Monday, October 10, 2011

Is it a legal term?

Many companies want to have procurement involve the law department or outside counsel when they are negotiating “legal terms”. Few companies define exactly what those legal terms are. Businesses may also ask for guidance or what terms do they need to include outside counsel.

It never hurts to have counsel involved, but since companies need to manage legal costs and law departments don’t have unlimited availability of resources, you should work to establish guidelines to follow on when people really need to involve counsel. I’m sure views will differ, but here is a general list that I’ve developed.

Is it a “legal” term?
Preamble, parties and effective date No
Definitions Only if the definition is used in a legal term
Changes to the product or servce No
Supplier personnel, independent contractor Yes
Prices No
Products No
Services No
Taxes No
Purchase orders No
Pricing No
Taxes No
Payment & Acceptance No
Electronic commerce No
Warranties (not material and workmanship).Yes unless specific warranties are considered business only
Warranty against defects in material and workmanship No
Warranty redemption No
Post warranty service No
Epidemic defects No
Delivery Logistics and on-time delivery No (except when title transfer is at different point than normal for term
Any Intellectual Property Grant language Yes
General Indemnity or hold harmless Yes
Intellectual Property Indemnity & exceptions Yes
Limits of liability Yes
Limits on remedies Yes
Insurance No, but you should involve an insurance expert
Termination No
Amendments to the agreement Yes
Assignment rights No
Choice of law, jurisdiction and forum Yes
Prior communications / merger Yes
Counterparts Yes
Confidential Information Yes
Freedom of action Yes
Force Majeure Yes
Notices Yes
Order of Precedence Yes if other documents will impact how the agreement is interpreted. No if the precedence is established between other documents where the agreement has the ultimate priority
Records & Audit Rights No
Severability of terms Yes
Terms that survive expiration or termination Yes
Waiver of rights Yes

1 comment:

  1. Hi Jack, I have been following your blog with great interest lately. This list is a good guide to manage expectations from the legal and commercial people. It is common to just dump the whole document on one party. Problems crop up when the wrong people are looking issues that are naturally out of their scope (or depth). Great work! Paul