When you are a vendor providing goods/services to a customer, the most critical issues in a SOW are those relating to the description of services, payment, and the terms of acceptance. These provisions should be written with clarity and specificity. The remainder of the terms, while important, do not require the same level of detail. To help guide the providing party in its review or preparation of a SOW, consider the following: 

As discussed in Part 1, a SOW should tell a story with enough detail that a person who is unfamiliar with the deal could rely on it to understand the intentions of the parties, including such key terms as products/services, deliverables and pricing.

Statements of Work (SOWs) can easily be considered one of the “workhorses” of commercial contracts, documenting key business terms like price and deliverables between parties who, in many cases, have previously entered into a master services agreement with each other. Regardless of the nomenclature (SOWs, order forms, schedules, exhibits, work orders, etc.), business teams should carefully prepare and/or review a SOW’s first draft to ensure that it accurately captures their intentions and expectations, even if a lawyer will ultimately review it. In this 3-part series, I will explore the role of the SOW and its key provisions for each party. 

This is the first post in a 3-part series.

When business negotiations are in full swing, clients are typically focused on bottom line business objectives, content to leave the lawyers to hash out standard legal provisions. However, certain legal provisions can also impact business risk, enough so that clients should understand how they work and what can be done to avoid unnecessary risk. One such provision that often receives little attention from clients is contract damages. However, the reality is that negotiating the scope of allowable damages requires a strategic examination of the risks inherent in the transaction and their possible impact on your position in the event of a breach of contract.

Our team negotiates a lot of contracts and works with many clients across a broad range of industries. Over the years, we've noticed a varied approach to the contract negotiation process.  Some clients are highly involved, participating on every call and paying close attention to details, while others prefer to remain in the background and jump in only when directed by their lawyer.  However, the vast majority of business people fall somewhere in the middle – leading the negotiation of core terms such as price and payment terms – then deferring to legal counsel to handle provisions such as indemnification, limitation on liability and other legal boilerplate.

Starting your own business can be a mammoth undertaking, especially when it comes to managing expenses while working (often tirelessly) to build momentum, and eventually, a revenue stream. Many new business owners grapple with the right time to hire an attorney. Although the thought of engaging an attorney from Day 1 may seem cost-prohibitive, it is a smart business decision even for the smallest companies. Of course, you’ll want a lawyer who is fairly-priced and efficient, and who has experience working with startups.

It’s no surprise that start-ups and small businesses are mindful of their budgets. Occasionally, however, cost-consciousness can lead a company to question the need for a contract or contract review, particularly when a transaction involves a small dollar amount or simple service offering. By assuming a lower risk of liability in these situations, the cost of hiring a lawyer to write, or review, a contract can seem unnecessary. This is a misconception.

How to review support terms for Software-as-a-Service (SaaS) or Online Subscription Services

Most online subscription services or SaaS agreements include provisions regarding support, maintenance, uptime and repairs. These terms cover how often the services work, how often they might experience “downtime” or unavailability, and what to do when that occurs (who do you contact, how quickly must they respond, etc.). These terms are often in a separate document or exhibit, typically called a Service Level Agreement or SLA.