Tips for sales contracts

• Use standardised templates and playbooks

  Develop contract templates with pre-approved clauses and a playbook with agreed fallback positions (for use by your sales team or lawyer) to reduce drafting time and maintain consistency. Templates allow for quick customization while ensuring legal integrity. Regularly refining templates based on feedback from customers and legal changes can further streamline your process
  

• Use clear and concise language

  This is the start of a successful business relationship so avoid legal jargon and opt for plain language. This can help accelerate understanding and agreement between parties. If your purchaser understands the contract, it may mean they can bypass their own legal team for review

• Structure your agreement appropriately

  If key commercial points change from customer to customer (e.g. you operate a services business with different scopes of work) structure your agreements so that the key commercial points are dealt with in an Order Form with a standard set of legal terms that don’t need to change. If they are still negotiated, it be helpful to deal with variations within the Order Form so that you can more easily track changes for that customer and also over time across your contracts to help refine your templates going forward.

• Make your payment terms fair

  Be clear on your payment terms and consequences for late or missed payments. This should include how you will communicate late payment to the customer providing them an opportunity to remedy. If they are late or don’t pay you should make the consequences clear e.g. suspension of services or interest rates or fees to help encourage prompt payment. Automating invoicing and written reminders aligned with the agreed payment schedule can further enhance efficiency

• Look after your customer’s interests

  Ensure your template is compliant with all applicable legal and regulatory requirements to avoid future legal complications. Include clauses that require both parties to comply with laws relevant to the agreement, such as data protection. Reassure your customer by providing appropriate warranties that you hold necessary licenses and permits, that your product will meet the specification and the service levels that you are offering

• Include a limitation of liability clause

  Protect your business by limiting liability to a reasonable amount, such as the contract value or your insurance coverage limits. Always check any restrictions required by your insurer to ensure your standard terms (and negotiated deals) don’t invalidate your cover. Consider the level of mutuality that is appropriate and your justification for not having similar protections for the customer, as this can often be an area of pushback.

• Protect the crown jewels (yours and your customers)

  Safeguard your intellectual property and sensitive information by specifying clearly what is your IP and what information is confidential. Make clear any specific licence terms or permitted use for confidential information, such as those required by law or to professional advisors, to provide clarity. Incorporating mutual confidentiality clauses and information security protections and your accreditations (if applicable) to protect your customer’s data and commercial information can help build trust and efficiency in the contracting process.

• Avoid costly disputes when things go awry

  Include a dispute resolution mechanic which has a step-by-step process for resolving disagreements, starting from internal escalation to mediation or arbitration, to handle issues efficiently without litigation. Specify the choice of law and venue for dispute resolution to add clarity. Opting for alternative dispute can help settle disputes faster if they do arise and more privately than court litigation – which can help maintain relationships.

• A clean end to the relationship

  Define how and under what circumstances the agreement can be terminated by either party, including identifying breaches that allow for immediate termination, such as non-payment or insolvency. If appropriate make clear what auto-renewal terms apply to avoid surprising a customer – perhaps by including in your Order Form. If appropriate, you should also make clear if either party can terminate with notice for any reason, to add flexibility if this is appropriate.

• Engaging your lawyer early may help avoid costly negotiations

  Have your templates reviewed by a lawyer who can help tailor standard templates and processes to fit your businesses nuances. Getting this done upfront can help avoid protracted negotiations down the line and ensure you close deals faster whilst best mitigating risk. Review these templates yearly to ensure they are fine-tuned and kept up-to-date with how you operate and your evolving products and services.

We have plenty of expertise in this area. If you’d like some help, please feel free to get in touch