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Decoding technology - why we need to junk the jargon

Sue McLean, Morrison & Foerster | June 13, 2017
Clarity is vital in technology contracts, says Morrison & Foerster of Counsel lawyer Sue McLean.

- By all means, use acronyms if helpful, but remember to define them if they are not well known terms.

- Don't include substantive rights and obligations in the definitions. The definitions should act as a glossary only.

- Err on the side of caution. Details may seem obvious to those embedded in the deal or with deep technical knowledge. But take a step back. Is the position clear from what's actually written down?

- Simplicity is best. The contract needs to be usable and workable by those that will manage it. Use intelligible and precise language. Use logical sequences, numbering, bullet points and other formatting to make it easy to read. Use tables, charts, diagrams, and worked examples.

- Make explicit who is obliged to carry out each activity ("the supplier will", "the customer will") to ensure that obligations are legally enforceable. Including lists of actions that don't specify clearly who is responsible for those actions are not helpful.

- Make sure obligations are properly aligned to business outcomes. And try to be specific when detailing obligations, rather than relying on general language such as "in accordance with good industry practice".

- Specify when something must be done - whether it's by a certain date, or at a particular frequency, rather than rely on more generic language ("as soon as reasonably practicable", "regularly".)

- There may be some issues that genuinely cannot be resolved pre-contract. But try to limit 'agreements to agree' as much as you can. Where they are necessary, build in detail regarding the timescale and mechanism for reaching agreement.

- If you are incorporating ancillary documents (requirements, specification, policies) and not annexing these to the contract, describe these clearly (i.e. with date and version number) to avoid any version control disputes later on.

- If supplier obligations are to be subject to customer dependencies, specify these carefully and don't rely on vague general language. Otherwise, there is a risk that the required relief won't be available when you need it.

- Look out for, and avoid, inconsistencies between, and within, schedules.

- Don't simply blindly copy or incorporate template schedules or schedules from other deals. Consider carefully your business requirements for the particular deal. Remember that an example document from a signed deal is likely to reflect a negotiated position, rather than your desired starting point.

- Don't underestimate the effort required in writing, reviewing and completing the schedules. Start early and dedicate sufficient time and resources to the task

- Lastly, share early drafts of the schedules with your legal team and executives. Schedule drafters may not be experienced in contract preparation. If concerns are not resolved at an early stage, the schedules may need significant re-writing. Not only could this adversely impact the project timetable for the deal, it could cause challenges if the schedules have been shared extensively with the other side.

 

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