An Advisory Board & Board Observer Agreement sets participation terms for advisors or observers in company governance. This playbook reviews confidentiality, fiduciary boundaries, and compensation considerations.
Why This Matters: An agreed legal regime and resolution process minimize uncertainty, control potential litigation costs, and provide predictable enforcement outcomes.
Negotiation strategy
If you're the Company:
Ensure the governing law is a neutral jurisdiction to avoid bias. Propose mediation followed by arbitration to resolve disputes efficiently.
If you're the Advisor:
Negotiate for a jurisdiction that is favorable or at least neutral. Agree to mediation and arbitration to minimize litigation costs.
Essential elements
1
Governing Law
Legal framework for the agreement.
2
Dispute Resolution
Process for resolving conflicts.
3
Costs and Fees
Allocation of dispute resolution expenses.
Action framework
ACCEPT
Propose edits if the jurisdiction is not neutral or if the dispute resolution process lacks clarity.
EDIT
Reject if the clause imposes unfair jurisdiction or excessive costs.
ADD
Add language to specify neutral jurisdiction and clear dispute resolution steps.
PRO TIP
Always verify the neutrality of the jurisdiction to ensure fair enforcement.
Example clauses
FAVORABLE
Preferred Governing Law
"The Agreement shall be governed by and construed in accordance with the laws of [Neutral Jurisdiction], without regard to its conflict of law principles."
NEUTRAL
Costs and Fees
"Each party shall bear its own costs and expenses incurred in connection with the mediation and arbitration, and the parties shall equally share the fees and expenses of the mediator and arbitrator(s), unless the arbitrator(s) decide otherwise in the award."
UNFAVORABLE
Biased Jurisdiction
"The Agreement shall be governed by the laws of [Non-Neutral Jurisdiction], which may favor one party over the other."
Fallbacks
Cross-Border Transactions
In cross-border deals, ensure the governing law is internationally recognized to avoid enforcement issues.
High-Value Contracts
For high-value contracts, consider arbitration in a well-regarded jurisdiction to ensure enforceability.
Long-Term Agreements
In long-term agreements, include periodic review of the governing law and dispute resolution clauses to adapt to changes.
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WEEK 3
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WEEK 4
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