Contracts take up an enormous amount of time to negotiate and sign. They never seem to get signed fast enough and there are so many to negotiate. Organizations often blame the other party (or the lawyers) for taking unreasonable positions or just being “difficult”. We’ve written several blog posts about reducing the cycle time of contracts and the benefits of automating the contracts process but sometimes the fault lies within the terms of your own contracts.
Oftentimes, contracts are either:
Too one-sided, or
Jam packed with a ton of terms that aren’t applicable (the one size fits all approach).
Years of negotiating contracts has led to a list of 12 Annoying Things About Your Contracts That Are Obstacles to Signature. Each of these just leads to unnecessary effort to mark-up and negotiate your contracts. If you reviewed your contracts and updated them to address each of these issues, no doubt you will streamline the contracting process and reduce the number of contracts that need to be negotiated.
Given that the Festivus season is upon us, here are the 12 Annoying Things About Your Contracts That Are Obstacles to Signature. It’s the Nimble “Airing of the Grievances” about your contracts:
Limiting your liability to an unreasonable amount. Some limitation of liability is acceptable but it can’t extinguish all or nearly all risk.
Your warranty warrants almost nothing. A warranty that you offer but after all the exceptions, conditions, exclusions, and process really isn’t a warranty at all. Worse you’ve offered no warranty for your product or services at all.
The consequential damages exclusion isn’t mutual, it’s only in your favor.
There is a very limited time period (like 1 year) in which we have to bring a claim otherwise, under contract, we’ve lost the ability to bring a claim. Under the contract you are not limited by any similar arbitrary period in which to bring a claim against us.
We have to pay you even if we are disputing, in good faith, certain amounts of your invoice and you’ll charge us late fees for not paying the amounts in dispute.
A dispute has to be brought exclusively in the jurisdiction where your organization is headquartered and no where else.
You have completely one-sided audit rights under the contract that allow you to look at anything and everything whenever you want.
We have to indemnify you for everything under the sun going back to the beginning of time. And you don’t have to indemnify us for anything.
The “No Waiver” provision is one-sided and not mutual. This one is particularly annoying to find to be one-sided in a contract.
Your non-compete and non-solicit provision have absolutely no exceptions.
There is an intellectual property clause in the contract that says you own all of the intellectual property related to the contract. These make no sense when you are buying our product that we have developed and sold for over 20 years.
Your return of or destroy confidential information clause in your NDA does not allow for confidential information to remain in the other party’s data backup or recovery systems. You can’t expect other organizations to be able to pinpoint your confidential information in those systems so only that information gets destroyed.
By addressing these provisions in your contracts and making them either mutual or less one-sided you’ll streamline your contracts process and receive significantly fewer comments on your contracts. Another suggestion to streamline is to go back and view what are the most frequently negotiated provisions in your contracts and change them to where you most frequently ended up.