An IT contract is a multi-faceted vehicle for companies not only to protect their interests, but also to set the tone for customer relationships and create an image of their business for outsiders. Businesses can control the way their contracts are perceived simply by abiding by a number of standardized guidelines and ethics for creating these key legal documents.

Set out below are some top tips in drafting IT contracts to ensure that everyone involved benefits:

# 1 Plain Legal Language

Draft the contract with the reader in mind. The reader is not necessarily a lawyer nor a legal advisor. Anyone involved in the business arrangements should be able to pick up the contract and understand what has been agreed. Writing legal contracts in plain language also indicates goodwill. Although legal security should never be compromised, there is never any real incentive to burden IT contracts with superfluous legal language. Contracts should be readable to ensure customers take a real interest in what is being agreed. By adopting a simpler approach, it could reduce customer inquiries relating to contract language/comprehension — and in turn, diminish customer support requests.

# 2 Avoid Unnecessary Technical Abbreviations

In IT Contract technical abbreviations are frequently used. For example, a common abbreviation used in IT Contracts is “AAA” – or “Triple A” – which refers to a framework for intelligently controlling access to computer resources, enforcing policies, auditing usage, and providing the information necessary to bill for services. Another common abbreviation is SLA (Service Level Agreement) which is a critical annex to many IT Contracts. Those not working in the IT industry are unlikely to be aware of these acronyms so it is vital to provide for definitions in the definitions section in order to facilitate the reading and to avoid technical abbreviations which are not strictly required.

# 3 Transparency

Technology trends in the industry have moved away from obscurity in the legal language used and now tend towards much greater more transparency of language. Whether a contract is transparent or obscure speaks volumes about the approach of a company in its business dealings. Transparent contracts also indicate a positive level of trustworthiness.

# 4 Comprehensive and Short IT Contract

It is always advisable to keep the contract as short as possible: one of the main benefits of having shorter contracts is that there is less room for confusion. As a rule of thumb, stay within a maximum of 10 pages where possible. If necessary, collect all the technical information in the annexes. Also never overlook the importance of your company’s legal positing in your contractual agreements which takes priority over the length of the contract.

# 5 Balance the Use of Electronic Signatures

Many countries enable IT contracts to be signed with an electronic signature. This is quicker and easier than a handwritten signature, and in many cases carries greater evidentiary weight. However, when parties from different countries are involved in the agreement, the electronic signature may be an open issue due to different technology applied in different countries.

# 6 Balanced Agreements

IT contracts are moving away from a one sided standard drafted by the commercially stronger contractual party, i.e. the vendor, towards a fairer and more balanced starting position. Contract negotiations have a tendency to balance themselves. During the creation process it is ever more difficult to get the parties to accept the terms of a contract if they are deemed unnecessarily burdensome on one the weaker party.

# 7 Developing an Effective End User Agreement

End User Agreements act as a safety blanket for companies. Not only do they protect the company from issues which may crop up, they also speak volumes about the company to the users. They determine what sorts of liberties users and resellers can take with the software. There is a lot of nuanced information that goes into an End User Agreement so it is important to evaluate this carefully.

# 8 Don’t use NDA’s for Data Security

One of the most common tech buyer mistakes is to rely on non-disclosure agreements (NDA’s), or non-disclosure clauses, to protect data. Non-disclosure terms protect trade secrets, not data held or accessed by the vendor—and certainly not private data.

A security data clause should cover procedures for protecting data: encryption, passwords, dual control restrictions, physical protection of servers, etc. And data clauses should address compliance with laws and privacy policies, as well as e-discovery policies, which cover when and how the vendor can give data to the other party in a lawsuit.

# 9 Don’t let Exceptions Swallow your IP Indemnity

In many IT contracts, the vendor indemnifies the customer for IP suits regarding the vendor’s technology. If a third party sues the customer, claiming use of the vendor’s tech infringes a patent, copyright, or trade secret, the vendor normally defends its position and pays its own legal costs and may be ordered to pay any court settlement amount ordered.

However, the standard indemnity language may include exceptions that try to avoid vendor liability. For this reason, it is important to review all the exceptions included in the IT contract very carefully.

# 10 Include, Read, and Edit Specifications (even if you’re IT-illiterate)

It’s odd how often tech contracts fail to say what the technology is supposed to do.

Software is almost always adaptable and flexible. It can do countless complex things, so it can’t just be assumed that everyone agrees on what it is supposed to do. Warranties become vague or meaningless without good specifications, because a warranty promises that the tech will work, and no one knows what “work” means. For this reason, it is essential to have clear well drafted specifications. Once the specifications are clear and well prepared, the rest of the contract should become more effective to better protect the positions of the contracting parties.