Customer Contracts

Contract Components

1. Terms of service - has all the general contractual terms and can be incorporated by reference. The idea is to allow us to update the TOS without having to amend every customer agreement. The TOS is composed of the User Agreement and the Privacy Policy.

2. Order form - Includes payment terms and duration of subscription. The contract doesn’t have any payment information without the order form, so a signed order form is a must to go along with the TOS.

Types of Contracts

Order Form Only

Our strong preference is to use only an order form that references the TOS to make a purchase. Note that our Order Form is the “Estimate” in Quickbooks. Provisions of the Order Form trump any conflicts between it and the TOS – usually these are relating to items where the TOS says something like “unless otherwise specified in the Order Form, blah blah.” Provisions relating to the subscription details can be included in the order form:

• Cost of the subscription

• Payment terms (e.g. billed yearly vs monthly)

• Prohibition on reimbursable expenses

• Renewal (e.g. automatic, requires written notice, etc.)

Order Forms do not need legal review.

Amendment to the Terms of Service

If a customer needs to modify the TOS, we do that through an amendment. We do NOT produce alternative versions of the TOS (i.e. a forked document that then doesn’t inherit changes we subsequently make to the base TOS). The Amendment should address ONLY the provisions that contradict or supersede provisions in the TOS, or add new terms that are not present. Amendments should NOT be used to specify terms that would normally go in an order form (e.g. payment terms, renewal conditions, etc.). Amendments should be drafted by (or at lease reviewed by) our lawyers.

When there is an Amendment, the set of documents that makes up the contract is Amendment + Order Form + TOS (by reference). The order of document precedence should be spelled out in the Amendment. Usually, it will be Amendment to the TOS trumps Order Form trumps TOS.

Doing an amendment should cost about $1k - $1.5k in lawyer time, hopefully less, if the amendment contains provisions that have been negotiated before in an other contract, or primarily business terms (e.g. regarding PR).

Bespoke Agreements

Bespoke agreements are costly ($2k-$5k per), but for customers for whom an Amendment is not sufficient, we do negotiate entire contracts, particularly if these are governmental entities with little flexibility in their forms of contract.

In the event of a bespoke agreement, the set of documents that makes up the contract is Agreement + Amendment (optional) + Order Form + TOS (by reference). The agreement will will usually be the top dog in any conflicts. This top-level agreement should specify precedence, and it will usually be Agreement trumps Amendment to the TOS trumps Order Form trumps TOS.

Note that provisions that conflict with the TOS should still go into an Amendment to the TOS so that any revisions to the TOS that don’t deal with the amended provisions continue to flow through with future updates.

~Consultant Agreements~ NO!

Sometimes a customer will want us to sign a bespoke agreement that their standard form of consultant agreement. Sometimes these are in the form of a Master Service Agreement. Either way, we don’t accept these as contracts for software subscriptions. These usually have a bunch of stuff regarding site safety, professional licenses, work for hire, etc. that are just not applicable, and they lack the provisions we need that are in the TOS. Gently guide them toward one of the other options, starting with Order Form.

Internal Stakeholders

• “Business unit,” probably the person who sold the deal (Marc). This person is the responsible for getting this contract done in a timely manner and should dictate the business decisions. Do not abdicate this role to the lawyer – if you’re unclear on whether something is a business decision, just ask the lawyer point blank. If the lawyer says it’s a business decision, then it is your decision to make, not theirs.

• Contract facilitator - probably Bomee. Maybe we can phase out this role! Mostly around for institutional memory on what we did for prior contracts and to make sure that business decisions are not getting delegated to lawyers.

• Commercial lawyer. The lawyer’s job is to make sure that we are not leaving ourselves open to vulnerabilities in ways that deviate from the prevailing industry practices. They are there to advise on risk management, so you can generally assume that they will take a more Cadence-protective position even when that might result in longer negotiations. It is the job of he business unit to prompt the lawyer for alternatives when there is a provision that is so skewed in our favor that it’ll delay the contracting unacceptably (or you can let it go to the customer and have their lawyer take three days or three weeks to come back and say no to the obviously one-sided provision).

When working with legal, please set the expectation up front that when there is a business decision, you will want it called out so that YOU can make the call, and that if there is ever an issue that the lawyer feels will incur risks that are out of line with prevailing industry practice, they should unambiguously say that also. What we want is a balanced partnership!

NB! When in negotiation, whenever one side’s lawyer is present, the other side’s lawyer should also be present. If only one lawyer shows up, the call needs to be rescheduled. You can, however, have a call where neither side’s lawyer is present.

Oft-negotiated Provisions

Some provisions of the Terms are more often negotiated than others. Here are some of the precedents we’ve set so far.

Limitation of Liability

This is one of the provisions that tends to get negotiated. Here are the various versions that we have used in past agreements.

• Our default language limits liability to $10k

• We have also changed that to “the amount paid by the customer under this agreement”

• CPC’s version also carves out IP violations, gross negligence, and willful misconduct

Information Processing and Data Security

Organizations often have a standard rider. We have accepted the New York State data and information processing standards on multiple contracts (so that never has to be reviewed by our lawyers again), and the data processing standards for Related Companies. If in doubt about whether a new data addendum is new ground, view those contracts in the Shared drive. Any discussion of this topic, please be sure to loop in François Huet.

PR & Communications

Not uncommon for a customer, especially a governmental or non-profit customer, to want a veto on unilateral PR. Usually, these terms will say something like “you can’t do PR without prior approval of the content.” That is fine; however, we will want to carve out a few items:

1. Disclosure of the fact that they are a customer. We’re early days yet and we’ll be shouting to the hills about our early customers, so we don’t want to have to seek approval on this point.

2. Use of name and logo on pitch decks, website, and marketing materials. Same rationale as prior.