Please use this information to answer questions 1-14 below:

Sally Savvy is the CEO of Savvy Software Inc., a U.S. based software developer. Sally routinely signs confidentiality/nondisclosure agreements, assuming they are all the same. Now, Sally has been notified that a former multi-national client, whose project Savvy completed two years ago, is planning a security/compliance audit relating to Savvy's work for them. Sally asks her legal team for the confidentiality agreement and the contract and sets up an interview with her CIO and development team.The full confidentiality agreement reads:

"The Parties agree not to disclose Confidential Information to anyone other than those of its employees and subcontractors that need to know the Confidential Information to perform the purpose of this Agreement and who have signed a confidentiality agreement binding them to the terms provided here. Each Party agrees to use reasonable care to protect the Confidential Information of the other Party, but no less than the care it uses to protect its own Confidential Information. "Confidential Information" means proprietary and confidential information relating the business, customers, finances, marketing, products, intellectual property and such other information as the receiving party should understand to be confidential. Confidential information also includes all final software code developed under the applicable project agreement. At the close of the project under this agreement, each Party will return or destroy all copies Confidential Information received from the other party. This agreement will remain in effect for Confidential Information for three years from the delivery of the Confidential Information."

Sally learns the facts below in her conversations with her staff. In view of those facts, as explained, please identify if each statement is true or false. (28 points total)

Question 1 2 pts

This client sent Confidential Information to Savvy by email. Savvy's IT staff of eight and the development team of 23 have permission to access and administer the email servers and do so regularly. This is could be a problem under the confidentiality provision.

Group of answer choices

True

False

Flag this Question

Question 2 2 pts

Savvy's development team brought in three contractors to work on this project. The project-lead explained to each of the contractors that the project information and results were confidential and shouldn't be shared outside the company. This explanation met the requirements of the confidentiality agreement.

Group of answer choices

True

False

Flag this Question

Question 3 2 pts

When the contractors arrived, Savvy had the contractors sign Savvy's standard nondisclosure agreement, which obligated the contractors to "protect the confidentiality of all information of Savvy and its clients." With this signed nondisclosure agreement, Savvy met the requirements of the confidentiality agreement.

Group of answer choices

True

False

Flag this Question

Question 4 2 pts

During the project, Savvy's developers (those on the project and those not on the project) had working lunches at the crowded cafe next door. The developers always sat in a booth and discussed confidential aspects of the client project during lunch. Even if the servers and customers did not overhear the discussions, Savvy violated the confidentiality agreement with its client.

Group of answer choices

True

False

Flag this Question

Question 5 2 pts

During the project, Savvy's developers worked in an open room with staff working for other clients. Upon inquiry, the CEO learns that the developers did not lock their computer screens if they left the room. This would likely cause Savvy a problem if disclosed during the audit.

Group of answer choices

True

False

Flag this Question

Question 6 2 pts

Savvy's developers take notes in spiral notebooks. When two developers left Savvy at the end of the client project, they took their notebooks containing client Confidential Information with them. They keep the notebooks in a locked drawer at home. Because they had a "need to know" while working on the project, this was permitted under the confidentiality agreement.

Group of answer choices

True

False

Flag this Question

Question 7 2 pts

During the client project, Savvy received a government subpoena (a court-sanctioned request for information) for all the email and documents of one of the developers working on the project. Savvy provided the information to the government. This transfer to the government was permitted under the confidentiality agreement.

Group of answer choices

True

False

Flag this Question

Question 8 2 pts

Client never wrote or called to instruct Savvy to return or destroy all copies of Confidential Information after the project was completed. Therefore, all of the files received from the client remain in Savvy's servers. This will cause a problem for Savvy if identified during the audit.

Group of answer choices

True

False

Flag this Question

Question 9 2 pts

Under the confidentiality agreement, Client was required to mark electronic information "Confidential" for the information to be treated as Confidential Information.

Group of answer choices

True

False

Flag this Question

Question 10 2 pts

According to the confidentiality agreement, client Confidential Information provided to Savvy employees who "need-to-know" it may not be used by those employees for work on another client's project.

Group of answer choices

True

False

Flag this Question

Question 11 2 pts

During the client project, Savvy's project lead shared with the client certain portions of code for early versions of the software. Savvy owns that code under the contract, but the code was not labeled "Confidential." Therefore, the code cannot be Confidential Information under the confidentiality agreement.

