David & Goliath

Navigating contracts with big corporates

When working with SMEs, I often see this dynamic: a small and growing business gets an exciting opportunity with a big company, only to face a daunting set of one-sided legal terms.

That was the case for Great Potential Ltd, a scaling SME who was given the chance to work with Big Hitter Ltd. They were thrilled about the opportunity and gladly agreed to contract on Big Hitter’s standard terms and conditions of purchase.

Backstory

Great Potential recognised the need to understand what they were signing. They asked me to do a red flag review: “Just the deal breaker points, we don’t want many changes.”

I open the contract and it’s 100 pages long, in size 8 font. It is generic, covering almost every kind of purchase of goods and services. At least 50% of the content isn’t relevant to the services that Great Potential will be providing. The contract also anticipates a deal that is ten times bigger and crucially, ten times riskier for Big Hitter than the one with Great Potential. It contains every kind of protection that their army of lawyers can think of, tightened and enhanced each year.

The value and gravitas of the contract with Big Hitter would propel Great Potential to the next level so signing the contract was absolutely essential for them.

So how did we get from a one-sided 100+ page document full of onerous terms and half completed schedules to a contract Great Potential can live with, having made informed decisions about the risks that are material to their business? And where did we get to on the deal breaker points?

Start strategically

We started by categorising the contract into three areas:

• Commercial – pricing, duration, termination
• Operational – service scope, deliverables, SLA
• Legal – liability, indemnities, intellectual property, data protection

Why this mattered

Great potential had been discussing the deal solo with Big Hitter for 3 months. So, to ensure commercial accuracy, they were best placed to check that what they had agreed was reflected in the contract (it wasn’t) and spot anything missing (quite a bit). If Great Potential had brought legal in sooner during the commercial discussions, I’d have been well placed to take that work off their plate, and I usually do this for clients.

To ensure operational accuracy, I worked with different internal teams on sections of the contract relevant to them. For example, I worked with the CFO/Finance team to ensure they were happy with the financial terms (invoicing frequency, payment period, payment disputes process, interest). A legal review is most useful when the right people in the business engage with it.

Identify the deal breaker points

“Deal breakers” differ by sector, company, transaction and context. It is very subjective. In a services contract, for some companies, their prime focus will be on negotiating the service levels, service credits and rate increases. Other clients will have additional key focuses such as confidentiality, rights to assign and provisions around change of control. All clients will normally (rightly) be conscious of liability caps and be very wary of indemnities.

Because I’d worked closely with Great Potential on many deals, I knew their business model and risk appetite – and could quickly identify provisions which were unacceptable.

Negotiate the deal breaker points

Here’s how we approached the most contentious clauses – and where we landed:

Termination for convenience

Starting position: Big Hitter’s contract allowed them to terminate the contract “at any time for any reason” on just 30 days’ notice undermining what was presented as a 3-year deal and what the pricing was based upon.

Big Hitter’s procurement team did not want to revisit the price yet dug their heels in and said they had to have this termination right in every supplier contract with no exceptions (even though there were comprehensive termination provisions for breach of contract/SLAs).

Negotiated outcome: In the end we agreed that the termination right wouldn’t apply until the final year and if exercised, Big Hitter would pay 50% of the fees payable for the remaining term. This capped Great Potential’s potential loss to a maximum of 1/6th of the contract value.

Takeaway: A 30-day termination clause can turn a 3-year contact into a rolling month-to-month deal. Always assess the commercial risk.

Payment disputes

Starting position: Normally a failure to pay charges due would be considered a breach of contract. But Big Hitter wanted the right to withhold any disputed charges, indefinitely, without any consequences. This posed serious cashflow risk for Great Potential.

Negotiated outcome: In the end, we introduced a formal payment dispute process with timeframes and agreed a form of wording which meant that non-payment was only not a breach of contract when the charges weren’t due under the contract.

Takeaway: Ensure payment disputes are time-bound and objective.

IP ownership

Starting position: Big Hitter’s contract had the effect of assigning ownership of new IP that was created  by Great Potential as part of the services to Big Hitter. They also contained an extremely wide licence which allowed them to use Great Potential’s existing IP however they liked for however long they liked. It was so wide it would have permitted Big Hitter to set up a rival service using Great Potential’s IP!

Negotiated outcome: This was a huge point for Great Potential whose main asset is its IP. We clarified to Big Hitter that IP ownership would remain with Great Potential. We also narrowed the scope of the licence to reflect the specific use case agreed in the negotiations.

Takeaway: This is often a try on and ought to be capable of amendment unless the services are genuinely bespoke and IP ownership was always expected to be part of the deal.

Controller or processor (data protection)

Starting position: Big Hitter’s contract named Great Potential as a data processor, but in reality, they acted as a data controller – with greater autonomy over data decision. Being incorrectly labelled as a data processor would have restricted Great Potential’s ability to manage the data, subcontract and innovate.

Negotiated outcome: We aligned the contract with the actual processing role preserving Great Potential’s operational flexibility.

Takeaway: Your role under data protection laws isn’t a choice – it must reflect the practical reality of how you operate – what data you collect, what you do with it and who you share it with.

Moral of the tale

• Don’t accept standard terms at face value—especially from large corporates. They’re designed to protect their interests, not yours.
• Pick your battles. Focus on clauses that materially affect your risk, cashflow, IP, or service delivery.
• Pre-empt key risks before legal terms are shared. If possible, agree deal principles in writing early on.
• Get internal input early. Contracts are cross-functional—finance, ops, and commercial leads must be involved
• Build a playbook of acceptable positions and common fallback language. It speeds up negotiations and reduces legal costs over time.

It is always worth requesting amendments to a Goliath’s contracts. SMEs can protect their interests without derailing the deal. Measured and well-supported requests are often more successful than you think.

If you’d like help developing your own negotiation playbook or reviewing a major contract, My Inhouse Lawyer is here to support you.