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Extras - Technology Contracts for Everyone: A Quick Checklist of Key Issues

By Dennis Kennedy, Published on May 18, 2003

Dennis Kennedy is a technology lawyer who helps
business decision-makers who sign important technology agreements get a
good night's sleep. Dennis, a solo practitioner in St. Louis, Missouri,
received the 2001 TechnoLawyer of the Year award and the 2001 Burton
Award for Legal Excellence. He is a well-known speaker and author on
Internet, technology and legal topics. His highly-regarded website contains most of his articles and a variety of useful resources.
 




It still surprises me how many legal issues even a simple IT contract, software license or e-commerce agreement might raise. While the following is not a comprehensive list, focusing on these areas can help you put together a successful agreement.

Deal Coverage

Draft agreements often do not accurately reflect the deal terms. Does language actually express your understanding? Are all deal points included? Are the correct parties named?

License Scope

The license grant sets the limits on your rights. It must grant you what you need. Are all requested rights granted? Do the rights to copy, modify or use remote access fit your needs? Have you secured rights for affiliates, subsidiaries, independent contractors or third party consultants, if needed?

Ownership

Failure to cover ownership rights will come back to haunt you. Who owns the deliverables? Who owns any modifications or derivative works? Who owns customer data?

Performance Warranty

In most cases, you should be able to get a warranty that deliverables will perform in accordance with specifications. Have you adequately set out your specifications?

Acceptance Testing and Exit Strategies

The optimism and confidence that you have when entering an agreement can quickly disappear as deadlines are missed and promises are not kept. How do you know the work is done? How do you get out of the deal if things don't work out? When should you have termination rights or get refunds? Should the vendor be obligated to help you transition to a new provider?

Service Levels and Protection of Data

You care most about how good the performance is, that customer service is readily available and that your data is safe. Are the confidentiality obligations acceptable? Are there requirements to backup and/or return data? Are there customer service procedures and penalties? How about uptime and security requirements?

Reduce One-sidedness

The first draft you see will definitely not be in your favor. Can terms be made mutual, deleted or made more fair?