4
PLAYBOOK TEMPLATES

Strategic Alliance Agreement

A Strategic Alliance Agreement documents cooperative arrangements between entities for mutual benefit. This playbook highlights IP ownership, performance metrics, and termination strategies.

Liability Caps and Baskets

Why This Matters: Caps and baskets limit exposure to indemnity claims while ensuring meaningful recourse for significant breaches. Misaligned thresholds can either expose the client to small claims or eliminate remedies for major issues.

Negotiation strategy

If you're the Buyer:

Negotiate for lower caps on fundamental breaches and higher caps on general covenants to protect against significant financial exposure.

If you're the Seller:

Aim to set reasonable caps that reflect the risk and size of the transaction, ensuring that indemnification is not overly burdensome.

Essential elements

1

Liability Cap

Maximum liability limit.
2

Deductible Basket

Threshold for indemnification claims.
3

De Minimis Threshold

Minimum claim size for indemnification.

Action framework

ACCEPT

Propose edits when caps or thresholds do not align with risk tolerance.

EDIT

Reject clauses that expose to excessive liability without adequate protection.

ADD

Add clauses to establish clear caps and thresholds if missing.

PRO TIP

Always align liability caps with the specific risks and size of the transaction to avoid unexpected liabilities.

Example clauses

FAVORABLE

Balanced Liability Cap

"The total liability of each Party under this Agreement for all claims, losses, damages, and expenses arising out of or related to this Agreement shall not exceed $1,000,000, except for liabilities arising from fundamental breaches, which shall be capped at $500,000."
NEUTRAL

Standard Deductible Basket

"Indemnification claims shall only be made if the aggregate amount of all claims exceeds the deductible basket of $50,000."
UNFAVORABLE

Excessive Liability Exposure

"The total liability of each Party under this Agreement shall not be capped, exposing both parties to unlimited claims."

Fallbacks

High-Risk Transactions

For transactions involving high-risk elements, such as regulatory exposure or significant IP, additional analysis is required to adjust caps and thresholds.

Small-Scale Deals

In smaller deals, consider lower caps and thresholds to reflect the reduced risk and financial exposure.

Cross-Border Transactions

Adjust caps and thresholds to account for varying legal standards and enforcement risks in different jurisdictions.
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