Are we there yet?
In Part 1 of the SoundLegal Contract Roadmap series (find it here), we talked about the roadmap (structure) of the overall contract, to help commercial parties find what they’re looking for.
To sum up Part 1, it’s a good idea to locate the project details (scope, price, time) at the front of the document, and the T&Cs at the back.
But what about finding your way through the T&Cs? Well, read on. I have plenty to say about that too.
Mapping the Terms & Conditions
There are no hard and fast legal rules about the structure of the T&Cs, but my preference is for them to loosely follow the storyline of the project or the relationship. So with that in mind, here’s the structure I usually follow when drafting a contract:
- Performance: this is the key promise of the contract. Essentially, the supplier will do the work in return for the fee/price.
- Party obligations, including any quality requirements and standards: The supplier must deliver the services or works to a required standard, by the agreed time. The buyer must provide all the information required and do whatever else is necessary to support the supplier’s service delivery, including paying the fee.
- Payment: What are the requirements for payment claims (time for submission, content), and what are the payment terms.
- Change management: this is the process for managing changes to scope and program, including suspensions (e.g., force majeure) and liquidated damages.
- Liability: What is the overall risk allocation (often captured as an “indemnity” clause), and are there any limitations to it (cap on liability, exclusion of consequential loss etc).
- Insurance: if something does go wrong, one or both parties needs to have insurance to cover the loss.
- Defects liability: The rules about fixing things up if they aren’t working properly.
- Default and termination: What happens if something goes wrong (or even if it doesn’t) and the project has to finish up early?
- Disputes: hopefully you’ll never need it, but you should set out the process for when the parties aren’t getting along. Declare whether they have to meet face-to-face and/or go to mediation before lawyering up for a court stoush.
- Intellectual Property: Who owns it, who licenses it back to the other party and are there any third-party rights.
- Confidentiality: don’t blab each other’s commercially sensitive info. There might be some rules about privacy here too.
- Sh!ts and bits: I like the boilerplates to be at the end of the T&Cs. I try to define as much as possible in the contract details (this should capture most key project details), but anything else is in an interpretation clause here at the end with the boilerplates. This information shouldn’t be left out, but it’s not as important on a day-to-day basis as the other content so it belongs at the back.
So there you have it. SoundLegal’s roadmap for commercial contracts. You’ll never get lost again!
Let SoundLegal revamp your contract roadmap
Are your clients and suppliers getting lost in the suburbs when they (try to) read your contracts? Do your commercial partners find themselves facing the wrong direction in a one-way street?
Reach out, we can whip them into shape in no time. We’ll either do some maintenance on your existing contracts or (if your business documents have completely lost their way) build you a brand new contract roadmap.