NDAs Explained โ What You Need to Know (part 1)
NDAs ensure that confidential information is used solely for the specified purpose set out between the parties in a business relationship. In the world of business, where ideas, innovations, financial information and secrets are the keys to success, Non-Disclosure Agreements (NDAs) often play an important role in protecting a companyโs confidential information. This article will provide a comprehensive overview of NDAs in the context of Business to Business (B2B) dealings.
What is an NDA?
An NDA, also referred to as a Confidentiality Agreement, is a legally binding contract between two or more parties to protect confidential information which may be shared during the course of their business relationship. More specifically, confidential information is non-public information of a company that could harm the company when it would be shared in public. Usually a list of the Confidential information is included in the NDA, containing for example: trade secrets, know-how, products and technology-related information, discounts, customer lists, sales and financial information, business plans, etc.
Why and when do we need an NDA?
In the B2B context, NDAs can be an essential tool for protecting proprietary knowledge, trade secrets and other confidential data that is important for a company to maintain its competitive advantages. That sensitive information, therefore, should be defined clearly and carefully in NDAs. However, be careful not to define it too narrow to ensure that you have not missed an important category. By using a properly drafted NDA, your company can secure valuable information from competitors or other third parties who may benefit from the disclosure of such information.
Primary objective
The primary objective of an NDA is to ensure the disclosed sensitive information is securely used and handled, preventing its use or disclosure without proper permission and authorization by the disclosing party. An NDA is often signed at the beginning of a business relationship or before entering into a business relationship.
Example
Common example: a technology company is planning to sell and offer specialized software solutions to an enterprise customer. The companies start by discussing how to integrate the software into the customer’s systems to ascertain the price for the integration and the use of the software. For this, the technology company might share insights about their pricing, SLA, policies and software, and the customer, in turn, might explain their challenges and share business plans. While doing so, the companies therefore plan to share documents including non-public, hence confidential information. This is why it is advised that these companies sign an NDA before sharing this confidential information to each other. Such an NDA can be terminated when the parties sign a final customer contract, which should also include confidentiality terms.
How does an NDA protect your confidential information?
Like any other legal contracts, an NDA carries important legal consequences for breach of contract. Depending on the severity of a breach, its consequence can range from lawsuits, financial penalties to – in extreme cases – criminal charges. Breaching an NDA can also harm a party’s reputation, which may lead to other long-lasting consequences to its business, especially in business relationships and industries where trust and confidentiality are crucial.
Claims and lawsuits relating to a breach of an NDA are not common, but it absolutely happens that a company needs to pay out a penalty for breach of confidentiality. We have even advised on this matter a few times in the past.
What type of NDA do you need?
There are various types of NDA that can be used based on the specific circumstances and the needs of the parties involved. Below are the three common types of NDA:
- Unilateral NDA (One-sided NDA): In a unilateral NDA, one party, typically the seller, imposes on the other party the obligation to secure the information and not to disclose or use the information for any purpose other than what is specified in the agreement. In a B2B context, unilateral NDAs are often used between buyers and sellers. For instance, a Biotech company (seller), may employ a unilateral NDA to prevent the buyer from disclosing sensitive information they have gained during the purchase of products or services, such as intellectual property and computer technology. Also common in Public Tenders and for RFI (Request for information) in RFP (Request for Price) situations.
- Mutual NDA (Two-sided or Mutual NDA): A mutual NDA involves two parties, and both parties will be sharing sensitive information with each other and agree that both sides will be bound by confidentiality obligations. Mutual NDAs are frequently used when the parties need to exchange considerable amounts of confidential information during their negotiations or business relationship. Such situations can be Joint Ventures, Vendor Contracts or Mergers and Acquisitions.
- Multilateral NDA (Three or More Parties NDA): A multilateral NDA includes three or more parties, where at least one party shares sensitive information with other parties and enforces confidentiality obligations. This type of NDA streamlines the paperwork and administration for the parties in a sense that the parties do not need to enter several unilateral or bilateral NDAs with one another. In a business relationship involving three parties, where all anticipate disclosing confidential information, a single multilateral NDA can replace the need for three different bilateral NDAs between each pair of parties. Such situations can be Partnerships, Government Contracts (like defense and aerospace contracts) and Consortium Agreements.
