Non-standard Standard Terms

Each year, the International Association for Contract & Commercial Management (IACCM) conducts a survey of negotiated contract terms. For 2007, the top 10 negotiated terms (according to participants from in-house legal, contract management and procurement groups in 800 organisations) were:

  1. Limitation of Liability
  2. Indemnification
  3. Price / Charge / Price Changes
  4. Intellectual Property
  5. Termination (cause / convenience)
  6. Warranty
  7. Service Levels
  8. Payment
  9. Delivery / Acceptance
  10. Confidential Information / Data Protection

Now, the above list seems reasonable enough to me. But I am curious about the reliability of the underlying data, as it would be very difficult for each participant to maintain accurate records on the number of negotiated terms across their portfolio of contracts. To achieve this, they would need a system in place that tracks:

  • What constitutes “standard wording” for every clause (or at least for the main ones) in each contract type
  • The total number of contracts the organisation has executed
  • Those clauses in each executed contract that deviate from the standard wording

There are contract creation and management systems that can track the above information. But, I’d be amazed if any organisation has managed to define and systematise its contracting processes to the extent necessary to track such detailed information across its entire contract portfolio.

That said, the IACCM is to be applauded for leading the effort to define, measure and improve organisational contracting processes.

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