AS A PROVIDER OF DEVELOPMENT SERVICES, YOU NEED CONTRACT CLAUSES THAT ARE INDIVIDUALLY TAILORED TO YOUR CUSTOMERS’ NEEDS. HOW DOES THAT WORK WITHOUT HAVING TO ASK THE LAWYER FOR EVERY LITTLE PIECE OF INFORMATION?
An example: A company specialising in exhibition stand construction is increasingly developing highly engineered exhibits. What used to be pure carpentry work are now exhibits with multimedia applications. Standard hardware and software are used, partly on an open source basis, but frequently also with proprietary programming services. The new IP created for this project therefore covers an enormous bandwidth from designs to computer programs. Customers, increasingly large international groups, regularly demand comprehensive rights of use, often by very far-reaching standard contractual clauses. Depending on the commercial agreement and the type of works to be developed, this is acceptable for our sample company, but sometimes it is not.
THE PROBLEM: THE INDIVIDUAL CASE
The expertise that has been built up over years and proprietary tools, which are also to be used profitably for future orders of other customers, must not be lost for our company by applying improper sample clauses of customers. It must therefore be defined precisely and individually in the contract which rights of use the customer is to receive and in what form. Should the customer be allowed to use the exhibit or the control software developed for it for trade fairs, or is the customer permitted to duplicate or process it and distribute it to other companies, i.e., be able to become a competitor? In addition, the company can only give the customer what it actually owns in terms of the scope of rights, which is why the chain of rights, e.g., from the software programmer who has been commissioned as a freelancer to the company, must always be taken into account. Promising all-inclusive exclusive rights of use for software that contains open source code is simply not acceptable. Perhaps rights of use should be limited by territory, and so on.
In order to protect one’s business and not have to deal with the customer’s long-winding terms and conditions every time, businesses would prefer to develop their own terms and conditions and use them for customers. But how can all these differing, individual cases put in model contract clauses?
THE SOLUTION: A MODULAR TERMS AND CONDITIONS SYSTEM
Of course, legal certainty can only be achieved by taking a close look at each individual case with its specifics and then draw up contract provisions adapted to it. This is like a tailor-made suit, the ideal case. But: From a lawyer’s point of view, the same questions and problems arise over and over again in comparable cases. The contractual clauses that are ultimately used are similar to each other. Then it is possible to develop standards that are tailored to the client and the business – specialised ready-made goods, so to speak.
HOW DOES THAT WORK?
Together, lawyer and client in conversation:
- limiting regularly occurring contract constellations,
- Identifying of the company objectives and
- defining the appropriate contractual arrangements
- drafting of standard clauses in such a way that legal laymen can at least largely compile them solely on the basis of the specific business request, i.e.
- labelling of standard, alternative and optional regulations, and
- inclusion of explanations in the samples in order to provide guidance to clients.
In the example, this applies among others to the definition of the “works” to which rights are to be granted, the differentiation from the tools and background IP remaining with the provider, the scope of rights of use, restrictions in terms of content, time or space, the time at which rights are granted, remuneration systems, liability and warranties, etc. The definition of the “works” to which the rights are to be granted is also a matter of the definition of the “works” themselves.
THE ADVANTAGE: TIME AND COST SAVINGS
Clients can use the construction kit to limit the set of contract clauses that is useful or necessary for the individual case. Special questions are then discussed with the lawyer, who makes a final check for plausibility, completeness and lawfulness before the offer or contract is sent to the customer. This saves money, but above all time, which is often scarce when preparing an offer; after all, there are also commercial issues for the client to deal with.
Such contract “building blocks” from the supplier’s point of view are of course also possible and useful in the IT sector, such as in software development and provision, or for any type of commercial contract.
Do you have any additional questions?