Contract Negotiations: How To Avoid Negotiation Peaks? Part 4
In the run up to Quarter 3 end (30th of Sept.), I advise you to send an email out today to your Sales, Partner & Procurement colleagues informing them that in the next two weeks, you will only pick up contracts that are:
* already ongoing;
* truly urgent; and
* need to be signed before the end of this month / end of Quarter (3).
Any deviations from this rule should get a green light from Senior Management.
Why?
The above is a pro-active step to manage your workload and working towards an efficient Legal department.
By emphasizing urgency and advanced planning, you can alleviate the end-of-quarter rush, enabling Legal to focus on what genuinely demands attention.
From experience I am aware that it is not an easy sell to the organisation, but , but trust the process. Once the wider organization realizes this is the gold standard for the legal team, they will (most of the time):
(i) initiate timely discussions, and
(ii) forward their inquiries and feedback well in advance.
I have deployed this strategy previously and while it takes a while for teams to get used to, the positive change is undeniable after 2-3 Quarters.
It ensures that your team’s time and resources are directed toward the most critical and time-sensitive matters. This approach also prevents (to the extent possible) that the teams are working on less urgent tasks, allowing for better productivity and focus.
Next Steps before you hit send:
1. Inform the sales, procurement, partnerships teams during your regular sync-up meetings about this communication and approach of the Legal department.
2. Align this approach with your manager and stakeholders or C-suite overseeing the sales, procurement, partnerships teams.
Good luck! Let me know if it also worked for you or if you have questions / comments.
Contract Negotiations: How To Avoid Negotiation Peaks? Part 3
๐ฉ๐ฒ๐ป๐ฑ๐ผ๐ฟ ๐๐ผ๐ป๐๐ฟ๐ฎ๐ฐ๐๐
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Picture the moment of buying new software, finalizing the lease on that dream workspace or formalizing your agreement with the new accountant via engagement letters. These are not just signatures or digital approvals of external contractual terms, they are important business decisions. Welcome to the world of vendor contracts!
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Building on our previous discussion how to negotiate your ๐ฐ๐ธ๐ฏ ๐ค๐ฐ๐ฏ๐ต๐ณ๐ข๐ค๐ต๐ด like customer contracts (Part 2), let’s focus now on contract of other parties.
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๐ฆ๐๐ฎ๐ฟ๐๐ถ๐ป๐ด ๐ฝ๐ผ๐ถ๐ป๐
One key principle we always advocate for: be cautious and hesitant to approve external template vendor contracts (referred to as Customer Paper) replacing your own template customer contract. Even though it is advised that large companies have their own template vendor contract for their vendors, only approve the use of such templates in exceptional and pre-approved cases. This will not only prevent delays, protect your business interests but also streamlines the negotiation process.
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๐ ๐ฎ๐ถ๐ป ๐ถ๐ป๐๐ผ๐น๐๐ฒ๐ฑ ๐๐ฒ๐ฎ๐บ๐
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๐ญ.ย ย ๐ ๐ฎ๐ป๐ฎ๐ด๐ฒ๐บ๐ฒ๐ป๐:
Roles:
ยทย Strategic direction
ยทย Alignment other teams. ยดIf the Sales Team wants to buy this software tool, let’s involve Procurement, Finance and IT to check the suitability of the toolยด.
ยทย Final decision
* Best practice:
– Keep overview of vendors to align with companyโs objectives.
– Work on communication between teams, especially for large vendor contracts.
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๐ฎ. ๐ฃ๐ฟ๐ผ๐ฐ๐๐ฟ๐ฒ๐บ๐ฒ๐ป๐: Acting as the bridge between your company and the external vendors, having the overview and responsibility for all vendor contracts.
Roles:
ยทย Budget & Pricing; Assess value and benefits of vendor contracts.
ยทย Relationship building and primary vendor point of contact
ยทย Negotiating contracts.
ยทย Contract compliance with company policies/procedures
* Best practice:
– Inform all teams early of anticipated engagements with vendors.
– Keep the management updated with vendor list
– Involve the legal team ๐ฒ๐ฎ๐ฟ๐น๐ (avoid end of quarter requests) to review contracts with clear timelines.
๐ฏ.ย ๐๐ฒ๐ด๐ฎ๐น.
