- Forms: Create form contracts for frequently utilized contracts. Common examples include a form non-disclosure agreement, form supply contract and form client contract.
- Start Discussions with a NDA: Start contractual discussions, whether with a supplier, client or otherwise, with a mutual non-disclosure agreement to protect both parties’ confidential information.
- Key Terms: Agree to key terms, such as work product, fee and timing.
Understanding the entire picture helps with key terms (e.g., if it’s a client contract, understand the supply side obligations as well). - The Contract: Enter the contract stage. Try to use your form. A company should be more successful using its form with a supplier compared with a client.
- Involve Internal Business Departments: Involve your internal business departments as needed. For example, finance/accounting should be aware of fee and payment terms, among other things.
- Negotiate: Negotiate the key points. Understand the other side’s key objectives. Offer alternatives or compromises as needed. Depending upon the number and importance of open items, sometimes a redlined turn of the contract is more efficient, and sometimes a phone call or meeting is more efficient.
- Sign: Execute the contract. I recommend using DocuSign, which is easy to facilitate signatures electronically, particularly in the pandemic-driven, remote work environment. It is paperless and electronic signatures are legally enforceable.
- Post-Signing Deliverables & Action Items: Track key contract deliverables, preferably through a software system. Some companies are starting to use blockchain, but in my opinion blockchain is not yet readily and easily applicable to tracking contract deliverables, etc. Some companies even use a tool as simple as Outlook calendar reminders to track a contract’s expiration date, among other things.
- Amendment: Amend the contract as needed if any substantive terms need to be changed.
Some Common Pitfalls to Address Pre-Deal
Customer Concentration Could lead to a significant discount off of sale price if the selling business has one customer that...