Negotiating a Fair Contract
for Software and Services
John Lateulere
March 27,2007
CSMS - Savannah
IANAL
March 27,2007
CSMS - Savannah
But …
• We all have to deal with contracts
• Apply a critical eye to vendor supplied
contracts
• Most contracts are written to their business
advantage
• Consult with counsel
March 27,2007
CSMS - Savannah
It’s NOT a War
• Vendors want to sell you their product
• They are often willing to change their
standard contract
• If you don’t ask …
• But you may need the sledge hammer
approach (legal counsel)
March 27,2007
CSMS - Savannah
To Protect – Them and Me
• All contract references to the company
have been replaced with The Company
• Modified identifiable product information
March 27,2007
CSMS - Savannah
Committed Services
As long as THE COMPANY were ready, willing and able
to provide the Committed Services in the time period
specified in Exhibit 1, then Licensee’s failure to use
the Committed Services within that time period will
not excuse Licensee’s obligation to pay THE
COMPANY the total fees for the Committed Services,
but will excuse THE COMPANY’s obligation to
provide any unused Committed Services upon the
expiration of that time period.
March 27,2007
CSMS - Savannah
Negotiated Langauge
Licensee will be obligated to pay THE
COMPANY for such services as if THE
COMPANY had performed such services on
the date scheduled, unless Licensee has
notified THE COMPANY that Licensee would
like to reschedule or cancel the provision of
such services at least thirtyfifteen (3015)
days prior to the date which THE COMPANY
is scheduled to perform such services
March 27,2007
CSMS - Savannah
… And had deleted
• Without limiting the foregoing, nothing in
this Section 4(f) will act in any way to
reduce Licensee’s obligation to THE
COMPANY in connection with any
Committed Services.
• The Commited Services definition didn’t
exist anymore
March 27,2007
CSMS - Savannah
What documentation?
• “documentation” used in freely in the
contract but not defined
• we had a definition added to the
definitions section
• Had a list of documentation appended
to the contract
March 27,2007
CSMS - Savannah
Hey we have “confidential”
information too!
• As defined confidential information was
one sided
• Confidential Information of Licensee
includes all “educational records” as
that term is defined in 20 U.S.C. 1232
(Family Educational Rights and
Privacy Act).
March 27,2007
CSMS - Savannah
The License
License. Subject to the terms and conditions of
this Agreement, THE COMPANY grants
Licensee a perpetual, non-exclusive, nontransferable (except as provided herein)
license to use and copy for use the Licensed
Software on the Equipment within the United
States of America for Licensee’s own, noncommercial internal computing operations.
March 27,2007
CSMS - Savannah
Test vs. Prod vs. Training?
Object Code. Licensee has right to use the
Licensed Software in Object Code form.
Licensee also has the right to use the
Licensed Software in Object Code form
temporarily on another THE COMPANYsupported configuration, for testing and
disaster recovery of Licensee’s computer
operations
March 27,2007
CSMS - Savannah
Payments and Schedules
• PAYMENT OF LICENSE FEE: The
Total License Fee is due on the
Execution Date.
• Execution date was February;
installation would be in July
March 27,2007
CSMS - Savannah
PAYMENT OF LICENSE FEE: The Total
License Fee shall be due in
accordance with the following
schedule:
March 27,2007
CSMS - Savannah
•
35% of the Total License Fee shall
be due not later than the Execution
Date.
•
40% of the Total License Fee shall
be due not later than 90 days after
the Execution Date.
•
25% of the Total License Fee shall
be due not later than 150 days after
the Execution Date.
March 27,2007
CSMS - Savannah
Services Payments
Licensee will remit payment for the Fixed
Fee Services set forth in Table 2, …, as
follows: fifty percent (50%) on the
Execution Date and the remaining fifty
percent (50%) by not later than six (6)
months after the Execution Date.
March 27,2007
CSMS - Savannah
Much Better
Licensee will remit payment for all other
Fixed Fee Services (a total of
$XXX,XXX) set forth in Table 2 as
follows: in eight (8) equal and
successive quarterly installments of
$XXX,XXX per installment, with the first
such installment to be due to THE
COMPANY by not later than February
1, 2006.
