It is essential for every company to have three key documents related to contracts:
1) Templates
2) Addendums
3) Playbooks
I will soon share downloadable samples of each.
1) Templates
These are complete documents that set out a company’s standard terms based on its internal policies, processes and position.
Templates streamline the contracting process, reduce contract cycle time and enhance legal protections through consistent legal terms. An efficient contracting process helps procurement build stronger partnerships with business units and vendors.
Templates should be complete and simple. They should have all necessary terms that are expected in most contracts. They should avoid one-sided terms and edge cases that get pushback from too many vendors and the process inefficient. The language should be simple so anyone can understand the purpose. Templates should evolve through iterations based on learnings from vendor negotiations and changes in internal expectations.
Generally, smaller vendors with less leverage are more likely to accept templates, and vice versa. Vendors will specialized services and contract terms, like most software vendors, are less likely to accept other templates and strongly prefer to use theirs.
2) Addendums
These are short templates that focus on a specific self-contained topic, such as ‘cybersecurity and privacy’ or ‘insurance’.
Addendums make contract templates modular and allow flexibility. They can be added to relevant contracts, irrespective of whether it’s a company’s template or the vendor’s.
3) Playbooks
These provide a list of standard clauses that can be used to redline vendor contracts. They are applicable when vendors insist on using their templates.
Playbooks streamline the process of redlining vendor templates by providing a list of clauses that can be inserted into the contract. They have similar advantages as templates.
Playbooks should be exhaustive and clear. They should provide necessary terms that might be applicable and should provide clear instructions on when they are applicable. They should provide favorable, one-sided terms along with balanced terms, both of which can be used during contract negotiations while keeping the process efficient. Similar to templates, these should also evolve through iterations based on learnings from vendor negotiations and changes in internal expectations.
procurement simplified 