It’s common for Technology Companies to have their legal representation draft a Sales agreement when they first get started, and use that same agreement in perpetuity. That’s not the best idea, however. Here are 6 reasons why you should regularly update your Sales Contracts.
Changes in the law
The law is a living, breathing thing. New regulations are passed, and new legal precedents are set all the time – whether in your local jurisdiction, or globally where you may or may not be doing business. As such, you should keep up with the changes in the law that may affect your service and offerings.
Updates to your products
As you update your product features and release new products, different laws and regulations may become applicable to you. As such, it’s important to keep track of how the language in your Sales contracts may need to be updated, or how your potential liability changes based on what you are offering.
Applicabillity of the contracts you’re using
Contracts are not one-size-fits-all. Your SaaS offering requires a different contract than your mobile application offering, and they require a different than your SDK offering. You want to make sure you are utilizing the right kind of contract for the right product offering, especially as they evolve and change.
Exhibits to add or update
Specific regulated industries and your Enterprise customers may require Exhibits such as Data Processing Addendum (DPA), Business Associate Agreement (BAA), Security Exhibit, or other industry or customer specific documents to be added to your Contract package. In the interest of streamlining your sales process, it may be in your best interest to add or update Exhibits that you see a repeated need for.
Updates to your insurance coverage
As your company grows, your insurance coverage may grow as well. Language in the “Limitations of Liability” and “Indemnification” provisions of your contract may need to be updated to reflect these changes. What you don’t want is to be held liable for something that your insurance coverage will not cover.
Changes to your risk palette
As organizations grow, their risk palette might also grow. What you agreed to as a young, scrappy startup may not be what you want to agree to as a more established, well funded, revenue generating company. As such, your contracts should reflect accordingly.
Let us help
This post is providing a high level overview of why you should update your Sales contracts.
There are many more nuances and specifics, and you should have an experienced attorney to review your agreements.
Author: Shahed Kader
