CBN Contract Clause Drafting 3

Question 1

In a software services agreement, which clause type best addresses ownership of custom code developed by the vendor?

Accepted Answer

Intellectual property assignment clause

Answer

An IP assignment clause explicitly transfers ownership of custom-developed work from the vendor to the client.

Question 2

Which drafting technique makes a contract clause more likely to be interpreted in the drafter's favor under contra proferentem?

Accepted Answer

Stating terms precisely and unambiguously to avoid the rule applying

Answer

Contra proferentem resolves ambiguities against the drafter, so precise drafting eliminates the rule's application entirely.

Question 3

A 'liquidated damages' clause is enforceable when:

Accepted Answer

The amount reflects a reasonable pre-estimate of anticipated harm and damages are difficult to prove

Answer

Courts uphold liquidated damages clauses when the amount was a genuine pre-estimate of loss, not a penalty.

Question 4

What does an 'entire agreement' (integration) clause accomplish?

Accepted Answer

It prevents parties from introducing prior negotiations or representations to vary written terms

Answer

An integration clause establishes the written contract as the complete agreement, barring extrinsic evidence of prior discussions.

Question 5

Which type of clause in a construction contract protects an owner when a subcontractor files a mechanic's lien?

Accepted Answer

Lien waiver clause

Answer

A lien waiver clause requires contractors and subcontractors to waive lien rights upon receiving payment, protecting the owner's title.

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