Choosing Your Contract

How do you know what type of contract is appropriate for a vendor? In today’s episode of An Ounce of Prevention, Rachel Reese speaks to Matt Reynolds on the types of agreements he has seen in and around the oil industry. Matt and Rachel discuss MSAs, IADCs, CSAs, and more; and how each type of contract may or may not be applicable to a contractor’s work. Additionally, they discuss the common pitfalls and mistakes they see companies make in contracting. Rachel and Matt begin by discussing the different types of contracts and their most common uses. They spend extra time on MSAs, which Matt says should be modular if they are drafted correctly. Finally, Rachel discusses the recent Wyoming Supreme Court Chesapeake Exploration, LLC v. Morton Production Company decision, and what it means for the COPAS Form. For more detailed show notes, navigate using the time stamps below:[0:00] Intro[1:39] Matt described his background — he has worked on commercial contracts in and around the oil industry for over two decades.[2:40] The first question Matt asks vendors is whether they are working on a one-off contract or a more long-term partnership. While one-off contracts can be simple, longer term relationships need to be handled more carefully.[4:52] MSAs are specifically crafted to work with the risks and responsibilities in field or well-site work. A well drafted MSA can be modified.[6:22] Drilling companies usually use an IADC instead of an MSA due to their unique risk profile. [9:22] CSAs, or consulting service agreements, are generally for anyone who is providing advice and supervision, and is not providing goods of any kind. [11:11] The most common other contracts Matt sees in the industry are licensing agreements, software as a service agreements, supply contracts, and exclusivity agreements, among many others. NDAs and confidentiality agreements are also extremely common.[12:54] The most common mistake clients make is taking a one-size-fits-all approach to creating contracts. [16:38] In the case law segment, Rachel discusses a case that touched on the COPAS Form including in most Joint Operating Agreements and Unit Operating Agreements. The Wyoming Supreme Court recently ruled on the case, Chesapeake Exploration LLC v. Morton Production Company, in favor of Morton.If you enjoyed this conversation and would like to discuss how RR&A’s Outsourced Legal Department can help your company, visit the R. Reese & Associates Website: https://rreeselaw.com/ Want more ways to stay up to date on the latest industry-specific news? Subscribe to our monthly newsletter: https://rreeselaw.com/insights/an-ounce-of-prevention-by-rra/