What Really Matters in Contracts?
Updated: May 5
According to the International Association for Contract & Commercial Management (IACCM), only half of the terms that are most negotiated are considered to be most important by the parties:
Attorneys tend to focus on legal provisions like indemnity and limitation of liability, and business people tend to focus on the financial terms such as price and payment. But we all pay too little attention to the scope, which includes all the other important aspects of the relationship, such as the parties' responsibilities, delivery, reporting, performance and change management. And it is the scope and other business terms, rather than purely legal terms, that are often the subject of contract litigation, so they deserve our most focused attention during contract drafting and negotiations.
When it comes to Scope, here's a checklist of the types of things that should be included in the contract:
Full and clear description of the products and services that will be provided, including quantity
Complete list of what will be excluded
The specifications for products
Price and method of payment
How and when new prices will go into effect
What the Seller is and is not responsible for
What the Buyer is and is not responsible for
Date or schedule when products or service deliverables will be provided
Date or schedule for payment
Where services will be provided
Where risk of loss will transfer to the Buyer
Process for placing and accepting orders
Process for managing order changes
Process for inspections and acceptance of goods
Process for making claims
Isn't it time to shift our focus to what truly matters in contracts?