Pria ChettyThe Art of Drafting (IT Service) Contracts:
A few notes for the new drafter of contracts, particularly IT service contracts:
Contracts construct a story. This means that they should tell a complete story. Use
the how, what, when, where, why principles to identify whether pieces of the story are
missing/ incomplete. The service may be delivered to the client at the client’s office
locations in 5 provinces or remotely. The service may be delivered for an initial period
of 12 months renewable for additional 12 month periods commencing on the first day
of each month. The service may be delivered by installing equipment at the client’s
premises or the client accessing remote services using their own equipment (and
network).
Try to be chronological. Are there any qualifying criteria for signing up for the
service? How do you sign up for the service? What will you get during the service?
How will the service terminate? Are there any legal matters that survive termination
of the service?
When the story is established, understand the laws that apply to the contract? If you
are drafting for the supplier, who is the supplier of the service? What is the nature of
their business? What sector specific regulatory or compliance obligations should be
dealt with? Privacy? Anti-bribery? Labour?
Insert definitions that will add clarity to the contract and address verbosity in the
contract. Particularly for ICT related contracts, good definitions make good contracts
that translate technical subject matter into meaningful explanations of inclusions and
exclusions of the service. Be consistent in your use of definitions.
Thread legal risk mitigation clauses. Often the concerns of the client raised in the first
meeting would establish their key areas of risk and legal risk? Provide for adequate
but responsible indemnifications, warranties and limitations of liability.
In addition to termination clauses, early termination options need to be agreed. Under
what circumstances will either party be entitle to terminate the contract with reduced
or no penalties? Particularly because of consumer protection laws that restrict early
termination penalties, these clauses need to well considered and lawful.
Establish whether the general clauses are appropriate and complete. Are the
governing laws and jurisdiction appropriate to the nature of the particular service and
supplier? Does the contract provide for electronic notices (legal correspondence)?
Are the force majeure clauses which deal with contractual breaches born out of
circumstances beyond the control of the parties adequate and relevant? Is the client
particularly prone to a particular risk such as the non-scheduled load shedding or
loss of resources?
Finally, a strategic opportunity is presented by the drafting of a contract for a client,
there are certain permissions and consents that have enduring strategic purpose for
the client and these can be included (within reason). Ultimately however, the contract
must form the basis of a good (and durable) relationship between the parties. This
place meaningful consensus and construction as the principal pursuits.