Customer Responsbilities Wanted from the Vendor
We have all run into this problem at some point in our business lives: trying to get a project or task done but you have to wait on another person to provide you with the necessary documents to finish it up. Not just annoying, these delays can be costly in terms of underutilized staff or penalties for missed deadlines, if we’re talking about deadlines in a Master Services Agreement (MSA).
The vendor (consultant, developer, etc.) in an MSA will want the customer to agree on certain obligations and responsibilities during the course of the agreement. This is important since it ensures that a vendor will not fail to meet deadlines due to customers not replying or providing the necessary information.
Ultimately if the customer is materially breaching the contract the Vendor will have certain common law remedies, but for the “gray area” issues that may or may not be construed a material breach, it is better to stipulate the customer responsibilities up front.
Protecting the Vendor
Customer responsibilities can also extend to protect the vendor from the actions of the customer. An example would be that the customer has to comply with all applicable laws and, failing to do so, the vendor can terminate the agreement. It also prevents the vendor from being stuck in an agreement that they have no ability to terminate if the customer continues to make unreasonable requests.
Below are several examples of common customer responsibilities (note that being timely is important):
- The Customer should be responsible to provide information and direction for the vendor. This information should be accurate (as we all know, inaccuracies can cause delays!);
- The Customer should appoint a person who is a contact liaison for the vendor and is responsible to promptly respond to vendor inquiries and requests;
- The Customer should ensure that the vendor has access to any required equipment and facilities in a timely manner;
- The Customer should promptly review any delivered work product (this requirement is also usually found within the acceptance provisions of an agreement);
- The Customer should commit to promptly paying vender invoices (this obligation usually appears in the payment terms provisions of the agreement, and a covenant to make prompt payment is a nice-to-have);
- The Customer should be asked to commit to complying with applicable law – and, actually, both the customer and vendor should be acting in accordance with law, but from the perspective of either party, this clause is useful to provide a termination mechanism in the event that illegal activities are suggested; and
- The Customer should commit to purchasing any third party supplied equipment, software licenses and so on that are required to perform the activity (language to this effect may also be included in the expenses provision or in the fees provisions, but it may be helpful to include that here as well).
The extent to which these clauses are implemented is dependent on either party’s bargaining power.
You can view Clausehound’s sample Software Development Agreement here!
To continue reading additional articles within this series, click here.