Hey Sara,  

Let's talk in detail Monday but just quickly -  its precisely the decision to 
include the arbitration clause that makes the language prohibitive.  I think 
the gist of the applicable NASD rule is that members cannot draft arbitration 
clauses which limit the damages that either party would otherwise be entitled 
to in  court.  Thus, the solution if Morgan or the others object would be to 
draft a clause that is consistent with what New York provides -- since New 
York is the applicable jurisdiction.  (I'll find a sample clause I drafted in 
the past and bring when we meet).  Otherwise, these firms could be fined for 
including such language.  I am going to find the applicable rule and make 
sure that it is still good law but off hand I believe that it is.  It will be 
interesting to note if any of the firms object on this ground.  

I may have some questions about other legal issues in the agreements; if so, 
I will bring them up when we meet so that we can work through them together.
  

Cheryl Nelson
Senior Counsel
EB3880D
(713) 345-4693



	Sara Shackleton@ECT
	03/02/2001 11:18 AM
		
		 To: Cheryl Nelson/NA/ENRON@ENRON
		 cc: 
		 Subject: Re: Legal Review - Enron Credit Inc.

With respect to Morgan, I believe that a paragraph could be added to reflect 
the parties' agreement to a forum other than a contract market (i.e., "AAA"), 
and if the customer chose a particular forum for arbitration, then the 
parties could stipulate that the arbitrators not have authority to award 
punitive, exemplary or similar damages.   Because these are fairly old forms, 
I can't recall the reason for excluding this language.

I'll schedule some time on Monday for us to talk.

Sara Shackleton
Enron North America Corp.
1400 Smith Street, EB 3801a
Houston, Texas  77002
713-853-5620 (phone)
713-646-3490 (fax)
sara.shackleton@enron.com



	Cheryl Nelson@ENRON
	Sent by: Cheryl Nelson@ENRON
	03/02/2001 10:58 AM
		 
		 To: Sara Shackleton/HOU/ECT@ECT
		 cc: 
		 Subject: Legal Review - Enron Credit Inc.

Hi Sara,

I have completed a preliminary legal review of the Account Agreements with 
Goldman Sachs and Morgan Stanley.  

I read the draft language you sent re: limitation of liability that you 
suggested we add to these and the Bear Stearns agreements for Enron Credit, 
Inc.   Because these agreements have arbitration clauses, this provision as 
drafted might be unenforceable under the NASD rules.  I am going to 
doublecheck the law on this point today or over the weekend.  If this is in 
fact correct, the firms will probably reject the provision on this ground 
especailly if including it would subject them to NASD fines.   In any case, 
we can wait to see what there response is but in the meantime we should set 
aside time to discuss the law on this point.

Cheryl Nelson
Senior Counsel
EB3880D
(713) 345-4693