December 03, 2015

2015 Contract Forms Wish List: Treat Yourself to the Gift of New or Updated Contract Forms for the New Year

Faegre Baker Daniels partner Brian Clifford authored the following article for the Control System Integrators Association in December 2015.

With the entering of a new year, consider an update to your file of standard contract forms. I recommend to my integrator clients that they have at least the following documents always ready to use when an opportunity arises:

  • Confidentiality/non-disclosure agreement (NDA): When responding to a solicitation from a customer or pitching a technology solution to a potential client, you may want to “show off” a novel or specialized application, product or process to land the work. An NDA will protect your proprietary information and will establish confidentiality rules that will allow you to explore project specifics with your customer. And, as an added benefit, a signed NDA can speed up the process of getting a complete agreement for the work. Not only will you have one less topic to address in the contract for the full project, but you also will have received your first yes in the contract negotiation process, and the first one is often the hardest to obtain. 
  • Standard terms and conditions: For smaller projects, routine work for long-term customers and “off-the-shelf” deliverables, you may be able to get your own terms and conditions to control your legal arrangement with your customer. By using your own form of boilerplate terms, you can quickly respond to customer needs without being worried that you have unclear or an unfavorable amount of risk in the deal. And, for larger projects, including your own legal terms as a part of your proposal may help establish a basis to negotiate more favorable provisions in the final agreement. 
  • Form master services agreement (MSA)/Project services agreement (PSA): For an ongoing relationship (MSA) or a one-off project (PSA), you may be able to control the terms of your contractual arrangement if you have an agreement ready to go that is reasonably fair, balanced and in-line with market terms. Being the first one to propose a form for a contract usually has a significant impact on the final provisions of the signed agreement. You can often establish the topics and basis of negotiations and signal your company’s tolerance for risk by being the first to circulate a standard agreement form.
  • Employment documents: There is an enormous demand for high-quality and experienced staff members. Your company’s ability to retain its existing talent, and to be ready to add team members quickly when needed, can be aided by having good employment-related documents, including non-competition agreements for appropriate employees, contracts for incentive payments and other similar forms. 

In addition to having these documents available in the “forms file,” I recommend that these templates be updated at least annually. An annual review and revise process ensures that the forms are consistent with current trends in the marketplace, insurance program changes, regulatory and statutory shifts, and other legal issues. 

Having the right documents ready at the right time can help your company achieve its 2016 resolutions and can mean a new year with less contractual headaches and heartburn. 

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