Roles:
ยทย Review, advice and negotiate contracts
ยทย Streamline process
ยทย For large companies: create vendor templates
ยทย Create questionnaire for all vendors (create with Compliance / Data Security Team)
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* Best practice:
– Create a vendor questionnaire
– Stay proactive (not reactive) to avoid review of vendor contracts in peak periods
– Improve communication between legal, procurement and other teams to avoid delays and last minute reviews.
Prioritize vendor contracts for Quarter start periods. handling contracts based on $value and potential impact.
How To Avoid Peaks in Negotiation Cycles by Improving Team Collaboration
1. Introduction
Working towards an optimized negotiation process is not only a legal matter but requires effective collaboration between various teams. In my experience, the teams highlighted below have the most important role in negotiation cycles.
The general rule to involve all teams in your contract template creation and contract negotiations will always apply. As Legal is in the middle of these processes, we have written this series from the point of view of the Legal department.
Letโs dig deeper into the roles of the different teams involved in negotiating your own contracts.
2. ๐ ๐ฎ๐ป๐ฎ๐ด๐ฒ๐บ๐ฒ๐ป๐
Next to a focus on the strategic vision of the company, the management will encourage teams to sign as many customer contracts as possible. It will especially crucial for the management to have a seamless process with minimal involvement from management, except where agreed.
Main roles
In contract negotiation, the roles of the company’s management will be:
- ยทย ย ย ย ย ย Strategic Vision
- ยทย ย ย ย ย ย Risk Management
- ยทย ย ย ย ย ย Stakeholder Alignment
- ยทย ย ย ย ย ย Escalations / final decisions
Best practice: Establish a robust structure that defines Managementโs role and involvement in decision-making processes. Explore and discuss refinement of contract processes and agree on key priorities.
3.ย Commercial Team
With this we mean for example Sales & Account Managers, Business Development Managers, Partnership Teams. As a sprinter nearing the finish line, the Commercial Team will race to close deals at the end of each quarter. Smoother processes will mean better results so Commercial Teams are usually more than willing to work towards improvements.
Main Roles:
In contract negotiation, the roles of the company’s commercial team will be:
- ยทย ย ย ย ย ย Overall Overview and Responsibility for customer contracts
- ยทย ย ย ย ย ย Relationship building / primary point of contact
- ยทย ย ย ย ย ย Getting the deal done
- ยทย ย ย ย ย ย Stakeholder Alignment
Early involvement and cooperation with other teams is imperative for Sales to avoid bottlenecks & peaks. In the cooperation with Legal, focus on (i) Setting Priorities, (ii) Contract Template Training and (iii) when & how to involve Legal.
4.ย ๐๐ฒ๐ด๐ฎ๐น
In contract negotiations, the legal team navigates all legal advice and negotiations from a strategic point of view, with a goal to improve processes and reduce risks for the company.
Main roles:
In contract negotiation, the roles of the company’s legal team will be:
- ยทย ย ย ย ย ย Contract Advice, Negotiation and Drafting
- ยทย ย ย ย ย ย Risk Management of the company
- ยทย ย ย ย ย ย Creation of contract templates / playbooks and contract process improvement
Best practice: Legal shines in drafting, advising and negotiation of contracts. Do not create gridlocks by making them the point person for each negotiation. Strategize with Sales when Legal should step in, which should mainly be for large or strategic customer contracts.
Conclusion
By carefully dividing roles and collaborating closely between teams, we are able to work on improving contract & negotiation processes. This also includes working better together to avoid end-of-quarter spikes before the holidays.
In our other articles about this topic, see 1, 2, 3 and 4 we dive deeper on the ways to improve the communication and collaboration between these teams.
Contract Negotiatons: How to Avoid Negotiation Peaks? Part 1
Negotiating commercial contracts is always a daunting task, but is particularly complicated at the end of Quarter. We have written a series of tips on how to avoid these negotiation peaks, using my experience gained on this topic since 2004, as I have found that now a great time to start preparing for the end of Q3 and especially for the highest peak of the year (end of Q4).
If we all embrace the goal of reaching a steady negotiation rhythm, we are able to unlock benefits like improved decision making, streamlined processes, more joy at work and stronger relationships. Replace rushed contract negotiations & discussions with a strategic plan that allows for efficient and optimal contract negotiations.
