We often recommend and use a modular approach to drafting documents (like IT contracts, agreements and policies). Akin to building a document out of lego blocks. Not always, but often. It does not suit every agreement nor every offering. We find that the following are some of the benefits to using this object orientated approach:
- Sign documents faster
- Avoid protracted negotiations
- Quicker and easier to generate documents and conclude agreements
- Find what you are looking for easily
- Mistakes and unauthorised amendments are reduced
- Redundancy is avoided
- Inconsistencies become impossible
So what is a Modular Approach?
There are usually two separate documents. The commercial (or variable) terms and general (or legal) terms are separated.
- The commercial terms contain the specific commercial details of the relationship. For example, what will be provided, what is the fee, when will the fee be paid. They are the things the parties are usually most interested in. Words are mainly defined in the commercials rather than the general terms. Parties and witnesses sign on the cover page, which means that they know where to sign and it is easier to prove that there is a binding agreement. The commercial terms incorporate the general terms by reference.
- The general terms deal with the high-level generic legal issues between the parties. Things like, the law that governs their relationship, how disputes will be resolved, what happens if a party is in breach. Tables of contents and indexes can be included to make the terms more accessible.
What are the benefits?
This has numerous benefits:
- The business people only need to consider the short commercial terms and therefore the commercial terms get signed faster without getting into a protracted negotiation.
- The parties can dispense with the general terms necessary for conducting business at the beginning of their working relationship. This means that the parties needn’t worry about concluding the general terms every time a specific service is required by the customer. In other words, the general terms allow for an ongoing relationship between the parties, which facilitates a productive working relationship.
- The commercial terms, which are of most interest, are easy to find.
- Amendments only have to be made to the commercial terms, reducing the number of mistakes and unauthorised amendments.
- The other party thinks that the general terms are not negotiable.
- The general terms do not need to be signed or initialled by the parties – they are incorporated into the commercial terms by reference. It is faster and easier to conclude an agreement.
- Flexibility is achieved. As and when new goods or services are to be provided, the parties need only conclude a new commercial terms. The parties are able to agree on specific terms that are to apply to specific goods or services.
This structure mirrors the structure of most online agreements – a web-based form with terms. Templates are therefore future proof. We can provide you with Customer Agreement templates.