Group of answer choices

True

False

Flag this Question

Question 12 2 pts

During the client project, Savvy's project lead shared with the client certain portions of code for the final version of the software. The client is obligated under the confidentiality agreement to protect that code forever.

Group of answer choices

True

False

Flag this Question

Question 13 2 pts

Savvy's lawyer suggests that Savvy send a letter saying: "Savvy requests that you promptly return all software code shared by Savvy during the project." Savvy's lawyer is not so savvy. As a practical matter, this would leave Savvy's Confidential Information with the client because copies of code shared by email could remain on the client's system.

Group of answer choices

True

False

Flag this Question

Question 14 2 pts

Each Party is permitted to keep a copy of the Confidential Information for archival purposes.

Group of answer choices

True

False

Flag this Question

Please use this information to answer questions 15-20 below.

During Sally's questioning, Savvy's project lead said he suspected that the audit was scheduled because of problems Savvy's client washaving with the developed software. The client had reported numerous issues during the first six months after delivery and sporadic problems since then. The underlying contract contains the following warranty with respect to the software Savvy developed:

"Savvy warrants the product for a period of 90 days from delivery of the software. The software is warranted to work for the intended purpose in the environment for which it was designed as defined in the specifications provided by Client. Savvy will fix any bugs during the warranty period using personnel with the requisite skill, experience and qualifications and shall devote reasonably adequate resources to promptly remedy the fix the bugs.

Client represents and warrants that the specifications that it provides to Savvy for the environment in which the software will run, as updated from time to time during the project, will be and remain accurate through the date of delivery of the Savvy software. Client warrants that the team administering the environment and the delivered Savvy software will have the requisite experience and technical knowledge to operate the software in a professional manner."

Sally asks further questions and considers the facts she hears. In view of those facts, as explained below, please identify if each statement is True or False. (18 points total)

Flag this Question

Question 15 3 pts

Savvy's technology systems were overburdened during the software development phase so the IT staff turned off the system backups to speed responsiveness. Code was inadvertently lost, delaying the delivery of the software. That error was a breach of Savvy's warranty.

Group of answer choices

True

False

Flag this Question

Question 16 3 pts

Client did not install the software for six weeks after delivery by Savvy. Then Client's technically knowledgeable installation team did install the software into an environment that met the specifications given to Savvy; the software worked effectively. Two days later, there was a glitch and Client called Savvy. Savvy delivered a patch the next day and the software again worked properly. Sally reasonably believes that both Savvy and Client met its warranty.

Group of answer choices

True

False

Flag this Question

Question 17 3 pts

In the seventh week after delivery of the software by Savvy, and each week for the following three weeks, Client's newly hired and inexperienced software administrator called with different issues. Savvy's response was always prompt and Savvy coached the Client administrator extensively on basic software administration. With the coaching, each issue was resolved. It is clear that both Savvy and Client met its warranty.

Group of answer choices

True

False

Flag this Question

Question 18 3 pts

On the 75th day after delivery of the software by Savvy, Client's anti-virus system alerted Client to an influx of ransomware that the security team tracked to a vulnerability in the Savvy software. Savvy delivered a patch the next day. Savvy breached its warranty.

Group of answer choices

True

False

Flag this Question

Question 19 3 pts

On the 89th day after delivery of the software by Savvy, the Client called with another problem. The Client administrator shared its screen with Savvy. Savvy's developer realized that the client's environment differed from the specifications Savvy had been given. The Client disclosed that the environment had changed the prior week. Savvy could not get the software running for days. It is clear that both parties breached their warranties.

Group of answer choices

True

False

Flag this Question

Question 20 3 pts

For one year following the 90-day warranty period, Savvy continued to receive calls from Client's software administrator at least twice a month. Savvy responded to the calls as a low priority, sometimes days after the calls were received, and assisted Client to resolve issues. After that year, Client began to complain that the software had never worked properly. Savvy's handling of the calls as a low priority was not a breach of warranty.

Group of answer choices

True

False

Flag this Question

Question 21 3 pts

Please use this information, plus the additional facts noted, to answer Questions 21-23 (total 9 points).

