Cross-Post from Law360: How A Michigan Case Could Upend Auto Part Contracts

This is a cross post from Law360.  Please contact Sarah Rathke or Alexis Chandler with any questions.

In the US, the UCC Statute of Frauds’ (2-201) requirement that a contract must contain a written quantity term to be a binding contract, has been the law of the land in all 49 states that have adopted the UCC.  This is now being questioned by a pending Michigan Supreme Court case, which is considering whether a “blanket purchase order” that sets forth no firm quantity can nevertheless constitute a binding agreement – a testament, no doubt, to the power of the automotive industry in Michigan.  Read more analysis in this article recently published in Law360 by Alexis Chandler and Sarah Rathke here.

Cross-Post from The Trade Practitioner: Proposed Rule Would Require Government Contractors to Disclose Climate-Related Risks

This is a Cross-Post from The Trade Practitioner.  Please contact Karen Harbaugh or Sarah Vilms with any questions.

The Biden Administration recently released the Federal Supplier Climate Risks and Resilience Proposed Rule requiring contractors of the federal government to disclose climate-related risks.  Read more on the proposed requirements here.

Common Signs of Business Stress and Distress

Our UK colleagues, John Alderton (Leeds), Russ Hill (Birmingham), Monika Lorenzo-Perez (London), Charlotte Møller (London), and Devinder Singh (Birmingham)  have prepared a legal insight outlining how the failure to recognize signs of business stress can cause a company to face a period of distress.  To help identify some of the common signs of business stress and distress read the full insight below:

Supply Chain Webinar: “Why is Everything Broken? Understanding Pandemic Supply Chains”

#TeamSPB’s Litigation Partner Sarah Rathke recently participated in an on demand CLE presentation for Quimbee on Why is Everything Broken? Understanding Pandemic Supply Chains.

This presentation discusses the causes of the current supply chain logjams, the ways forward to better deal with supply chain partners, solve problems expeditiously, and be knowledgeable about commercial rights and responsibilities.

You can watch the full presentation here: https://bit.ly/3gTRfsF

Upcoming Webinar: 2022 Chemicals Workshop Webinar Series: PFAS, REACH and Other Chemical Regulatory Issues

Please join us on Thursday, October 13 at 12PM EDT for 2022 Chemicals Workshop Webinar Series: PFAS, REACH and Other Chemical Regulatory Issues.

Join Allen Kacenjar, Lianne Mantione and Anita Lloyd for the second webinar in our two-part 2022 Chemicals Workshop webinar series, in partnership with the Ohio Chemistry Technology Council (OCTC).

In this session, we will provide an overview of the rapidly evolving landscape related to per- and polyfluoroalkyl substances (PFAS), including proposed listing of perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), regulation under the Toxic Substances Control Act (TSCA), and the practical strategies, considerations and measures to assess legacy and current risks.

In addition, we will discuss developments related to Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) and other chemical regulatory issues in the UK and the EU.

This program is pending 1.5 hours of Continuing Legal Education (CLE) in Arizona, California, New Jersey, New York, Ohio and Texas. If you need another jurisdiction, please contact Robin Hallagan.

Register here.

DHS Released a Notice on the Addition of Entities to the UFLPA Entity List

On August 4, 2022, the U.S. Department of Homeland Security (DHS), as the Chair of the Forced Labor Enforcement Task Force (FLETF), formally published the Uyghur Forced Labor Prevention Act (UFLPA) Entity List. The Entity list is a consolidated register of the four lists required to be developed and maintained pursuant to Section 2(d)(2)(B) of the UFLPA.  DHS also released details on seeking changes to the UFLPA Entity List, including requests for removal from the list.

For our previous blog entries on the UFLPA and its implementation, see posts here, here, here, here, here and here.

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Bipartisan Bill Introduced by Senate relating to Uyghur Human Rights Policy Act of 2020

On August 2, 2022, Senators Bob Menendez (D-New Jersey) and Marco Rubio (R-Florida) introduced the Sanctioning Supporters of Slave Labor Act, legislation that would expand the categories of persons that could be sanctioned under the Uyghur Human Rights Policy Act of 2020 (UHRPA).  Rep. Jim Banks (R-Indiana) filed a companion in the House of Representatives.

Currently, UHRPA imposes sanctions on certain entities and individuals named by the President as allegedly having committed certain human rights violations in Xinjiang.  The bill would expand the scope of this reporting requirement to include “each foreign person that knowingly provides significant goods, services, or technology to or for a person identified in such report; and each foreign person that knowingly engages in a significant transaction relating to any of the acts described” in UHRPA.  If passed, the amendments to UHRPA would take effect immediately upon enactment and notably, would apply to all reports issued pursuant to these provisions of the UHRPA, including reports issued before, on, or after such date of enactment.

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Case Update: Dwyer v Fredbar in the Court of Appeal

In our previous article about post-termination restrictive covenants we discussed the High Court case of Dwyer (UK Franchising) Limited v Fredbar Limited [2021] EWHC 1218 as an example of covenants being found unreasonable and therefore unenforceable. Since then, the Claimant has appealed the judgment and the Court of Appeal has once again found in favor of the Defendant.  So what does this mean for those trying to enforce, or avoid, restrictive covenants?

The Facts

The facts of the case are set out in our previous article (link above).  However, in short, the Claimant (Dwyer) is the franchisor of ‘Drain Doctor’, a very large emergency plumbing and drainage franchise.  In contrast, the Defendant essentially consisted of Mr. Bartlett, an individual who ran his business from home and had no previous plumbing experience other than a brief course provided by Dwyer.

The franchise agreement was terminated in mid-2020, and Mr. Bartlett then began to trade as ‘Daily Drains’. Dwyer alleged that this was in breach of the post-termination restrictive covenants in the franchise agreement.  The High Court disagreed, holding that the restrictions were too wide because they effectively left Mr. Bartlett unable to be employed by a similar business for 12 months even if there was no confusion with Drain Doctor, and unable to use his home as a registered address even if operating elsewhere. The judge took into consideration the inequality of bargaining powers between Dwyer and Mr. Bartlett in reaching his conclusion.

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Be Reasonable: The Enforceability of Post-termination Restrictive Covenants

The impact on working arrangements caused by the pandemic has led many workers to re-evaluate what they want from a job, with considerations such as flexible and remote working becoming both more desirable and attainable. This is affecting businesses in all sectors, and the impact it can have not only on a business’s workforce but also on its customer base is far reaching.

One of the most important things to consider when a worker leaves a business is restrictive covenants. These are often contained in the employee’s employment contract, service agreement or, in some circumstances, shareholders agreement. Restrictive covenants are contractual restrictions that prevent individuals from doing certain things after their employment ends. Examples include non-compete clauses (preventing individuals working in competition with their previous employer) and non-solicit clauses (preventing individuals soliciting the customers and employees of their previous employer). Clauses protecting the use of confidential information are also often key. Preservation of a company’s connections, workforce and goodwill is vital for many businesses, so it is important to make sure these clauses bite when necessary. So, how do you do that?

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FLETF Released Strategy Guidance. Join SPB Webinar To Learn More!

Christmas came early this year.  Ok, not really, but the Department of Homeland Security, which chairs the Forced Labor Enforcement Task Force (FLETF) released its strategy guidance on the Uyghur Forced Labor Prevention Act on June 17, 2022—four days ahead of schedule.  Click here to view FLETF’s strategy guidance.

SPB will be hosting a webinar this Thursday, June 23, 2022 at 11am EST to discuss the Uyghur Forced Labor Prevention Act, FLETF’s strategy guidance and best practices for organizations in light of the new guidance. You may register for the event here.

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