March 27,2007
CSMS - Savannah
This payment schedule is based on the
presumption that THE COMPANY will provide
an equal amount of Fixed Fee Services hours
each quarter throughout the Services Period.
To the extent Fixed Fee Services are
rendered on a more accelerated basis during
the Services Period, THE COMPANY
reserves the right to adjust the payment
amounts above (without increasing the Total
Fixed Fee Services Fee), upon written notice
to Licensee, to more accurately reflect the
rate at which Fixed Fee Services are being
rendered during the Services Period
March 27,2007
CSMS - Savannah
We added …
If fewer hours are expended than
expected during a given period, the
payment for that period will be
adjusted downward.
March 27,2007
CSMS - Savannah
Although THE COMPANY’s obligation to
provide these services for the Fixed Fee
set forth in Table 2 is subject to the time
limitation provided in Table 2, subject to
the parties’ mutual agreement set forth in
a writing signed by both parties, and
subject to the availability of THE
COMPANY resources, THE COMPANY
shall provide additional services as may
be necessary to complete all Data
Migration tasks for additional fees at THE
COMPANY’s then-prevailing rates.
March 27,2007
CSMS - Savannah
Also added:
In the event the assignment of the THE
COMPANY Project Manager must
change, Licensee shall have the right
to pre-approve the new Project
Manager, which approval shall not be
unreasonably delayed or withheld.
March 27,2007
CSMS - Savannah
1 year = 7 months
THE COMPANY will provide: an
aggregate of 660 service hours of
“Short Term” Remote Database
Administration Services and on-going
support for the THE COMPANY
Baseline Component Systems. Service
hours must be used within a twelvemonth service period from the
Execution Date
March 27,2007
CSMS - Savannah
1 year = 12 months
Execution date changed to:
date of installation of the Licensed
Software
March 27,2007
CSMS - Savannah
Severability – Jurisdiction
• Changed to reflect The Company
agrees to the federal court in our state
• Had been subject to the laws of their
home state
March 27,2007
CSMS - Savannah
Limited Liability
The COMPANY’S LIABILITY IN
CONNECTION WITH THE LICENSED
SOFTWARE, ANY SERVICES, THIS
LICENSE OR ANY OTHER MATTER
RELATING TO THIS AGREEMENT WILL
NOT EXCEED THE FEE THAT LICENSEE
ACTUALLY PAID … FOR THE
COMPONENT SYSTEM OR SERVICES
GIVING RISE TO THE LIABILITY.
March 27,2007
CSMS - Savannah
A little less Limited
THE COMPANY’S LIABILITY IN
CONNECTION WITH THE LICENSED
SOFTWARE, ANY SERVICES, THIS
LICENSE OR ANY OTHER MATTER
RELATING TO THIS AGREEMENT WILL
NOT EXCEED THE FULL AMOUNT OF ALL
FEES ACTUALLY PAID BY LICENSEE FOR
THE BASELINE COMPONENT SYSTEMS
AND THE SERVICES
March 27,2007
CSMS - Savannah
And for other components
WITH REGARD TO ANY COMPONENT SYSTEMS OR
SERVICES THAT LICENSEE OBTAINS FROM THE
COMPANY SUBSEQUENT TO THE EXECUTION
DATE,THE COMPANY’S LIABILITY IN
CONNECTION THEREWITH OR WITH ANY OTHER
MATTER RELATING TO THE AMENDMENT/WORK
ORDER PURSUANT TO WHICH SUCH
COMPONENT SYSTEMS/SERVICES ARE BEING
OBTAINED WILL NOT EXCEED THE FULL
AMOUNT OF ALL FEES ACTUALLY PAID BY
LICENSEE FOR THE BASELINE
COMPONENT SYSTEMS
March 27,2007
CSMS - Savannah
What will it run on?
Added:
THE COMPANY confirms that it
supports the use of the Licensed
Software on the configuration set
forth in Attachment B.
March 27,2007
CSMS - Savannah
You can find the presentation at:
http://www.otterbein.edu/home/fac
/jhnfltlr/csms2007.htm
March 27,2007
CSMS - Savannah