Buyer Beware...Technology Contracts

You have found the technology vendor of your dreams—congratulations! Their price sounds fair, their experience seems extensive, and they have given you a cool pen that lights up! Where do you sign??

 
Tizgee has found that many of our clients are so eager to begin work on their projects that they neglect to read or fully understand the terms of their contracts. Suddenly, that wonderful sales person has disappeared and has left you to work with an inflexible project manager, a developer who doesn’t understand your requirements, and big invoices that appear regularly every month for work you either can’t use or didn’t authorize. You want to terminate your contract, but you are told that you have signed a three-year agreement in order to get that “special” pricing. Your service has been down for 3 days, but no one is returning your calls. What can you do?
 
If your vendor is not contractually obligated to support these issues, the sad answer is often “nothing.” In addition to finding the best technology vendors and products to meet your needs, Tizgee offers contract management services to help you obtain a contract that protects your needs and your money. We negotiate the best pricing possible while ensuring that you are never locked into a contract. We stipulate terms of ongoing support so a vendor can’t “cut and run” on you without facing financial consequences. 
 
What are the basics you should look for when reviewing a technology contract? We recommend the following:
 
  • Every contract should be written with a “with or without cause” exit clause. This allows you to walk away from a contract as long as you provide the notification listed in the terms of the contract (usually 60 or 90 days written notification) without having to provide a reason for your termination. Many contracts require that a “material breach” of contract be cited in order for you to terminate. This is very difficult to prove and may require expensive legal proceedings so having the ability to terminate without cause is critical.
  • Every technology contract that involves providing a product should outline a Service Level Agreement (SLA) indicating how long it will take you to get support in case of problems or outages, how you obtain that support, and what financial penalties the vendor will pay for extended outages.
  • Do not accept an “auto-renewal” clause on your contract. Few busy people remember when a contract comes up for renewal. Dissatisfied with your vendor? Unfortunately, you have just been auto-renewed for another year. Ensure that your contract requires your written approval prior to being renewed.
 
These are just a few tips to help you avoid the pitfalls associated with technology contracts. If you need more guidance about choosing either a technology product or vendor or evaluating a technology, contact us to set up a free assessment of your needs.
 
By Joey M. Gupta on May 28, 2015 | Topics: Technology Consulting

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