Floating Terms in Vendor Contracts: Cloud Services, Software Licenses and Telecommunications Agreements

Mitigating the Risk of Unilateral Vendor Changes to Key Terms

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, September 27, 2017

Recorded event now available

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Program Materials

This CLE webinar will discuss myriad risks of “floating” vendor contracts for businesses. The panel will discuss why floating contracts are dangerous and best practices for businesses to mitigate the risk of vendors unilaterally changing key terms of their agreements. These issues arise in almost every type of technology contract from cloud services, to software licenses, to telecommunications agreements.

Description

In many modern vendor engagements, both the customer’s data and several key areas of the vendor contract are stored in the cloud, including provisions on service level standards, security measures, support obligations, and service descriptions.

This means that key contract terms “float” in the cloud and can be changed at any time by the vendor, frequently without notice to the customer. Even if the customer is given notice, the customer often has no right to object to the changes.

Other challenges of floating contracts include their “as-is” nature, making them less susceptible to negotiation; the customer’s inability to access key functionality and performance during the term of the contract; and the customer’s limited ability to terminate the agreement, even if key terms change to its disadvantage.

Negotiating floating contracts is extremely difficult. Approaches to mitigate risks include requiring the floating terms to be in writing and attached to the agreement as actual, fixed exhibits; including language that the vendor cannot materially decrease the overall levels of performance and functionality reflected in the floating terms as of the date the contract is signed; and negotiating clear termination rights in the agreement.

Listen as our authoritative panel discusses best practices for mitigating risks to businesses entering “floating” engagements.

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Outline

  1. What are floating contracts and why are they dangerous?

  2. How can businesses mitigate the risk of vendors unilaterally changing key terms of their floating contracts?

Benefits

The panel will review these and other key issues:

  • The definition of floating contracts and the risks they pose to businesses
  • Effective approaches to mitigating the risks of floating contracts (methods of locking in terms, safety in numbers, falling back on termination rights)

Faculty

Overly, Michael
Michael R. Overly

Partner
Foley & Lardner

Mr. Overly focuses his practice on drafting and negotiating technology related agreements, software licenses, hardware...  |  Read More

Cassim, Yusuf
Yusuf Cassim

Vice President, Associate General Counsel
Charles Schwab & Co.

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