As Commercial Contracting Experts, we focus on the following two scenarioโs:
Scenario 1: negotiating your own contracts with buyers of your Products & Services: Customer Contracts.
-Teams involved: Sales, Account Management, Legal, Finance, Management, etc.
Scenario 1: negotiating contract of other companies to buy their products: Vendor & Supplier Contracts.
-Teams involved: Procurement, Finance, Facility, IT, Legal, Management, etc.
Top 10 common Commercial Contracts
– Confidentiality Agreement (NDA)
– Order Form
– Master Services Agreement (MSA)
– General Terms & Conditions (GT&C)
– License Agreement
– Framework Agreement
– Partner Agreement (Reseller, Distribution, Incentive Agreement)
– Service Level Agreements (SLA)
– Statement of Work (SOW)
– Data Privacy Agreement (DPA)
First Tip: start your preparation & planning and list your priorities now.
Are the teams your work with aware that the contracts you are working on need to be signed soon โ particulary before end of Q3 or Q4??
Contact your team members this week to inform them of any upcoming contract negotiations.
Four Critical Factors: The following four Critical Factors will prepare you to work towards a steady negotiation cycle:
1. Early Preparation, Planning and Prioritization
2. Communication & Cooperation
3. Standard Templates & Procedures.
4. Implement Legal Tech & Digital Solutions
Bonus: specific actions for the last weeks of each quarter.
In the next posts in this series we will provide you with the specifics of the four Critical Factors and share practical tips for the teams involved, especially Legal, Sales, Procurement and Management.
How to roll-out a new Contract Template #6 – Meetings
Introduction
Last but not least! Here is part 6 and last part of my tips on how to roll-out a new Contract Template as an Expert.
Once you have sent out the new templates, these next steps are most important to ensure that the team will really use the templates. In this part of the series ‘How to roll-out a new Contract Template #6 – Meetings’ we focus on meetings and training sessions you should set up with your team.
How to roll-out a new Contract Template #6 – Meetings
๐ง๐ฎ๐ธ๐ฒ ๐๐ต๐ฒ๐๐ฒ ๐ณ๐ผ๐น๐น๐ผ๐-๐๐ฝ ๐ฎ๐ฐ๐๐ถ๐ผ๐ป๐ ๐ฎ๐ณ๐๐ฒ๐ฟ ๐ฟ๐ผ๐น๐น๐ถ๐ป๐ด ๐ผ๐๐ ๐๐ผ๐๐ฟ ๐ป๐ฒ๐ ๐๐ผ๐ป๐๐ฟ๐ฎ๐ฐ๐ ๐ง๐ฒ๐บ๐ฝ๐น๐ฎ๐๐ฒ
By following these last steps when sending out contract templates, you can optimize the contract management at your company. Consequently, this will create a more efficient and effective working environment with less discussions about the templates. If you train the teams well and empower them sufficiently you will also see that the negotiation process will run much smoother.
๐ฆ๐ฒ๐ฝ๐ฎ๐ฟ๐ฎ๐๐ฒ ๐บ๐ฒ๐ฒ๐๐ถ๐ป๐ด๐ ๐๐ถ๐๐ต ๐บ๐ฎ๐ป๐ฎ๐ด๐ฒ๐บ๐ฒ๐ป๐
Address and discuss the goals of the new Contract Template and raise specific concerns and considerations, engaging key stakeholders individually.
Full team meetings:
Provide comprehensive explanations of new templates/policies, emphasizing their purpose, benefits, and alignment with company goals.
๐ง๐ฟ๐ฎ๐ถ๐ป๐ถ๐ป๐ด ๐๐ฒ๐๐๐ถ๐ผ๐ป๐
Train and empower colleagues with the necessary skills and knowledge to implement the contract templates effectively.
Centralized document access
Establish a user-friendly location for all internal standards, guiding team members to easily find necessary documentation.
๐ฅ๐ฒ๐ด๐๐น๐ฎ๐ฟ ๐บ๐ผ๐ป๐ถ๐๐ผ๐ฟ๐ถ๐ป๐ด
Check awareness, adherence, and effectiveness of procedures, identifying areas for improvement and ensuring compliance.
Support and guidance:
Offer ongoing support to help guide your colleagues by proposing one on one meetings and training sessions.
