that are void, unenforceable or inapplicable in New Jersey.

Courts have interpreted the statute to apply to language typically used by retailers in their websites’ Terms and Conditions and Rules of Use, on social media, and in contracts – such as commonly used provisions seeking to hold the retailer harmless or limit liability, requiring the customer to assume risks, and waiving certain fees and costs. As a result, retailers should evaluate all customer-facing language, notices and disclosures to ensure that the rights of New Jersey customers are not being waived or restricted. Retailers should note, however, that plaintiffs are in the process of testing the boundaries of the TCCWNA with courts, which means that the law is unsettled

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