Negotiating Big Client Company Agreements for Emerging Companies – Part 4: Avoiding Unfair Deliverable Expectations
Note: This conversation has been organized around dealing with ‘big’ clients. But many of the lessons apply to large, important vendors.
So now that you’ve entered an agreement with a client company, they’re expecting you to deliver—whether it’s a product, a service, or something else, you’re probably thinking you’ve got it covered. After all, this is your work. You’ve always delivered in the past.
But before you get that far, you have to sign a contract—here’s what to look out for to ensure that your bases are covered when it comes to deliverables and expectations for your contracted services.
1. Ability to Reject Deliverables (or Services) based on Vague Judgment Calls
What is this? The client can reject your deliverables or services simply because the client “determines it is not satisfactory (or because of some similarly-worded contract right).
Why This Is Unfair: This type of clause allows rejection based on subjective opinions rather than specific, agreed-upon standards, creating uncertainty and potential for unjustified rejections. It makes it difficult for you, the vendor, to measure your own deliverables. Including this in your contract puts you at the mercy of the other party, because without clear agreed-upon specifications and requirements for your deliverables, your client’s ability to reject those becomes very easy to abuse.
At best, this can leave you at the mercy of very subjective decision-making, making it very hard to know for sure if you’ve done a satisfactory job
At worst, this language makes it very easy for the other side of the deal to game the situation, making up any dubious reason they can think of to get free extra work and/or avoid payment obligations.
What To Consider Asking For Instead: To avoid subjective or unfair rejections, negotiate terms that tie acceptance of deliverables to clear, written standards set out in the main agreement and/or, if applicable, a particular statement of work or proposal – or that have otherwise have been agreed to later on in writing by both sides.
You should also require that a client can only reject a deliverable if the client provides sufficiently detailed and specific feedback on what they thought was wrong. If they are going to ask you to redo some or all of a deliverable (usually at no additional charge), you should have the right to clearly know what they find deficient. These adjustments reduce ambiguity, foster accountability, and create a fair process for addressing potential issues.
2. No Deadline for Rejecting Deliverables or Services
What is this? The client does not have a deadline for the rejection of any deliverables or services you provide.
Why This Is Unfair: This means that the client can tell you multiple months after you delivered your work that they have decided it is not up to par and, now – at this much later date – they’ve decided to reject it. Without a deliverables acceptance period deadline included in your contract, a client can essentially reject your delivered work product at any time, putting you in a precarious situation, always waiting for the other shoe to drop.
A related risk is when you have to deliver multiple deliverables, and they are structured so that each builds on the previous one, having a client tell you they have a problem months after an initial deliverable has been delivered may not only require reworking that first deliverable but also all the ones that came after and are thus built on top of it.
What To Consider Asking For Instead: Specific language should be included stating that if something is not rejected by a certain deadline, it is automatically deemed accepted.
To reduce the risk of this ‘indefinitely long’ exposure to rejection, consider requiring that the contract include clear timelines for client feedback. For instance, it is common that a client must notify you of any issues with a deliverable within a defined review period (ten business days is commonly used review period), detailing the specific defects to be corrected—again, according to the agreed-upon specifications and requirements we discussed in part 1.
And if no feedback is provided by the deadline, the deliverable should be deemed automatically and irrevocably accepted.
This approach protects you from unexpected rejection months after delivery and ensures timely communication about any necessary adjustments. Including these provisions promotes fairness and streamlines the process for both parties.
Next time will be our last blog in this series, where we’ll talk about unfair and one-sided terms to look for as it relates to IP.
ASK A QUESTION OR SCHEDULE A MEETING/CALL.
Disclaimer: This article constitutes attorney advertising. Prior results do not guarantee a similar outcome. MGLS publishes this article for information purposes only. Nothing within is intended as legal advice.