How can you use contract templates effectively?

Drafting a contract template is the most essential element which should not only take care of all legal pit falls but also take care of the business. Domain specific clauses are always the plus points. Having Indemnification per the organisation's risk capability and insurance is the second most element. Having a definitive LoL clause protects you from buying an unlimited liability scenario. Choosing a right governing law leverages your position better to handle disputes. Also, if your template is being repeatedly redlined on a few clauses, you need to introspect whether we have put a neutral and a good sail through clause for both the parties. Always advised for a business to get this drafted through a specialist.

The choice isn't just about which of your templates is the best fit, but which party's template is the best fit? Are you going to use your template or the counterparty's template. This is often the first step in the contract negotiation process. My advice is to assess the template against the circumstances of the deal and ask "Which template starts us out closer to the finish line?" Then use that template, even if it's not yours.

Templates should be created from tested executed contracts to reflect the realities of negotiation, and not only the ultimate preferred positions of the drafting party.

Sometimes, use of contract templates is a reflection of the bargaining power (or lack of it) in a particular industry or transaction. In the entertainment industry, the party with the actual or perceived bargaining power generally uses what are unfortunately very one-sided templates and resist most negotiated changes.

La meilleure chose à faire est de choisir des modèles flexibles, qui peuvent s'adapter à vos besoins particuliers, d'une part, tout en restant dans le cadre de la loi, d'autre. Vous pouvez trouver de modèles fiables et flexibles sur admintech.ch pour la Suisse et la France respectivement.

Yes - review every clause, but try to refrain from editing it simply for the sake of editing. Templates from a reliable source should be presumed to have mutually beneficial terms.

Your legal terms need to align with your risk profile and your leverage. You cannot just skim past these provisions and assume it meets your needs. Founders should have a strong understanding and comfort level with the provisions in their standard template, particularly as it relates to what you are taking responsibility for and to what extent! If you don't understand what you are agreeing to indemnify the other side for or whether or not your contract has carve-outs to the limitation of liability provision (or a liability cap at all!), you should not be using the template without an attorney involved!

Once you send out a draft—that draft is your proposal; and it is expected you should be able to explain (both internally and externally) every point of it. If you are submitting your opening position, do not hesitate to trim down the number of, or reduce the complexity of your provisions. You will need to agree on the main principles first, before moving to the boilerplate clauses.

Customize the template to fit your needs by paying attention to how the provisions in the template connect to each other. Be mindful that you are trying to change the already-built structure of a template document.

Tailoring contract templates to suit an organisation's needs offers several benefits.: 1. Organisations can address their specific needs by incorporate provisions aligned to business strategies through custom contract templates. 2. Organisations can save time and money by reusing standardised provisions and clauses from customised templates rather than starting from scratch with each new agreement. 3. Organisations can protect their interests and mitigate risks by including provisions such as indemnification clauses, limitations of liability and dispute resolution mechanisms. 4. Customised templates are easily updated to adapt to changing business, evolving legal environments and emerging risks.

Keep it simple, straightforward and easy to interpret in day-to-day implementation. In my experience of reviewing contracts, I have come across a number of times where a) it was difficult to understand how to interpret in day-to-day implementation of the contract, b) different clauses contradict each other, c) description of certain services but no corresponding rates, d) written for a lawyer and not a layman using the contract on a daily basis.

Consistency in the use of defined terms is key. Depending on the level of sophistication and technical knowledge of parties, you may use certain relevant industry terms to avoid any ambiguity.

A well-defined term is an undisputed term. One should always strive to create a comprehensive "definitions" clause in one's contract templates.

Make sure that you have a single, well identified place for the defined terms and expressions, and make sure that they are used as much as possible throughout the text, to reduce ambiguity. Ideal contract is not a masterpiece of literature, subject to personal interpretation, but as boring as a sequence of computer code can be. Especially if the contract is expected to last for many years and be used by different people—the simpler is the contract, the easier will be for both sides following it.

In terms of consistency defined terms and their use is the most important. Make sure you're using defined terms properly and consistently. (Previous to that make sure the defined terms reflect what your company is delivering in terms of services definition for example or what is your product, etc.

Here are four ways that I avoid errors in my contacts. 1. Use words or numerals, not both - These errors happen all the time. Don't repeat numbers. Say them once. 2. Avoid similar defined terms - Don't use licensor and licensee. It is way too easy to confuse them as you read. Use Vendor and Customer or, even better, a short version of their legal names. 3. Change all caps to sentence case while you read it - Just because the counterparty put the language in all caps doesn't mean you have to keep it that way. Change to sentence case and then change back when you send it back. 4. Run redlines between the then-current version and your original at every stage - This helps you see the cumulative changes. I find errors all the time this way.

