Have we designed our contracts to fail?

Har vi designet vores kontrakter til at fejle

Over the past 20 years, WorldCC has conducted annual surveys on the “Most Negotiated Terms,” posing the following two questions to its members: What terms do you spend the most time negotiating before the contract is signed? What terms do you spend the most time disputing after the contract is signed? In 2020, the survey analysis was expanded with an additional question: Which terms do you believe are the most important—in the sense of being most significant for your results or outcomes? The study has an interesting and thought-provoking conclusion (Figure 1): The terms most frequently prioritized for negotiation are not actually the same terms listed as the most important or most disputed.

Figure 1 WorldCC Top 10 Most Negotiated Topics:

On one hand, the study reveals that many negotiators focus on regulating what happens if things don’t go as planned (Limitation of Liability is the No. 1 most negotiated term). On the other hand, relatively less time is spent negotiating terms that can ensure things go as expected (delivery scope scores high on both most important and most disputed). Somewhat provocatively, one could say that negotiators negotiate based on an expectation that things will go wrong. Could it become a self-fulfilling prophecy?

Which terms should we focus on?

Perhaps, instead, we should actively start with the most important and most disputed terms when negotiating? In Figure 2, specific terms are suggested that they recommend prioritizing when negotiating IT contracts. These 10 areas are characterized by having a direct impact on the partner’s business case.

Figure 2 Top 10 Negotiation Topics in IT Contracts:

Contractus recommends proactively developing a contract strategy based on the topics in Figure 2. For example, you can advantageously create checklists and templates to ensure that the contractual scope is clearly and unambiguously defined.

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