Beyond Force Majeure: Tips for Entering New Tech Agreements During COVID-19
Many companies have been dealing with what to do about existing contracts during COVID-19, while many are also continuing to enter into new agreements. A new contract can present an opportunity to mitigate risks from the continued uncertainty everybody is currently facing. A recent Perkins Coie memo outlines tips for negotiating new contracts during COVID-19 relating to provisions typically found in technology agreements. Here’s an excerpt:
Addendums: Consider including an addendum that contains terms and conditions that apply during the pandemic with an understanding that the pandemic-specific provisions preempt the terms and conditions in the main body of the agreement during the pandemic – the addendum can specify criteria that must be satisfied before the addendum can expire
Acceptance of Goods, Risk of Loss, Transfer of Title: Travel restrictions and stay-at-home orders may prevent inspection and acceptance of goods per the contract’s standard terms, which can then affect risk of loss, transfer of title and payment provisions so parties should consider alternatives such as relying on remote video or data measurements, permitting partial payment upon delivery or through use of buyer-funded escrows that could be released once inspection and acceptance occurs
Service Levels: Service providers may need to negotiate for more flexible service levels to accommodate bandwidth demands to regulate service usage – considerations could include temporary elimination of non-critical service features, throttle bandwidth, limitations on hours of operation, and service credits for service interruption
Other provisions addressed in the memo relate to ADR, limitations of liability, suspension, delivery terms, milestones, change orders, disclaimers, termination, health & safety, transition services, governing law, business continuity, confidentiality & reporting obligations, reps & warranties and insurance.
-John Jenkins, TheCorporateCounsel.net April 29, 2020
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