Avoiding Contract Woes

Jul 6, 2007  |  Michael Wurzer

Earlier this week, I posted about our woes in dealing with GeoJet at the end of our contract, and that has given me the idea of doing a short series of posts on this topic. I’ve negotiated our MLS software license with over 100 different MLSs and I’ve been told consistently that our contract is one of the easiest to understand and negotiate that they’ve experienced.

Part of the ease of negotiating, I suspect. is that I do it myself and so have authority to modify the contract, without having to go through a long bureaucratic process. Also contributing, however, is the fact that our core contract is only eight pages long and the exhibits add another five pages. It’s simply easier to understand and negotiate a shorer contract.

Most importantly, however, is that, as we’ve learned from past negotiations, we modify our base contract to adjust to the most common result. I think this is unusual. Most companies simply keep battling over the same provisions, over and over again, or employ a take it or leave it approach, but that doesn’t make sense to me.

For example, previously, our base contract required that any litigation over the contract occur in our home state of North Dakota. This is called a jurisdiction provision and is very common. However, this provision was challenged every time by clients, wanting jurisdiction in their home state. With many attorneys, this provision was a battle royale; they simply had to have it their way, which usually made me dig my heels in even more, too.

Some time ago, however, I was negotiating this provision and the other side suggested that jurisdiction favor the defendant. In other words, whoever is bringing the suit has to do it in the other’s home court. Brilliant! A provision that discourages litigation and is balanced for both parties. Ever since that negotiation, we now include it as part of our standard contract. Why battle over a provision that has a good, well-balanced solution?

Next up, we’ll talk about arbitration provisions, and why I hate them.

One Response to “Avoiding Contract Woes”

  1. Good stuff Michael. It’s been awhile since I’ve had the opportunity to read your blog. I’ve been working on two rehab houses (personal investments) and not at my desk. Had the chance tonight to read a few…better late than never, right? Thanks for sure!