Spring Cleaning Your Contracts
I’d be lying if I said that I enjoy spring cleaning. It’s dirty, tiring, and inevitably involves coming face to face with insects and/or rodents that have found a home in or around ours.
But I do it anyway — every year. Not only does it help spot small problems before they become big ones, but it keeps things looking neat and tidy throughout the year.
Well guess what? If you offer your technology-enabled products or services under some general terms and conditions, your contracts may need regular “spring cleaning” as well. And while you’re unlikely to discover nasty critters within (although I wouldn’t rule it out), it’s worth taking a look at them now and then, to make sure basic terms are properly covered.
The following isn’t an exhaustive list — but here are a few items worth checking:
Right to Assign
If you’re a small to medium-sized company with big aspirations, make sure you have the “right to assign” your agreements in the event of a corporate transaction or change in control. Absent that right, if a large suitor comes knocking and offers a meaningful exit, you might be forced to seek approval from your largest customers — potentially slowing or derailing the entire transaction.
Most vendors these days subcontract a portion of their services to provide a state-of-the-art, quality, and cost-effective offering. The range of potential subcontractors spans from Amazon Web Services (AWS), to data providers, to help desk or support services, to software developers. If you outsource a portion of your services, make sure you have the ability to do so without customer approval.
Since the COVID-19 pandemic began, much has been written about “force majeure” clauses and the ability to get out of, or amend, a contract due to circumstances beyond a party’s reasonable control.
What’s your situation? Some vendors may need to terminate or amend a contract if another pandemic or otherwise unforeseen circumstance occurs. Other vendors will have ongoing commitments to providers that can’t be cancelled — and therefore, in the face of unforeseen circumstances, need to keep their customers committed as well. In any event, no solution fits all, but the bottom line is that you should review your “force majeure” clause and ensure it properly covers potentially crippling, unforeseen circumstances.
From time to time, clients relocate but fail to update the address listed in their standard notice terms. It’s a simple thing, but make sure your terms include your current address and contact information.
On a related note, many outdated notice provisions still permit notice via facsimile. Unless you anticipate doing additional business in 1995, you should consider removing this option.
These days, most agreements and documents are signed electronically — using services such as DocuSign or Adobe Sign. These e-signatures replace a handwritten signature and provide a legal way to get consent or approval on electronic documents or forms. Make sure your boilerplate contemplates and permits that the contract can be signed electronically.
If customers frequently balk at your right to use a name and logo in marketing materials without consent, consider making a change. Would you really use a customer’s name and logo without the customer’s consent? If not, consider aligning your terms with your ongoing practice, making the sales process as frictionless as possible.
Over time, as forms are cobbled together in a piecemeal way, formatting issues may arise which detract from the “professional” look of a contract. For example, I’ve seen variable font sizes, section numbers out of sequence, inconsistent references to the parties, or old logos in use. Ultimately, the look of your contract is as much a reflection of the way you do business as the words themselves. Get started on the right foot by cleaning these up as needed. And this attention to detail doesn’t even require a lawyer!
There you have it… spring cleaning, contract style. Take care of items like this each year and your contracts will remain in tip top shape (work gloves and facemask optional!).