What are the top vendor contract terms you should negotiate for renewal?

2 Scope of work and service level agreements

Another key contract term to negotiate for renewal is the scope of work and service level agreements (SLAs). The scope of work defines what the vendor will deliver, how, when, and where. The SLAs specify the quality standards, performance metrics, and remedies for the vendor's services. You want to have a detailed and realistic scope of work that covers all your expectations and requirements, and a measurable and enforceable SLA that holds the vendor accountable for their results. You also want to have a change management process that allows you to adjust the scope of work and SLAs as needed, without incurring extra costs or delays.

4 Intellectual property and confidentiality

A fourth contract term to negotiate for renewal is the intellectual property and confidentiality clause. This clause defines who owns, controls, and can use the intellectual property (IP) that is created, used, or shared by the vendor in relation to the contract, and what confidentiality obligations the vendor has to protect your sensitive information. You want to have a clear and comprehensive IP and confidentiality clause that secures your rights and interests in the IP that is relevant to your business, and that prevents the vendor from disclosing, misusing, or compromising your confidential information. You also want to have a data security process that ensures the vendor follows the best practices and standards to safeguard your data.

5 Liability and indemnification

A fifth contract term to negotiate for renewal is the liability and indemnification clause. This clause defines the extent and limits of the vendor's liability for any damages, losses, or claims that arise from their services, and their obligation to indemnify you for any such liabilities. You want to have a reasonable and proportionate liability and indemnification clause that covers the vendor's responsibility for any harm or risk that they cause or contribute to, and that compensates you for any such harm or risk. You also want to have an insurance policy that covers the vendor's potential liabilities and indemnities.

6 Force majeure and contingency

A sixth contract term to negotiate for renewal is the force majeure and contingency clause. This clause defines what constitutes a force majeure event, which is an unforeseeable and unavoidable circumstance that prevents the vendor from fulfilling their obligations, and what contingency plans will be implemented in case of such an event. You want to have a specific and narrow force majeure clause that excludes any predictable or preventable events, and a robust and realistic contingency clause that minimizes the impact and disruption of any force majeure events. You also want to have a communication protocol that ensures the vendor informs you promptly and accurately of any force majeure events and contingency actions.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?