In connection with a separate development contract between Savvy and Clever Co., you, CIO of Clever, were disappointed in inventory management software developed for Clever as delivered in final form. You draft a letter to Savvy rejecting the product and asking for a refund. Your early draft seeks $1,180,000, an amount equal to 1.1 times the $1 million in fees your company paid for the software product (to account for inflation), plus indirect damages of $70,000 for lost time of your employees while they tried to get Savvy software to work as warranted plus $10,000 for lost profits as a result of software's not performing correctly. Before you send the letter, you ask for the development contract with Savvy. The contract contains the following language:

"To the extent Savvy is found to have any liability under this Development Agreement, such liability shall not exceed the aggregate dollar amount paid by Client to Savvy during the 12 months prior to the breach. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, VENDOR SHALL NOT BE LIABLE FOR LOST PROFITS, LOSS OF REVENUE OR ANY OTHER INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR OTHER CONSEQUENTIAL DAMAGES ARISING IN ANY WAY FROM VENDOR'S BREACH OF THIS AGREEMENT."

You turn to the payment terms of the Development Agreement, and see that Clever was to make payment in five equal $200,000 installments, each due on the last day of the quarter beginning on December 31, 2017, with final payment made on December 31, 2018. Savvy delivered the software January 21, 2019, following final payment.

You only want to demand money to which you are entitled under the contract. Therefore, your final letter should ask for:

Group of answer choices

$1.1 million as a refund for fees paid

$1 million as a refund for fees paid

$800,000 as a refund for fees paid

$600,000 as a refund for fees paid

Flag this Question

Question 22 3 pts

And your final letter should also ask for:

$70,000 for the lost time of your employees as a consequence of their trying to make the software work.

Group of answer choices

True

False

Flag this Question

Question 23 3 pts

And your final letter should also ask for:

No money for lost profits

Group of answer choices

True

False

Flag this Question

Use these facts to answer question 24

Then, to your dismay, you, as CIO of Clever, receive a letter from the lawyers for Infringed Co. stating that Savvy software developed for inventory management infringes their patent rights. You hire a lawyer to represent Clever. The lawyer engages in lengthy (and costly) letter writing and discussions to convince Infringed Co, that Clever is not using the Savvy inventory management software and that Infringed Co. should turn to Savvy. Your lawyer sends you a bill for $8,500. You want to edit your letter to Savvy to add the $8,500 cost. But first you turn to the indemnity clause of your Development Agreement with Savvy. It says:

Intellectual Property Indemnity

"For six (6) months following the effective date of this Agreement, Vendor will indemnify Clever against all damages, losses and costs (including attorney's fees) adjudicated by a court and finally awarded arising from claims alleging that the developed software infringes any third party copyright or trade secret that exists as of the date the Agreement is signed (the "Effective Date"). Vendor will not be obligated to indemnify Clever to the extent any infringement arises out of the use by Vendor of open source software incorporated by Vendor into the product.

Continuing to follow the principle that you only want to demand money to which you would be entitled under the contract:

Flag this Question

Question 24 2 pts

You edit your letter to add a request for the $8,500 because you are entitled to it under the Intellectual Property Indemnity.

Group of answer choices

True

False

Flag this Question

Question 25 12 pts

Now that you are looking at the intellectual property indemnity provision in Question 24, you wonder if it is a model that you want to use in future contracts. You have some concerns.

On the list below, please check off any valid concerns that you identify as CIO of Clever obtaining software from a vendor. You should find four correct answers.

Group of answer choices

1. The six month time period of the indemnity is too long. The Vendor needs to be able to cut off risk after a shorter time.

2. The six month time period of the indemnity is too long, even if the Vendor can buy insurance.

3. The six month time period of the indemnity is too short, because a third party might not discover the infringement within that time.

4. The time period for the indemnity starts when the agreement is signed, and that is a good start date because all parties know what that date is.

5. The time period for the indemnity starts when the agreement is signed, but it should start when the software is designed, because that is when any infringement would be planned.

6. The time period for the indemnity starts when the agreement is signed, but it should start when the software is delivered, because that is when the customer's risk would start.

7. Liability for infringement should be expanded to include patents, because the Vendor has the ability to avoid infringing any patents.

8. Liability for infringement is properly limited to copyrights and trade secrets because Clever can search patents itself because they are public.

9. Liability for infringement does not need to include trademarks because trademarks cannot be infringed by a software developer.

10. The limitation relating to open source software is not acceptable. The use of and potential liabilities related to open source software must be negotiated and allocated between the parties.

11. The limitation relating to open source software is reasonable.Either party can look up the licenses associated with use of open source software.

Flag this Question

Use the scenario below for questions 26-28. Additional facts will be provided for subsequent questions.

