4 Important Reasons Contract Standards Fail and 10 Practical Solutions
Contracts – for example Master Services Agreements, Customer Agreement or Terms & Conditions – are the backbone of virtually every business transaction. The best way to have the signing process run smoothly is by using contract templates.
For example, for all these professionals, contracts are an essential part of their work:
- a sales professional sealing a new deal;
- an entrepreneur looking for funding;
- a procurement specialist involved in the negotiation of vendor contracts; or
- a legal professional tasked with protecting company interests
By clearly outlining terms, responsibilities, and expectations, great contracts build trust, mitigate risks and keep business relationships running smoothly.
However, contracts can also become a source of complexity. Many companies desire that a new product, service, or partnership requires its own unique contract language. This can quickly turn into an administrative and legal bottleneck if not managed properly. This is why smart organizations turn to contract templates. When thoughtfully designed and regularly updated, these templates streamline contract creation and negotiation, saving both time and resources.
Contract templates are only as good as the process behind them. If they’re too long, packed with dense legal jargon, or buried in a repository that nobody can find, even the most well-written templates won’t make a difference. That’s where this article series comes in. It will help you craft contract templates that really accelerate deals while protecting your organization’s interests. We will first start with the ‘Most Important Reasons Contract Standards Fail and Practical Solutions’.
What We Will Cover
In this introductory article, we will explore the value of using contract templates and highlight key pitfalls that can undermine them. We will then examine the potential consequences of poorly managed templates and, finally, demonstrate the benefits your business can gain by developing modern, easy-to-use contract templates.
Here’s a quick overview of what you can expect:
- Why We Need (Better) Contract Templates
We’ll discuss why organizations of all sizes and industries should focus on improving their templates. Examples will range from standard Non-Disclosure Agreements (NDAs) to specialized industry contracts like AI software licensing or wind turbine supply agreements. - Common Issues with Contract Templates
We’ll identify the biggest challenges that derail template usage, from outdated clauses to complicated language that sales teams struggle to understand. - Consequences of Contract Template Issues
We’ll look at how these problems can delay deals, increase risk, and strain business relationships. - Results of Having State-of-the-Art Templates
We’ll highlight the positive impact of streamlined, clearly written, and easily accessible templates—such as faster negotiations and reduced legal bottlenecks. - Real Life Examples of Contract Optimization
- How to Improve Your Contract Standards & Templates
We’ll draw on two decades of professional insights into how companies achieve the best outcomes and keep improving their contracts over time.
This article sets the stage. The upcoming series of articles, called “10 Tips You Need to Know to Improve Your Contract Templates,” will dive deeper into each tip – see below the full list of tips. This will offer you practical steps to help you develop contract templates that truly serve your business. Before we get there, let’s start by laying out why a solid set of templates is indispensable—and where most organizations go wrong.
Why We Need (Better) Contract Templates
Organizations often juggle a wide range of agreements, from the simplest Non-Disclosure Agreement (NDA) to the most complexTerms & Conditions or Master Services Agreement (MSA). Companies, for instance, often deal with Software as a Service (SaaS) contracts (Salesforce, ServiceNow, HubSpot). Each contract type can be drastically different, but they all share one objective: to clearly outline obligations, manage expectations and mitigate risk.
Balancing Clarity and Complexity
One of the main reasons companies need better contract templates is the tension between clarity and complexity. A good contract should be thorough enough to protect the business while still being concise and straightforward. For example, a wind turbine manufacturer might need clauses that cover equipment specifications, maintenance, installation timelines, and environmental compliance. Adding too many layers of complex legal text, however, can slow negotiations or make the contract inaccessible for non-legal stakeholders.
By creating well-structured, user-friendly templates, you ensure that each new contract iteration doesn’t require a complete rewrite. Instead, your teams can modify or append specific clauses to tailor the template to each deal, project, or relationship. This level of uniformity can dramatically cut down on drafting time, reduce back-and-forth with legal counsel, and speed up the signature process.
Enhancing Workflows
Well-designed templates also improve workflows by establishing a clear starting point. If you are repeatedly negotiating Master Services Agreements or Terms & Conditions (T&Cs), for instance, you want your sales or procurement colleagues to know exactly which clauses are standard and which ones might need special approval. This clarity keeps deals moving quickly and prevents confusion.
