- 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.
Critical Legal Components of Commercial Contracts
Indemnification Indemnification addresses when one party pays for the other party’s losses or liabilities, such as losses...