In negotiating contracts, I generally resist suggestions to define the “affiliates” of a company as including other entities that the company controls through, for example, “the power to direct or cause the direction of the management and policies of the organization, directly or indirectly, whether through ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise.”
As I’ve noted elsewhere, the concern is that in later litigation, the parties might have to engage in extensive — and expensive — discovery about who has what management power.
For an example of an expensive legal battle concerning just this point — specifically, who did or did not have “control” of a vessel in drydock that was destroyed by fire — see Offshore Drilling Co. v. Gulf Copper & Mfg. Corp., No. 08-40885 (5th Cir. Apr. 20, 2010) (affirming summary judgment in relevant part).
The facts and outcome of the Offshore Drilling case aren’t important. The reason I mention it is to back up my claim that disputes about whether someone is in “control” can get really messy.