Contracting Starts Before You Have a Contract
- The contract process starts before you identify a customer, supplier, service provider, etc.
- A contract is your opportunity to define with certainty:
- What you will receive, when, and for how long?
- What you will provide, when, and for how long?
- Who will have responsibility for known potential risks and liabilities?
- To answer those questions, you need to think through your business and what you are trying to accomplish.
- What is important to your business?
- Do my contracts accomplish what I need for my business?
Documenting the Deal
- Legal & Business teams need to work together
- Appropriate documentation will depend on what is being done:
- Master Services or Supply Agreement (MSA)
- Purchase Orders (POs) – usually subject to terms of MSA, but can be stand alone
- Additional clarity and terms through company policies
- If there is no MSA, and only a PO, you need to protect yourself as appropriate:
- Suppliers: Ensure that your legal terms are incorporated into the PO by attaching or linking to terms and conditions or reference company policies
- Customers: Be aware of legal terms built-in to the POs within a link or in small print
Documenting the Deal: Purchase Orders
- POs typically contain the key business and financial terms of the deal:
- Detailed description of the product(s) and/or service(s)
- Price, fees and payment terms
- Delivery/shipping terms; inspection rights
- Term or date due for performance
- Unique business terms
- Suppliers should have standard forms
- Consult with legal team about any changes to legal terms that would conflict with the MSA
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.