What I Wish I Knew Before I Signed that Contract

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What I Wish I Knew Before I Signed
That Contract
2016 InnoTech Dallas
April 6, 2016
Gregory Wilson

Steve Case Celebrating

A.O.L. acquires Time Warner
Deal Details
 $182B purchase price
 Largest deal in history
 New Company worth $350B
 Annual Revenue $30B

Steve Case Years Later

A.O.L. acquires Time Warner
Deal Results
 Dot com bubble burst
 Economy went into a recession
 AOL takes a goodwill write-off $99B in 2002
 AOL valuation goes to $20B

Common oversights by IT in contracts negotiations
 Force Majeure
 Limits of Liability
 Intellectual Property Infringement Indemnity
 Order Acceptance Terms
 Infringement Indemnity
 License Terms
 Termination
 Acceptance
 Customer Use
 Remedy

Force Majeure

Force Majeure
 Fire
 Flood
 Loss of Power
 Loss of Connectivity

Limits of Liability

Limits of Liability
 Disaster Recovery
 Data Security
 Cumulative Liability Amount

Infringement Indemnity
 Who decides?
 What’s reasonable?
 What happens if “the
never will happen”
happens?
 Sole & Exclusive remedy

Subscription Terms
 Automatic renewal terms
 Termination notification timeframe
 Price increase % at renewal
 Price Benchmarking

Data Deletion at Termination
 Certificate of
Destruction
 Liability

Order Acceptance
 Remove hyperlinks
 What document controls?

License Terms

License Terms
 Territory Restrictions
 Ordinary Course of Business Restrictions
 License Nontransferable

Affiliate and Customer Use
 How is a customer defined?
 Can contractors/vendors use this product?
 Who can review the output?

Acceptance

Remedy

Remedy
 What if the repair is not acceptable?
 How many attempts are they allowed?
 How is the replacement product determined?
 What say do I have in the repair/replacement decision?

No Setoff
 Dispute Resolution
 What if it doesn’t work?
 Past, present or future claim

Expense Reimbursement

Expense Reimbursement
 10% Processing and Administrative Fee?
 Ensure preapproval
 Expense policy

SLA Credits

SLA Credits
 Credit for 100% uptime?
 Downtime definition
 Termination language for repeatedly missed SLAs
 Missed SLAs penalties
 Calculations for these metrics
 When does the clock start and stop?
 How do you receive your credit?

Contractual Terms

Contractual Terms
 Master Agreement supersedes all previous agreements
 Must be signed by both parties
 Entire understanding
 Each schedule supersedes all previous schedules

Revenue Recognition
Recognize Revenue - Recognizing revenue when each element of an
arrangement satisfies the following basic revenue recognition criteria:
 persuasive evidence of an arrangement exists,
 delivery has occurred,
 the software vendor’s fee is fixed or determinable
 collectability is probable

Questions

What I Wish I Knew Before I Signed that Contract

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