In a tech environment, especially one dealing with SaaS or AI solutions, the speed of execution can be a competitive advantage. Having strong, approved templates means your product or service can get to market faster, since you won’t have to battle the same legal issues repeatedly.
Keeping Pace with Evolving Business Needs
Business models evolve rapidly. Just think about how quickly AI technology is reshaping industries or how sustainability concerns are driving new contract requirements for wind turbine manufacturers. If your contracts don’t keep up with these changes, you could end up with agreements that fail to address emerging risks or market demands. For example, an AI contract might need robust clauses related to data privacy, algorithmic bias, or intellectual property ownership.
Templates need regular updates to accommodate new legal requirements, shifts in company strategy, and lessons learned from recent deals. Far too often, companies let their templates gather dust, failing to reflect current regulations, technology changes, or internal processes. This is why dedicating resources to regularly refining and updating templates isn’t a luxury—it’s a necessity for any forward-thinking enterprise.
Common Issues with Contract Templates
Despite their obvious advantages, contract templates can become more of a hindrance than a help if they aren’t properly managed. Below are four issues that commonly arise.
1. Complexity
Overly long, technical, or legalistic language can deter people from using templates. A contract for a wind turbine supply project, for example, might run dozens of pages, filled with specialized engineering terms. If the language is too arcane, the sales or operations team might avoid the template altogether, reverting to manual drafting or older versions. This reduces consistency and can create legal blind spots.
2. Accessibility
Just having great templates on file doesn’t help anyone if they can’t be found. Many organizations store templates in multiple folders or on different file-sharing platforms without clear naming conventions. This leads to confusion, version control issues, and the risk of using outdated documents.
3. Limited Resources
Template management can fall by the wayside when legal teams are stretched thin. With pressing demands like regulatory compliance, litigation, or high-stakes contract negotiations, dedicating time to reviewing and updating templates can seem like a low priority. As a result, templates quickly become outdated or overlooked.
4. Excessive Legal Review
One main benefit of templates is the reduction of legal review times—yet this only works if the templates are well-structured and widely trusted. If internal stakeholders distrust a template’s accuracy, they’ll still funnel contracts to Legal for a deep dive. When every single deal, even small ones, becomes a bottleneck, it defeats the entire purpose of having a standardized approach.
Consequences of Contract Template Issues
Neglecting contract templates or managing them poorly can trigger a cascade of problems:
Delays in Contract Creation, Negotiation and Signing
If a template is unwieldy or unclear, it can’t speed up much of anything. Negotiations might stall as both parties parse through unnecessary terms or loop in legal counsel for clarifications. In fast-paced markets like AI or SaaS solutions, a few weeks’ delay can mean lost opportunities.
Increased Risk Exposure
Templates are supposed to protect the company from legal pitfalls, but if they’re outdated or inconsistent, they can introduce more risk. For instance, imagine you’re finalizing a wind turbine maintenance contract and your template lacks a recent clause covering environmental regulations. You could face unforeseen liabilities or compliance issues if something goes wrong.
Higher Workloads
Legal, procurement, and sales teams spend far more time dealing with avoidable contract snags when templates aren’t user-friendly. Instead of focusing on strategic deals or high-risk situations, experienced counsel and managers waste hours revising the same clauses because the existing template is missing critical updates.
Strained Business Relationships
Contracts serve as touchpoints of trust and efficiency. Clients or partners who encounter errors, inconsistencies, or long delays may question your professionalism. This can harm relationships, with ripple effects on future collaborations and your reputation in the market.
Results of Having State-of-the-Art Templates
When companies invest in robust, well-maintained contract templates, the benefits are felt across every stage of the deal cycle. Below are nine advantages you can expect when you get it right:
1. Shorter Contract Negotiation Times
With standard terms already approved, you avoid renegotiating common clauses for each new agreement. Whether you’re drawing up a SaaS user agreement, an AI licensing contract, or an extensive MSA for wind turbine installations, both sides can focus on the unique aspects of the deal instead of wading through boilerplate clauses.
2. Increased Efficiency and Simplified Contract Handling
Well-organized templates reduce repetitive drafting. This frees up your legal, sales, and procurement teams to concentrate on more strategic tasks—like market expansion, major partnerships, or regulatory shifts that impact your industry. In tech, efficiency gains can translate directly into faster product launches or new feature rollouts.