After few rounds of negotiation, it is possible that the working document becomes messy and confusing. When this happens, consider cleaning the document and resetting the formatting. This may seem a lot of additional work; but in my experience it almost certainly pays off. Finally, even though the contracts are not required to be nice, if they are properly formatted and presentable, it makes much easier reading them, which is one of the qualities of a good contract.

What I check for is this: Defined terms are used correctly and capitalised if that's how you've gone with. So "Parties" "Party" "Agreement" etc. Second is section references are referred to correctly. Numbering sometimes gets scrambled up if, for example, you add additional sections. After adding sections in a template, all section referencing needs to be checked. To make sure the right referenced section is well understood I also like to add the name of the section in the reference so if during a negotiation an additional section is added and numbering is not checked properly, the reference will still work. E.g. I refer to section 7 (Term and Termination) and not just section 7.

There is not a single right way to draft or negotiate a provision. You can't look it up in a book take that version. Focus more on making sure the contract terms match what outcome your company needs rather than thinking it has to be one particular wording. By focusing on substance over style, you'll focus less on appearance and more on what the provisions actually say.

The way to negotiate with confidence is being prepared. What I like to have ready is: 1. alternate language that addresses the most common concerns from prospects. 2. Explanatory comments for why I do not accept or partially accept certain common redline requests 3. I have a good understanding on what my company is offering so if the redlines affects what we need to deliver, that would be caught right away. 4. Study and understand what is industry standard in terms of contracting.

I have three tips: 1. Clarity on your objectives and priorities, being well-versed in the details of the contract, applicable laws, or their implications, will help you avoid rude surprises and also respond effectively to unexpected challenges. 2. Research what the other side wants in the transaction. Knowing your counterpart’s needs, concerns, or alternatives can help anticipate their potential arguments or objections and leverage that knowledge to get an edge in negotiations. 3. Adaptability- Negotiation is a dynamic process and if you can be flexible with your approach, strategies, or even contract terms as required, your interests will be best served. That will also give you much-needed course correction and help avoid costly mistakes.

The best seed for confidence is preparation. Prepare your redlines, justifications, arguments, and risk tolerances in advance. Know what your deal breakers are and where you can concede. Know who has the latest redlines and who is taking the lead during the negotiation. Align with your internal clients beforehand. In any negotiation, preparation is key!

How often are you negotiating the terms of your contract? If it is more than 25%, you might need to take a step back and analyze why that is the case. The main culprit of needing to negotiate contracts too frequently is the way you are presenting contracts to your customers, and this is often a very easy fix! Continuing to heavily negotiate with individual customers rather than fixing the foundation of your contracting process is a bad business decision!

If you aren't a lawyer (I always tell people "I'm not a lawyer, I just play one on t.v."--don't try to be one. Just be the best "business person" you can be with a clear understanding of the legal and business articles within the agreement. If you don't understand what an article means, then research it and understand how it impacts your organization's risk threshold. Let your legal department do the legal work. Let the business leaders focus on the business work---then things should flow well in the organization and with your process.

If you work in a company with its own legal department, consider templates for core company transactions are made available for use in internal sites. Make sure you are downloading the correct template and that is the latest version. Sometimes a non legal colleague might send you a template they previously used, but said version might be out dated or overly negotiated (not the best starting point to start a negotiation). In case of doubt always contact you legal partners.

Find a mentor or a resource that could teach you how to draft and negotiate contracts in the real world, e.g. howtocontract.com

Of course, lawyers should always be looking for ways to increase efficiency without decreasing the quality of the work they do for clients. When lawyers become more efficient, they realize cost-savings that can be passed on to clients. Lawyers who use contract templates are in a great position to do just that, but, as with everything lawyers do it is important to remember the ethical ramifications of doing so. Lawyers should keep in mind their ethical duty to provide competent representation to their clients (Model Rule 1.1) When using templates, lawyers need to protect the interest of the client by modifying templates when necessary to ensure that the terms reflecting the unique nature of the deal are included.

I often hear companies referencing the need for a “frictionless sale.” I have seen many situations where the desire for a frictionless sale or allowing the Sales department to drive the acquisition of a customer has inadvertently led to there being no contract between the company and its customers. On more than one occasion, I have needed to tell a founder that, despite working with counsel and thinking they had a customer agreement, there are actually no legal and/or commercial terms that are being entered into between the company and their customers.