Inside the Contract Clause Database - IT Contracts - TermScout

TermScout reviews and determines a party favorability rating that is based on more than 750 bits of structured data points. These data points also serve as the backbone of the TermScout platform, and our global contract database, enabling accurate comparisons across vendors and topics.

For each IT contract, TermScout answers the following questions:

1. Liability Caps

• What are the caps (including where relevant secondary caps) on each parties’ liability?
• What are the exceptions to those caps?

2. Liability Waivers

• What types of damages does each party waive?
• What are the exceptions to those waivers?

3. Contractual Statute of Limitations

• Are there any limits on when either party can bring a claim against the other?

4. Indemnification

• For what types of claims does each party indemnify the other party?
• Do each party’s indemnification obligations include the obligations to hold harmless or defend?
• Are either party’s indemnification obligations limited in any way (e.g., jurisdictional conditions, exclusions based on modifications, etc.)? 
• Are there time constraints on when a party must notify the other of an indemnifiable claim?

5. Confidential Information

• Does the contract provide any protection for each party’s confidential information?
• Does the vendor commit to not disclose the customer’s confidential information except as needed to provide the services? 
• Does the vendor commit to not use the customer’s confidential information except as needed to provide the services? 
• Are all provisions regarding confidential information fully mutual?
• Is there a “residuals” clause?

6. Intellectual Property

• Does the vendor receive a license to any IP that is broader than necessary to provide the services? If so, what does the license pertain to?
• Does the customer assign any work product or other IP to the vendor?
• Does the vendor receive any sort of publicity right to use the customer’s name or marks publicly?

7. Data

• Data Rights

  • Does the vendor claim ownership of any data provided by the customer?
  • Does the vendor receive any usage rights in any data provided by the customer beyond what is needed to improve or provide the services?
  • Does the contract prohibit the vendor from using any data resulting from the customer’s use of the service, other than as needed to improve or provide the service?

• Data Security

  • Does the vendor make any contractually binding commitments with respect to its data security standards or practices?
  • To which third party data security audits, standards, or certifications does the vendor commit?
  • Does the contract provide a list of subprocessors?
  • Does the vendor commit to ensuring that its sub-processors will be bound by the same or similar data or privacy commitments as those contained in the contract?
  • Does the vendor commit to any form of data breach notification policy?

8. Warranties

• Does the vendor warrant that the services will comply with documentation or specifications?
• Does the vendor offer an SLA? If so, is there a specified remedy for violations of SLAs? If so, is the remedy exclusive?
• Does the vendor offer other warranties?
• Does the vendor disclaim any or all implied warranties?

9. Term & Termination*

• What rights does the customer have to terminate or cancel?
• What rights does the vendor have to terminate or cancel?
  • If the vendor can terminate for cause, what cure rights does the customer receive, if any?
• Are there auto-renewals?
• Is the customer entitled to a refund under any termination scenario?
• Can the vendor suspend the customer’s access to the service?

10. Payment Terms*

• Are there any penalties for late payments?
• Does the customer have at least thirty days to pay invoices?
• May the vendor bill the customer for any types of expenses incurred by the vendor?

11. Restrictive Covenants

• Are there any non-compete provisions affecting the customer?
• Are there any non-solicit provisions affecting the customer? If so, what is the scope of the non-solicit?
• Are there any restrictions on the customer’s ability to procure similar services from other vendors?

12. Miscellaneous

• Insurance
  • What, if any, types of insurance does the vendor commit to carrying?
• Amendments
  • Does the vendor reserve the right to unilaterally change the agreement and/or any secondary documents that are incorporated into the principal agreement by reference? If so, what type of notice is required?
• Force Majeure
  • Is there a force majeure clause benefitting either or both parties?
• Audit Rights
  • What audit rights, if any, does each party receive?
• Compliance with Laws
  • Do either or both parties commit to complying with applicable laws?

*Note that many topics (e.g., term, termination and payment terms) are addressed in secondary documents (e.g., an order form). TermScout reviews the online agreements for these clauses, but customers should always check their ordering documents with each vendor.

Every year businesses engage in billions of online, click-to-buy software transactions. Each one of these transactions presents the buyer with the dilemma of signing the vendor’s agreement as is or incurring the thousands of dollars and weeks of time required to review and negotiate a more favorable agreement. TermScout eliminates this dilemma by enabling businesses to immediately spot contractual red flags in an agreement and see how that contract compares to “market”. Companies now have transparency in contracting, allowing them to both manage risk more effectively and, when appropriate, get through the contracting process with a simple click of the mouse.