IT Business Contracts and Vendor Contracts

There are two aspects to this issue: vendor contracts and your contracts. One of the first ways I start to do work for new clients is when they have a contract problem with one of the vendors they’ve been using since formation. Generally, clients begin to have problems with price escalation clauses, long term contracts with onerous early termination clauses, or license compliance issues. When starting out, many companies negotiate on one issue only: price. When reviewing vendor contracts you need to look at some other contract terms with the understanding that as your business grows, the contract should grow with you. So while your bandwidth vendor may say “sign this 5 year contract, and we’ll be your long term partner” you need to make sure that the contract is flexible enough to respond to changing business needs, and not lock you in to a static contract that you’ll have to pay to exit.

You also need to create contracts for your customers. For most new companies, this means stealing the contract used by one of the companies they aspire to be. Putting aside the ethical issues associated with this, the main problem is that most larger companies have tailored their contracts to meet their unique needs. Using their contract exposes you to risks that the company may have decided to accept and insure against. It also leads to a situation where your contract does not support your brand. I am willing to work with new companies to design contracts that work for the company and have creative fee arrangements that may make a good contract feasible.