๐๐ฒ๐ฒ๐ฑ๐ฏ๐ฎ๐ฐ๐ธ ๐ณ๐ผ๐ฟ ๐ถ๐บ๐ฝ๐ฟ๐ผ๐๐ฒ๐บ๐ฒ๐ป๐:
Create opportunities for feedback to drive future enhancements. Actively ask your team members for feedback in the training sessions and meetings mentioned above.
Conclusion
As legal professionals, we play a vital role to improve compliance, efficiency and risk mitigation. By implementing these tips, we create a more productive and legally sound workplace with the ultimate goal: more fun at work and driving success for the company. Most importantly, when doing so, we work together with the other teams and we do not only dictate what they should do.
Easier said, this way:
- You will waste less time in trying to (i) find the right template or (ii) figure out how to use it or who to involve when you have issues
- Your colleagues at the Legal department will have more time to dive deeper into your legal issues and have more time to negotiate and advise you from a legal and strategic point of view
- The other teams of the company will feel more involved- it will be very hard for your colleagues to say that they do not know where to find the Contract Templates (sound familiar?)
- Your Contracts will be signed quicker!
To see the other parts in this series, go to:ย bit.ly/amstlegal-blogs
Communicating Your New Contract Template to All Team Members ย
As part 5 of my tips on how to roll-out a new Contract Template as an Expert, the following:
! ๐๐ฒ๐ ๐๐๐ฒ๐ฟ๐๐ผ๐ป๐ฒ ๐ผ๐ป ๐๐ผ๐ฎ๐ฟ๐ฑ: ๐๐ผ๐บ๐บ๐๐ป๐ถ๐ฐ๐ฎ๐๐ถ๐ป๐ด ๐ฌ๐ผ๐๐ฟ ๐ก๐ฒ๐ ๐๐ผ๐ป๐๐ฟ๐ฎ๐ฐ๐ ๐ง๐ฒ๐บ๐ฝ๐น๐ฎ๐๐ฒ ๐๐ผ ๐๐น๐น ๐ง๐ฒ๐ฎ๐บ ๐ ๐ฒ๐บ๐ฏ๐ฒ๐ฟ๐
Once your template is final, approved internally and previous tips are followed, send out your New Template / Procedure using a communication method that is tailored to your company.
Do not use a single communication method (e.g. only providing the template via e-mail). This will significantly decrease the use of the New Template.
When rolling out a new contract template in your company, it is important to use multiple channels of communication to ensure that team members are informed and understand how to use it. It is recommended to combine the following communication methods:
* Your company’s intranet or internal portal
* Collaboration software like Slack or Microsoft Teams
* Email
* Kick-off meetings/trainings
This combination will help to increase the visibility of the new Contract Template and provide team members with the opportunity to ask questions and address any concerns.
Remember that clear communication is key to the successful implementation of a new contract template.
๐ฃ๐ฟ๐ผ-๐๐ถ๐ฝ: In case of new Contract Templates or Legal Procedures, it is advised to cascade the communication as follows:
* First to each Head of the Commercial Team / Regional Leader who can share/discuss it with their team and reiterate the importance of the new Contract Template/Procedure
* Legal Team sends it to the Commercial Team
* For particularly important messages set up separate meetings between Legal Team members and Commercial Team members
To avoid the common issue that team members are not able to find the e-mail or other communication that you used sending out the new template, follow one of my previous tips: create one central location for all your templates.