3. Reduced Workload
By cutting down on the number of contracts that need an in-depth legal review, you open up bandwidth for high-value activities. This not only alleviates bottlenecks, it also makes the best use of specialized legal expertise. Instead of reviewing basic NDAs or T&Cs, your legal team can focus on, say, negotiating a complex AI data-sharing agreement or advising on regulations for renewable energy installations.
4. Enhanced Consistency and Contract Quality
A consistent, predictable approach builds trust with stakeholders. For instance, if you’re partnering with multiple wind farms, each contract will look and feel similar, providing confidence to partners that you know how to handle regulatory requirements, risk allocations, and maintenance responsibilities.
5. Risk Mitigation
Well-crafted templates function as a built-in risk management tool. By integrating updated clauses on liability, data protection, intellectual property, and compliance, you create a safety net that reduces the likelihood of legal disputes. This is particularly crucial in cutting-edge fields like AI, where regulations are still evolving and clarity is paramount.
6. Decreased Legal Costs & Improved Cost Efficiency
When legal teams spend less time reviewing common contracts, your organization saves money. Those resources can then be reallocated to essential areas—like exploring new tech partnerships or investing in research and development for AI or wind turbine efficiency upgrades.
7. Stronger Business Relationships
A smooth, transparent contracting process fosters goodwill. Clients, suppliers, and partners appreciate clarity and efficiency, and they’re more likely to remain loyal or expand the relationship. In specialized industries, like renewable energy, a reputation for easy, fair contracts can be a powerful competitive edge.
8. Optimized Resources
When contract workflows are streamlined, companies can allocate financial and human capital more effectively. This may mean investing in better contract management software, training employees on best practices, or diverting saved resources into innovation initiatives—such as new AI features or advanced turbine technology.
9. Empowered Commercial Teams
Finally, modern contract templates give sales and procurement teams greater autonomy. They can handle routine deals themselves, thanks to pre-approved language. This sense of empowerment boosts morale and allows these teams to focus on building relationships rather than waiting on legal reviews.
Examples: Experienced Results of Contract Optimization
Drawing on two decades of experience in contract optimization, I’ve seen firsthand how transformative good templates can be.
Technology Company
In one instance, a tech company changed its entire suite of legal documents—ranging from SaaS agreements to T&Cs and NDAs—to align them with new data protection laws. By involving key stakeholders (Legal, Sales, and IT Security) from the start, they created a user-friendly, legally robust set of templates. The outcome was a dramatic reduction in contract negotiation times and fewer escalations to senior management.
Renewable Energy
In another example, a renewable energy firm specializing in wind turbine installation tackled their inconsistent and overly complex MSAs. Their previous templates had caused frequent renegotiations and confusion over maintenance responsibilities. After revamping the templates to remove outdated clauses and clarify roles, the average contract closing time dropped by nearly 40%. Clients noted the improved clarity, leading to stronger partnerships and a significant boost in the firm’s industry reputation.
Bringing It All Together
These examples underscore the value of a collaborative approach to contract optimization. It’s not just a legal project; it’s an organizational endeavor that benefits every department involved in contract-related workflows. Regular feedback loops, where Sales or Procurement teams highlight real-world issues they face during negotiations, can pinpoint areas that need refinement. Legal teams, in turn, can incorporate new regulatory updates or risk mitigation strategies. This cycle of continuous improvement keeps your templates relevant, user-friendly, and aligned with evolving business goals.
How to Avoid These Issues and Reach Better Results?
But how can you avoid these issues and reach the advantages & results we discussed above? Stay tuned for our upcoming posts and articles, where we will dive deeper into practical tactics and step-by-step guidance on developing contract templates that truly work for your business.
Best Practices to Roll Out New Contract Templates
If you’re ready to transform your contracts from a necessary evil into a strategic asset, we’re here to help. Whether your primary focus is tech, AI, or renewable energy, every organization can benefit from more streamlined, flexible, and secure contracts. For further guidance on improving contract templates, managing negotiations, and optimizing related processes, reach out via lowa@amstlegal.com or book an appointment with Robby Reggers here.
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