By: Jill Miller, RSPA General Counsel
In our ever-changing industry, VAR and ISV partnerships lead to many different forms of agreements with unique business relationship terms. The best way to ensure each agreement is beneficial to you is to review and negotiate the terms of the agreement. Now, you may be wondering what you are looking for during this review. Sometimes, the key may be what you don’t see. It may not be about what’s in the agreement but rather what’s not in the agreement. One missing word or provision can make all the difference.
To help RSPA members perform a detailed contract review, we have prepared a Master Agreement Checklist to utilize before signing any agreement. Although many of us have worked in this industry for decades, we don’t always remember to hit every significant point when reviewing a business contract. This checklist will assist in reducing common mistakes and ensure consistency in all your agreements.
I’ll offer a summary of this tool here. You can access the full checklist in the members-only Legal Documents section of the RSPA website at www.GoRSPA.org/legal-documents.
The Master Agreement Checklist emphasizes:
- Services to be performed by both parties
- How, when, and what amounts will be paid
- Term of the agreement and termination rights
- Confidential information
- Choice of law and venue to be used in the event of a dispute between the parties
- Assignment of the agreement
- Liability for each party
As you review these categories, you should consider, “How are they addressed?” “Are they addressed at all?” “Is the language mutual?” “What has been a pain point for my business in other agreements?” “Do I intend to sell my business and need the ability to assign the agreement to a buyer?” Analysis of these key points will take your agreement review to the next level.
The term affects other elements of your agreement. For example, if you have favorable pricing, you may want a longer term to lock in pricing for an extended period of time. On the other hand, if there is a non-solicitation obligation related to your customers during the term of your agreement, you may want a shorter term so if the relationship is not working out, you can quickly pivot and move your customers to another service provider.
The agreement should also clearly define the services that are to be provided. Many agreements fall short on describing what the parties are obligated to provide to the other party and to the customers. At a minimum, the agreement should detail how customer service is handled, who will be billing the customer, and the minimum service level obligations of each party. If services are not detailed in the agreement, it will put both parties at a disadvantage because customer service will definitely be negatively impacted.
How compensation is measured and paid is probably the most important provision of an agreement. You should be sure that you are paid by a certain day of each month, and you should receive reports to allow you to reconcile your payments. If your partner is getting paid, you should get paid, even after expiration of the agreement. Both parties should have a specified period of time to dispute a payment. Both parties should be reconciling payments on a monthly basis; nobody wants another party calling up a year later disputing a payment.
Finally, even if you think you have seen an agreement before, review it again because your business may have changed, and vendors are also updating their agreements based on their experiences. I hope you find the Master Agreement Checklist useful in evaluating your business relationships.