๐ช๐ต๐ฎ๐ ๐๐ฒ ๐ต๐ฎ๐๐ฒ ๐น๐ฒ๐ฎ๐ฟ๐ป๐ฒ๐ฑ ๐ณ๐ฟ๐ผ๐บ ๐ฝ๐ฟ๐ฒ๐๐ถ๐ผ๐๐ ๐ฝ๐ผ๐๐๐ ๐ถ๐ป ๐๐ต๐ถ๐ ๐๐ฒ๐ฟ๐ถ๐ฒ๐:
– The top-down approach does not work
– Team members need to know the critical components for the use of the new Contract Templates: the Why, How, When and Benefits
– Create and follow a strategic communication and follow-up plan (the Communication Plan):
– Step 1: Identify Relevant Users and Teams
– Step 2: Notify / Pre-inform the team about the upcoming new template
– Step 3: Make sure to cover all 10 points of the Checklist
๐๐ฉ๐ช๐ด ๐ฑ๐ฐ๐ด๐ต ๐ฐ๐ง ๐ฑ๐ข๐ณ๐ต ๐ฐ๐ง ๐ฎ๐บ ๐ญ๐ข๐ด๐ต ๐ต๐ช๐ฑ (๐ฏ๐ณ. 10) ๐ฐ๐ฏ ‘๐๐ฐ๐ธ ๐ต๐ฐ ๐๐ฎ๐ฑ๐ณ๐ฐ๐ท๐ฆ ๐บ๐ฐ๐ถ๐ณ ๐๐ถ๐ด๐ช๐ฏ๐ฆ๐ด๐ด ๐๐ฐ๐ฏ๐ต๐ณ๐ข๐ค๐ต๐ด ๐ฃ๐บ ๐๐ณ๐ฆ๐ข๐ต๐ช๐ฏ๐จ ๐๐ณ๐ฆ๐ข๐ต ๐๐ฐ๐ฏ๐ต๐ณ๐ข๐ค๐ต ๐๐ฆ๐ฎ๐ฑ๐ญ๐ข๐ต๐ฆ๐ด’.
How to Roll-Out your New Contract Template: 10 point Checklist
This is part 4 of my tips how to Roll-Out your New Contract Template as an Expert.
๐ช๐ต๐ฎ๐ ๐๐ฒ ๐ต๐ฎ๐๐ฒ ๐น๐ฒ๐ฎ๐ฟ๐ป๐ฒ๐ฑ ๐ณ๐ฟ๐ผ๐บ ๐ฝ๐ฟ๐ฒ๐๐ถ๐ผ๐๐ ๐ฝ๐ผ๐๐๐ ๐ถ๐ป ๐๐ต๐ถ๐ ๐๐ฒ๐ฟ๐ถ๐ฒ๐:
* The top-down approach does not work
* Focus on the Why, How, When and Benefits
* Make a Communication Plan
* Identify Relevant Users and Teams
* Notify / Pre-inform the team about the upcoming new template
๐ก๐ฒ๐ ๐ ๐๐ถ๐ฝ: ๐๐ผ๐บ๐บ๐๐ป๐ถ๐ฐ๐ฎ๐๐ถ๐ผ๐ป ๐๐ต๐ฒ๐ฐ๐ธ๐น๐ถ๐๐
See below a non-exhaustive checklist of the items that I would recommend to include in your message When rolling out & communicating the new Contract Template.
-๐ฆ๐๐ฏ๐ท๐ฒ๐ฐ๐ ๐๐ถ๐ป๐ฒ: Use a clear subject line that communicates the purpose of the email, such as “New Contract Template โ [Add name relevant document] – Please Review and Adopt.”
-๐๐ป๐๐ฟ๐ผ๐ฑ๐๐ฐ๐๐ถ๐ผ๐ป (๐ช๐ต๐): Start with a brief introduction that outlines the importance of adopting the new contract template.
-๐๐ฒ๐ป๐ฒ๐ณ๐ถ๐๐: Provide an overview of the key features and benefits of the new contract template, highlighting how it will help streamline processes, reduce risks, and improve efficiency.
-๐๐ผ๐: Add instructions on how to use the new contract template, including where to find it, how to fill it out, and any specific requirements to be aware of.
-๐ง๐ถ๐บ๐ฒ๐น๐ถ๐ป๐ฒ: Clearly communicate the timeline for adoption of the new contract template.
-๐ง๐ฟ๐ฎ๐ถ๐ป๐ถ๐ป๐ด ๐ฎ๐ป๐ฑ ๐๐๐ฝ๐ฝ๐ผ๐ฟ๐: Include information on any training or support that will be available to help team members adopt and use the new contract template effectively.
-๐ฃ๐ผ๐ถ๐ป๐ ๐ผ๐ณ ๐๐ผ๐ป๐๐ฎ๐ฐ๐: Provide a point of contact for questions or concerns regarding the new contract template (e.g. a project manager or legal representative).
-๐๐ฐ๐๐ถ๐ผ๐ป: End the message with a clear call to action, such as “Please review and adopt the new contract template by 2025, and let us know if you have any questions or concerns.”
-๐ข๐ฝ๐๐ถ๐ผ๐ป๐ฎ๐น – ๐๐ฒ๐ด๐ฎ๐น: highlight any legal requirements, regulations or policies that must be adhered to, in order to ensure compliance and mitigate legal risks.