Logistics Inc. is the developer and licensor of "TruckIT" software, the first significant logistics software in the United States. Logistics also provides support services for its software for a fee. TruckIT enabled establishment of a national logistics industry segment. Eighty-five logistics companies, 89% of the industry segment, rely entirely on TruckIT for all essential functions of their businesses. Because of this, Logistics charges very high license and support fees and is very profitable. When introduced 10 years ago, TruckIT was unique and innovative. Now, Logistics has learned that two potential competitors' web-based alternatives to TruckIT will be released within eight months. These alternatives could render TruckIT obsolete; Logistics' own web-based application "TruckIT Online" is two years from release.

Please identify if the statements below are true or false.

Flag this Question

Question 26 2 pts

Acquiring an 89% market share in the industry segment likely gave Logistics a lawfully acquired monopoly.

Group of answer choices

True

False

Flag this Question

Question 27 2 pts

Customers' reliance on TruckIT software and superior support services preserves Logistics' dominant position in the industry segment. Providing superior support services is anticompetitive and accordingly, Logistics maintains a monopoly by unlawful means.

Group of answer choices

True

False

Flag this Question

Question 28 2 pts

An important aspect of Logistics' success in the industry segment has been its ability to provide superior support services to its customers. Competitors cannot duplicate these services because they do not have expertise with TruckIT. Logistics has therefore stifled competition by creating a barrier to entry in the industry segment and used unlawful anticompetitive means to maintain a monopoly.

Group of answer choices

True

False

Flag this Question

Use the additional facts below to answer questions 29-33.

You are the new CEO of Logistics. Your management team plans to leverage your customers' current reliance on TruckIT to protect Logistics' market share until TruckIT Online is released in two years. They intend to (i) renegotiate TruckIT licenses to reduce license and support fees to well below the expected price of the competitors' services and below Logistics' cost for customers who agree to use TruckIT exclusively for two years and (ii) delay or withhold support services critical to the day-to-day operation of TruckIT for customers that do not agree to use TruckIT exclusively for two years. Before approving these steps, you consult with your lawyer.

Please identify if the statements below are true or false.

Flag this Question

Question 29 2 pts

If customers' prices are reduced when Logistics renegotiates TruckIT licenses as described, that makes this a lawful means for Logistics to maintain a monopoly in the industry segment.

Group of answer choices

True

False

Flag this Question

Question 30 2 pts

The Logistics CFO believes that delaying or withholding support services will ultimately enhance the value of its shareholders' stock. Therefore, this is a lawful means for Logistics to maintain a monopoly in the industry segment.

Group of answer choices

True

False

Flag this Question

Question 31 2 pts

Logistics' management also plans tohire key software developers from potential competitors and their contractors for the purpose of forestalling competitive products. Such action could be viewed as use of anti-competitive means to maintain a monopoly.

Group of answer choices

True

False

Flag this Question

Question 32 1 pts

Logistics CEO was correct in thinking that management's plan was an unlawful tying arrangement.

Group of answer choices

True

False

Flag this Question

Question 33 1 pts

Logistics management decides to play it safe and contacts the two companies developing web-based alternatives.The two companies are start-ups and are having trouble implementing their business strategies.At the meeting, Logistics management proposes that the three companies work together for a year to develop web alternatives because it would be more efficient.At the end of the year, each company would sell its own product.By collaborating with two competitors, Logistics is engaging in horizontal anticompetitive conduct that is per se illegal.

Group of answer choices

True

False

Flag this Question

Question 34 1 pts

At the meeting, the three companies agree to form a joint venture to market their web-based alternatives, in which each company will derive profits in proportion to its share of revenues generated by sales of that partner's products.The joint venture agreement specifies that that the companies will agree on the prices for the products that the joint venture will sell.By entering into this agreement, the three companies likely are engaging in illegal horizontal anticompetitive conduct.

Group of answer choices

True

False

Flag this Question

Question 35 2 pts

Logistics CEO rejected management's plans and instead, Logistics introduced previously developed TruckIT features. Logistics was able to maintain TruckIT's share of the industry segment after competitors released their products. Logistics' continuation of its dominate position in the industry segment was likely accomplished lawfully.

Group of answer choices

True

False

Flag this Question

Please use the paragraphs below to answer questions 36-37.

Saul owns Supplier Inc., a seller of sensors. Peter, president of Purchaser Inc., says to Saul "My current supplier charges $500 for 15 sensors." Saul replies, "I will charge 80% of what your supplier charges if you pay promptly." Saul and Peter shake hands and Peter says, "That's great! I've got to have sensors." The next day, Supplier sends 15 sensors to Purchaser together with a $400 invoice on which Supplier's bookkeeper hand-writes "Invoice reflects First Order discount of 20%. This payment must be delivered within 15 days of receipt to receive this deal - Thanks, Saul."

