Good Counsel: Devil in the Details
Don’t ignore the boilerplate in your next contract review. Read on for some thoughts on how to better parse your contracts.
Grab your red pen, ease into a comfy chair, and get ready for some exciting contract review! Those are words you’ve probably never uttered or heard. While reviewing dense contract language can be intimidating, ensuring that your contracts protect your organization’s interests is worth the time and effort.
Contracts are simply a tool to create certainty for both parties based on shared expectations and to direct what happens when those expectations aren’t met. To do that, a contract needs to include several key elements. Here are a few terms that often don’t get the attention they merit—don’t overlook them in your next contract review.
Scope of work and timeline. More detail is always better to describe what is to be delivered and when, ideally in stages. If you’ve had months of conversations about what to include in your new website but only have three sentences in the contract describing it, you’ll be hard-pressed to get resolution if you’re disappointed in the product. It’s often wise to tie payment to specific deliverables.
Completion. The contract should include clear and objective specifications for the completed product, as well as agreement on whether and how it will be tested before acceptance.
Changes and termination. Issues may arise that require modification to a signed agreement. The contract should state how changes will be addressed, especially changes in price and timing. Language should also cover how the contract may be terminated if one party is dissatisfied, changes its mind, or can no longer meet its commitments.
Liability. Indemnification provisions can cost you dearly if not drafted properly. Don’t agree to anything the other party doesn’t also agree to, and never indemnify the other party for its willful or negligent actions.
Ownership. Specify that you retain your rights to your existing intellectual property. Clarify who will own the final product (as well as any new IP created) and who can modify the product.
A final tip: Always get it in writing. Never rely on what you’ve been told in person, on the phone, or via email. If a provision is not written into the contract, whatever assurances you received won’t mean anything when you try to enforce it. If the other party is not willing to document a commitment, you should question the strength of its promise.