contract-terms-condition-2In contract management one should ensure that appropriate specialists deal with the detailed terms and conditions. You should be using either contract lawyers or a specialist unit within the organization. They should have experience of the type of relationship you are dealing with – for example, not all lawyers will be familiar with the pitfalls in contracting for packaged software.

Buyers and sellers usually have differing views on what makes a good deal.

The buyer’s dream deal?

contract-terms-condition5The supplier will provide everything the customer wants or needs, whether or not they thought of it or subsequently change their minds. The supplier will ensure all things work perfectly, whether or not the supplier provided them, and that the overall solution will do everything the customer wants or needs both now and for an indefinite period into the future. All employees of the supplier are available 24 hours a day to provide assistance and advice on any matter at no additional charge. Unlimited training will be available from the supplier for an indefinite period. The supplier hereby assigns full ownership and intellectual property rights in all items provided during the course of this relationship. The customer may make copies of all materials supplied and provide these to anyone as they see fit. Any initial limits on usage cease to apply after the contract is signed. The customer need only pay what they want to at whatever time they feel is appropriate, and only when every element of the contract has been accomplished to perfection.

The seller’s dream deal?

contract-terms-condition-4The supplier undertakes to make some effort to meet the customer’s needs but cannot commit to anything. Items supplied are not necessarily fit for purpose or of merchantable quality. The customer accepts that an undefined number of faults will inevitably be contained in the delivered items, and that the supplier can in no way accept responsibility for these. The supplier is not obliged to remedy any faults nor provide any compensation for anything whatsoever. Prices charged for the initial items delivered may be increased at any time. Any discount offered only applies to the initial items delivered. Further purchases and recurring charges for licenses, services, etc. will be charged at the full list price at the date of renewal. Charges for any item the customer forgot to specify or requires in the future which cannot be obtained anywhere else will be charged at a special surcharge above standard list price. The customer is hereby deemed happy and will be featured in marketing and publicity materials.

The detailed negotiation of contractual terms can be unexpectedly frustrating and time consuming. It is easy to underestimate the time and resources required. With significant contracts, it is importantcontract-terms-condition-3 to get it right. You might take a softer view for minor contracts, e.g. hiring a contract programmer for three months, but, even then, you need to make sure the contract is sound. Would you want that contractor to claim that he owns the software he wrote?

Vendors often have standard contracts. If you wish to negotiate different terms, it often involves lawyers from both sides. Your organization may have standard purchase contracts. This can be the recipe for the most frustrating and time-consuming legal negotiation.