Externally provided IT Services play an increasingly important role in underpinning business operation. IT Hosting, IT service support, Software development and use of Software as a Service are all on the increase and it is essential that any agreements with IT service vendors are well constituted and above all fair and reasonable for both parties.
In the case of large organisations agreeing external IT service contracts of high value it is usual for a very significant investment in time and money to be made in Legal Services to achieve fully scrutinised, mutually acceptable contracts.
For smaller organisations with smaller contract values it is often the case that suppliers put forward their ‘standard terms’ which are then agreed by the client without reference to suitably qualified legal advice. While this may be a pragmatic approach it is important that in all cases organisations think very carefully about the potential impact of the service not being provided as expected when weighing up the level of scrutiny they are going to apply to the contract.
As a minimum the person responsible for the service should always take the time to read the contractual terms and discuss them with the vendor. Whilst some of the largest vendors may refuse to discuss terms which are ‘take them or leave them’ most small and mid-sized vendors are willing to spend time explaining their terms and perhaps modifying them if necessary.
Terms should be fair and reasonable for both parties and be clear about the commitments being made. If something seems unfair and upon challenge the response is ‘but that is standard in our industry!’ be wary, there are ‘standard contracts’ in the market that are written to be unbalanced in favour of the vendor. If confronted with such a contract it is even more important that the appropriate decision maker(s) in the organisation are fully aware and accepting of their liabilities when agreeing the deal.
