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Contract certification standards.

Explore contract deal breakers.

 

Deal Breaker Clause How Often Buyers Using TermScout Triage Consider the Clause to be a Deal Breaker Prevalence in Negotiated Contracts Analyzed by TermScout Prevalence in Vendor Forms Analyzed by TermScout Why This Matters
Vendor Disclaims all Liability 100%  2% 14% This makes it nearly impossible for a customer to recover from a vendor, no matter what goes wrong - even if the vendor violates other provisions of the contract.
There is some form of restriction on Customer’s right to compete with Vendor (broader than a restriction on use of the service to compete) 88%  4% 9% Signing non-competes means contractually promising not to engage in a certain line of business. This is something most businesses want to avoid where possible.
There is one or more restrictions on Customer’s right to solicit 75% 6% 7% Agreeing not to solicit a vendor’s employees, customers, or vendors sounds reasonable, but it places challenging burdens on the customer to ensure they comply. Most companies aren’t willing to incur these obligations except in rare cases.
There are restrictions on Customer’s ability to procure similar products or services from other vendor 75% 2% 0.5% Agreeing not to procure similar services from other companies can severely hinder a company’s ability to do business by limiting the scope of vendors it can work with and granted effective monopoly power to the vendor in question.
Vendor receives broad usage rights in data provided by Customer 88% 3% 13% Privacy laws require companies to follow strict rules with respect to how they handle certain types of data. These laws often cover how a company’s vendors use data. This clause presents major risks to a company’s ability to comply with such laws.
Customer assigns some work product or other IP to vendor (other than feedback) 38% 5% 6% It’s extremely rare for a customer to need to assign IP rights to an IT vendor. Doing so can materially jeopardize a company’s rights in its own IP.
Vendor is not obligated to protect customer’s confidential information 88% 5% 34% Since most IT services today are delivered “as a service”, customers often upload wide varieties of information onto vendors’ servers. Confidentiality commitments are expected by most customers to ensure the vendor does not misuse such information.


 ¹ Ratings reflect contract terms in effect as of June 2022.

 ² Each individual company may have its own views as to what constitutes a Deal Breaker in light of its own use cases and levels of risk tolerance.  You should consult your attorney to determine how TermScout’s list aligns with your individual circumstances.

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