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Reading Partner Contracts

February 10, 2011 - 0 Comments

Guest Post by Contributing Author Ken Presti

Okay, so you’ve shopped around, evaluated partners, evaluated solutions, and checked out the technology vendors. You think you’ve found what you’re looking for, and now it’s time to do the paperwork. Your expectations of what comes next should be largely dependent on the types of services to be rendered.

On one level, we can segment the contracts into two basic categories: The first category would be contracts to enhance and expand your IT infrastructure; the second category would be contracts to keep your IT infrastructure up and running. Of course, the two are often combined into a unified contract, most often in situations where the IT capabilities are being expanded, and it just makes sense to add the back-end maintenance piece. Sometimes maintenance will be managed through some sort of master agreement that also puts in place most of the primary terms and conditions for any subsequent additional projects that could then be commissioned with relatively simple paperwork.

Some of the key points to consider when reviewing any of these contracts would include the following:

Does the contract adequately describe the services to be rendered? In projects for network upgrades, you’ll definitely need to see a pretty formidable task list. Should the contract include training your people to operate the new gear? That answer will depend on the nature of the upgrade, but it’s something to think about. In maintenance contracts, individual tasks can be a lot more difficult to specify. The main objective is that they will address issues as they occur.

Service Level Agreement (SLA): Frequent readers have seen me bring up this component of service contracts a few times before. SLAs dictate things like promised levels of uptime, and how long the partner is are allowed to make you wait before something gets fixed. Prices will move based on how much attention and performance you get.

Exclusivity: There will certainly be exclusivity in anything that is project based. That kind of goes without saying. But ongoing maintenance contracts do not necessarily need to be exclusive, and, in most cases, shouldn’t be.

Can you cancel the contract, if you so choose? The answer varies, based on the circumstances. In project-oriented contracts, there is often a cancellation fee designed to help the partner recoup lost time and resources. In service contracts, there is sometimes more flexibility, except in situations where the partner is actually reselling the service contract of a particular vendor. It’s better to be sure of your purchase decision at the time it is made than to try to cancel it after the fact.

Can the partner cancel you, or assign your contract to another partner? If so, under what circumstances? You’re more likely to see subcontractors in situations that involve remote offices, or technologies in which the prime partner is not particularly proficient. In such cases, you’ll need to do some diligence to ensure that the partner is a good choice, and also to make sure that the prime partner retains full responsibility. Taking this step can avoid a lot of finger-pointing down the road.

In what ways does the partner seek to limit its liability in the event that something goes wrong? Here’s a good place for hidden landmines. Read this section at least twice!

Should you have an attorney review the contract? I would never advise against this. But the degree to which it is necessary partly depends on the clarity of the contract language, and whether the contract is bound by the laws of a state different from the one(s) where the partner or customer are headquartered.

Speaking of attorneys…. Everything I’ve written here is based on industry observations and the accounts of people who have traveled this road many times. I should add that nothing here is offered as legal advice. I’m not a lawyer. I don’t even play one on TV.

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