Devoted to purchasing, purchasing agents, and all things related

Contract Discussion Disclaimer:  I'm not a lawyer, nor do I play one on TV.  (Note to David E Kelly: I'd love to play a lawyer on TV, though, so please feel free to get in contact with me when creating your next show.)  In this post, I will share with you my personal experiences in drafting and negotiating contract language.

Whose contract should you use?  Both sides usually want their own standard contract used as it is often written advantageously to them.  Generally, the larger the company, the more insistent the reps are that theirs is the one they must use. 

I think the person who is spending the money is the one who should determine whose contract is used.  I have been on Purchasing teams that gave in and used the vendor's contract.  I've seen this mainly in technology purchases.

Contracts start off with the full legal names and addresses of the parties involved.  Then there is a section that defines terms which will be used in the document. 

Next comes the term of agreement.  This one can be a big point of contention.  Usually, the Buyer would state in the original RFP the company's intended term length.  The sales reps will want to extend this term as long as possible to guarantee revenue.  The Buyer has to balance locking in rates against the educated guess of whether they will go up or down (and by how) much in the future.  An honest sales rep will help the Buyer with this assessment.  Another factor the Buyer also has to determine is what other projects will be coming up in the future and how efficient it is to work on this again one in a given length of time.

The next section defines what products and/or services the contracts covers.  A separate attachment called the Scope of Work is usually used to spell this out in more detail.  The Scope of Work is often taken almost verbatim from the original RFP.

In Part 2 - Pricing, Payment, and Shipment

This series gives you some basic knowledge of contracts.  If you missed any of the other posts, here are the links:

Who Needs A Contract?   What is a Contract?   Anatomy of a Contract - Part 1   Anatomy of a Contract -  Part 2   Anatomy of a Contract  - Part 3   Anatomy of a Contract - Part 4