Purchaser receives the sensors and distributes them to its operating units. Sixteen days after receipt, Purchaser's accounting clerk mails a $400 check to Supplier. On the check subject line, he writes "Thank you for the sensors." Three weeks later, Saul e-mails Peter: "I received your $400 check. We sent you 15 sensors with a price of $400 if you delivered payment within 15 days. I need the $100 balance within five days or send me back all the sensors." Peter responds "No way, we have a contract."

Flag this Question

Question 36 4 pts

As Purchaser, what are the two most convincing arguments that support your view that a contract for 15 sensors for $400 HAS been formed?

Be sure to select the TWO most convincing answers to receive full credit. Do NOT select more than two answers.

Group of answer choices

1. Purchaser already distributed the sensors to its operating units.

2. Peter's response "That's great! I've got to have sensors." is an acceptance.

3. Supplier sent the products before Purchaser sent a written acceptance, so the sensors are considered a gift and Purchaser may keep the sensors and is not obligated to pay.

4. There is an offer and acceptance at a price of $400. Peter paid promptly. The payment term added by Supplier's bookkeeper after Peter accepted the offer cannot modify the contract unless Peter agrees.

5. Because the note by Supplier's bookkeeper was handwritten, it could not constitute a valid payment term from Supplier.

6. Purchaser's operating units already used some of the sensors it received.

7. Supplier's offer to reduce the price for the 15 days for prompt payment is the best deal that Purchaser would find in this market and therefore was the best choice for Purchaser. Evidence of this could be found in trade journals and advertisements or obtained through subpoenas issued to 3rd parties under Federal Rules of Civil Procedure 30 and 45.

Flag this Question

Question 37 4 pts

As Supplier, what is the most convincing argument that supports your view that there IS NOT a binding contract and that the sensors should be returned?

Group of answer choices

1. Supplier made an oral offer to sell the sensors at a price below what Purchaser usually paid but the offer wasn't in writing. Purchaser could not accept an oral offer.

2. Saul's offer to sell the sensors was ambiguous until his bookkeeper sent the written invoice with the meaning of "prompt payment." That was the offer. Purchaser paid late, so did not accept that offer.

3. Purchaser and Supplier have never worked together in the past.

Flag this Question

Use this background when you consider questions 38-39

Wiser from earlier dealings, Supplier signs a written contract with a different Purchaser which states that Supplier will sell to Purchaser 30,000 sensors for $1,000,000, shipped free to Purchaser's Fort Worth warehouse in 30 days.

Flag this Question

Question 38 3 pts

Before signing the agreement, Purchaser had told Supplier that he may want the sensors delivered to Purchaser's New York warehouse instead and Supplier said "sure, no problem, just let me know." On the 28th day after signing the contract, Purchaser e-mails Supplier saying "per our agreement, deliver the sensors to our New York warehouse." Saul responds "it's too late, they are on their way, you will have to get them there yourself." Purchaser sues Supplier for Purchaser's cost to ship the sensors to New York based on Supplier's breach of their agreement as orally amended. Choose the correct answer:

Group of answer choices

The court will likely not admit into evidence testimony that Supplier orally agreed that it would change the delivery location if asked.

Supplier breached the agreement and Supplier may be responsible for Purchaser's damages which include the shipping costs.

The court could rule that Supplier did not breach the agreement because Purchaser did not provide reasonable time for Supplier to make alternative shipping arrangements.

By saying "it's too late" Supplier acknowledged there was an oral agreement that amended the written agreement.

Flag this Question

Question 39 3 pts

After signing the written agreement, Purchaser and Supplier orally agreed that in consideration for Supplier lowering the purchase price to $900,000, for five years, Purchaser would buy all of its sensor requirements exclusively from Supplier. Purchaser bought sensors from other suppliers within one year. Supplier sues Purchaser for breach of their agreement as orally amended.Choose the correct answer:

Group of answer choices

The court will likely not admit into evidence testimony of the price reduction and exclusivity requirement.

The court must rule that the amended agreement is invalid because the exclusivity requirement is anticompetitive conduct.

Purchaser breached the agreement and Purchaser may be responsible for Supplier's damages.

The court will rule that the oral agreement is void if the written agreement does not contain an integration clause.