(Second Edition)

Kenneth L. Port,  Jay Dratler, Jr.,  Faye M. Hammersley, Esq.,  Terence P. McElwee,
Charles R. McManis, and Barbara A. Wrigley

On-Line Problem Supplement
Copyright © 2005   Carolina Academic Press.   For permission, see CMI.

Chapter 11

Problem 12:  Territory, Taxes, Governing law, and Dispute Resolution

Contair has decided to license air bag technology incorporated into the Estrella for use in new airplane seats.  The seats include a cushioning device that inflates upon impact, much like the air bags that inflate to cushion the impact of a car accident.  The device inflates an air bag in 0.02 seconds.  No other device on the market can inflate an air bag at that speed.  Contair has successfully obtained letters patent for the device in the United States, Japan, and most western European countries.

AirVan, a consortium of Asian airplane manufacturers, has approached Contair and offered to license the inflation device.  Counsel for AirVan has drafted the following contract language for a portion of their proffered license agreement.  As counsel for Contair, provide substantive comments and suggested amendments that Contair should consider before executing the contract.

    Article 12
    A. The territory of this Agreement shall be the world.
    B. Contair Corporation shall be responsible for any and all filings with any governmental agencies necessary to make this a valid license agreement.
    C.  Contair Corporation shall pay all taxes that may be assessed by any governmental body on royalties payable under this Agreement.
    D. The laws of the Country of France shall govern the creation and performance of this agreement.
    E. Disputes that may arise out of the performance of this Agreement shall be settled amicably among the parties hereto.
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