majeure clause is a standard contract provision and should clearly define the events that are considered force majeure. Insurance. If the agreement provides for vendor services which could cause some type of injury or damage, there should be a provision requiring the vendor to provide proof of insurance to cover any liabilities the vendor may have to the dealership and naming the dealership as an additional insured. Audit rights. There may be a need for a section in some agreements allowing the dealer to audit the vendor’s services. These rights can include access to books, records and other items to verify the vendor’s compliance with the agreement. Confidentiality and privacy. If confidential matters must be disclosed in certain vendor agreements, it is important to have a confidentiality clause. The clause should describe what is confidential, specify the obligations of the vendor regarding the confidential information, and how the information will be returned to the dealer when the agreement terminates. Many vendors give themselves the right to use customer data for their own purposes. Dealers should resist provisions that allow this. The agreement should ensure that the vendor will comply with all customer data privacy requirements. Notices. There should be a notice section in the agreement stating to whom and where notices are to be sent and the way they are to be sent. Governing law and jurisdiction. Many vendor agreements require that if there are any legal disputes over the agreement, the law of the state chosen by the vendor applies and that disputes must be litigated in that same state. This language should be resisted. If a business chooses to do business in California, California law should apply to any dispute and the matter should be litigated in the county where the dealer does business. Entire agreement. Every agreement should have an “entire agreement” clause. This is a clause that basically states there are no other agreements between the parties other than those stated in the agreement. It is also known as a “merger” or “integration” clause. Dispute resolution. Every agreement should address how disputes under the agreement will be resolved. This is usually done by court litigation, mediation or arbitration. It is usually best to have a clause that provides that the prevailing party in any legal action will recover attorney and expert witness fees spent pursuing or defending the action. If the agreement requires arbitration of disputes, it is good to have a provision that the arbitrator is bound to follow the law in making decisions because, for example, in California arbitrators are not required to follow the law and can apply their own sense of justice in their decisions. California also has a method of dispute resolution called “judicial reference” which is akin to a private court action that proceeds in the same manner as a court proceeding and is often presided over by a retired judge. Judicial reference requires that the hearing officer follow the law. It also allows an appeal of the decision. Counterparts. There should be a provision allowing the agreement to be signed in counterparts (signatures not all on the same page) and that copies of the signed agreement will be treated as originals for all purposes. Signatures. The signature area of the agreement should include the legal name of the party, the signature of the person signing on behalf of the party, and the printed name and title of the person signing. The signor should not sign as an individual unless that individual has agreed to be personally responsible for obligations under the agreement. Attachments and exhibits. Ensure that all attachments and exhibits referred to in the agreement are physically attached to it. Manning, Leaver, Bruder & Berberich LLP is a Los Angeles law firm that practices throughout California and has been in existence for over 100 years. It has a strong automobile dealer practice covering all areas related to the automobile dealer industry, including dealership buy-sells, real estate transactions, business and consumer litigation, regulatory compliance, dealer association law and franchise law. See www.manningleaver.com for more information and areas of practice. Nothing in this article may be considered as legal advice. Contact legal counsel for legal advice. 31 California New Car Dealer Quarterly
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