-๐ข๐ฝ๐๐ถ๐ผ๐ป๐ฎ๐น – ๐ง๐ฒ๐ฎ๐บ ๐ฆ๐ฝ๐ฒ๐ฐ๐ถ๐ณ๐ถ๐ฐ๐: mention important specific information or operational set-up details for certain teams.
Tip 8: Consistent terms & definitions in your documents
๐๐จ๐ง๐ฌ๐ข๐ฌ๐ญ๐๐ง๐ญ ๐ญ๐๐ซ๐ฆ๐ฌ & ๐๐๐๐ข๐ง๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ฒ๐จ๐ฎ๐ซ ๐๐จ๐๐ฎ๐ฆ๐๐ง๐ญ๐ฌ
Make sure that you use the same terms and definitions in your contracts and other important documents. It is also advised to follow the same rule for commercial documents like pitches / offers and even your website.
๐ช๐ต๐?
1. To ensure that everyone knows what is meant exactly by a certain term that you use in your company.
2. To create the best possible customer experience.
3. To avoid any misunderstanding on what service or product the customer has purchased from you exactly, and under which conditions.
4. In case of commercial discussions (and even litigation) about a term in the contract for whatever reason: e.g. exact services purchased (and under which conditions), the price for the service, termination possibilities, volume commitments, compliance and system requirements, etc.
๐๐ ๐ฎ๐บ๐ฝ๐น๐ฒ
For a typical SaaS/Software company this means that the same terms/definitions should be used for the following documents (depending on the contractual set-up):
โ General Terms and Conditions
โ End User License Agreement
โ Customer Contract / Master Ordering Agreement
โ Order Form / SOW (Statement of Work)
โ Annexes likes the Data Processing Addendum (DPA), Data Security Addendum and the Pricing Annex
โ Disclaimer on the website
๐๐ฆ๐ต ๐ฎ๐ฆ ๐ฌ๐ฏ๐ฐ๐ธ ๐ช๐ง ๐บ๐ฐ๐ถ ๐ฏ๐ฆ๐ฆ๐ฅ ๐ฉ๐ฆ๐ญ๐ฑ ๐ธ๐ช๐ต๐ฉ ๐บ๐ฐ๐ถ๐ณ ๐ค๐ฐ๐ฏ๐ต๐ณ๐ข๐ค๐ต ๐ต๐ฆ๐ฎ๐ฑ๐ญ๐ข๐ต๐ฆ๐ด!
Tip 7: All templates in one place
๐๐ฅ๐ฅ ๐ญ๐๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ฌ ๐ข๐ง ๐จ๐ง๐ ๐ฉ๐ฅ๐๐๐
Remember to store all your (contract) templates in one central place to make sure that everyone is (i) able to find the correct templates quickly and (ii) using the correct template.
Sounds very straight forward, but in reality I rarely see companies that store all templates in one central place easily accessible for all involved team members.
Storing all contract templates in one central place is challenging for most companies, but especially in case of:
โ fast-growing companies
โ mergers/acquisitions
โ activities in multiple countries
โ large groups with many subsidiaries or a complicated corporate structure
โ contracts in different languages
โ involvement of different departments (Account Management, Sales, Partnerships, Sales Operations, โฆ)
๐๐ก๐๐ญ ๐ข๐ฌ ๐ญ๐ก๐ ๐๐๐ฌ๐ข๐๐ฌ๐ญ ๐ฐ๐๐ฒ ๐ญ๐จ ๐ฆ๐๐ค๐ ๐ญ๐ก๐ ๐ญ๐๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ฌ ๐๐๐ฌ๐ข๐ฅ๐ฒ ๐๐๐๐๐ฌ๐ฌ๐ข๐๐ฅ๐?
Best options are:
(a) fully/partly automate your contract creation and be strict that this is the only way that contracts can be generated. This way the relevant, most up to date and correct Contract Template is used and all templates are stored in one spot as you should only be able to use this automated system; and
(b) create a central place (usually an internal website or โ less ideal โ a shared folder).
๐๐ซ๐ฎ๐๐ข๐๐ฅ: give training โ at the start of employment and regularly thereafter โ to your employees to make sure they know where the contract templates are located and how to correctly use these templates.