Navigating an IT agreement is like piecing together a jigsaw puzzle. It’s multi-layered, intricate, and prone to missing connections. In the age of digital contracts, order of precedence is important. Think about it: IT contracts are complex and can span multiple documents, have multiple drafters and lack unified review. That’s why clarity around IT agreement precedence is important for managing a landscape rife with inconsistencies and ambiguities.

Purpose and challenges of the order of precedence clause

Order of precedence clauses guide you through contract ambiguities by establishing a hierarchy or priority amongst documents. While order of precedence can be useful, this clause can also create challenges in IT contracts, for example:

  • Even with precedence established, ambiguities may persist within individual documents.
  • Different sections might address similar concepts, creating potential overlaps and disagreements.
  • Without a holistic contract review, these clauses may create unforeseen consequences.
  • Recycling content from older contracts might introduce outdated or irrelevant terms, further complicating matters.

Understanding the myriad documents that comprise a contract and their structure is pivotal. General terms and conditions, known as operative provisions, often reference schedules and may refer to other standalone documents such as appendices, annexures or other agreements. This multi-document structure amplifies the risk of inconsistencies. That’s why it’s important to get precedence clauses right, because they help delineate a clear pecking order when conflicts arise.

Does a higher standards clause improve IT agreement precedence clarity?

At a glance, a higher standards clause might appear as a knight in shining armour ready to rescue you from the legal consequences of having ambiguous or inconsistent contractual clauses. For example, your IT contract can include a clause that says:

“In the event of any inconsistencies in the requirements set out in this agreement or its associated documents, the most stringent requirement will prevail. The parties agree to always adhere to the higher standard during the term of this agreement. If either party requires an interpretation of the ‘higher standard’, both parties will together consult an independent third-party expert in the field of the subject matter, and their decision will be binding.”

Instead of establishing a pecking order,  the clause states that if multiple standards of performance or care are referenced in a contract, the party must always meet the most stringent one.  The higher standards clause improves precedent clarity, but it can also create issues in contracting, as determining the “higher standard” is subjective and the clause may seem to often favour one party over another. So a party may resist including the clause in your IT contract.

Recommendations

To avoid frustrations in the vexing puzzle of the order of precedence when it comes to IT agreements, we recommend the following:

  • Engage all teams early on and allocate sufficient resources and time for a thorough review. Cross-referencing to eliminate redundancy is crucial.
  • When an exhaustive review isn’t possible, making an informed choice between the order-of-precedence clause and the higher-standards clause is essential. Mixing them might only muddle the waters further.
  • While both clauses have their merits, combining them indiscriminately, except in niche scenarios, can spell disaster.

Actions you can take next

In the digital age, clarity on IT agreement precedence in multifaceted contracts is increasingly important. You have several options. Proper understanding and apt usage of the order of precedence and its alternatives ensure transparent, efficient business dealings. You can: