sales contract management consulting services

*Sharks*?

Sharks are the potential clients or vendors who say you have to accept their (contractual) terms. “After all, they’re standard terms”.

    It is not appropriate at this point to delve deeply into agreement terms, but a couple of “sharky” examples are:
  • Someone else’s “standard” contract usually contains a broad indemnification clause – favorable to the writer. For example: “You will indemnify and hold Client harmless against all liability, cost, loss, expense (including reasonable attorney’s fees), or damages paid, incurred or occasioned by any claim, demand, suit, settlement, or recovery against Client, without limitation…”
  • There will likely be a “Liquidated Damages” clause, which allows the client to penalize you through the contract (“penalty” clauses per se are usually not enforcable – so Liquidated Damages is a way around that).

Someone else’s “standard” agreement can be ruinous for you and your bottom line. Don’t allow a client’s proposed “standard” contract to put all the risk on you. It is much better to have your own “standard” agreement be part of your quotation package!

At the same time, an agreement must be fair to both sides. Review and negotation of conflicting terms should start at the RFP stage. Your sales agreement sets the basis for negotations if there are conflicting terms. see our post: Battle-of-the-Forms

You should not accept the responsibility of a one-sided contract. If your potential customer insists on only his terms, then you should consider not taking-on the additional risk. As always, this is a judgement call by you – measured against the level of risk your attorney reccomends as acceptable in view of your financial and strategic goals.

I’ll leave you with this thought: if a client insists on his terms over yours, then raise your quotation to cover protections needed, for example, purchase of an “errors & omissions” insurance policy [or other appropriate protections as defined by your attorney] specific for this one engagement, and spike it out as a line item in the proposal.

 



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