Commercial contracts are typically represented by two separate, yet equally important, components: the master agreement that contains primarily legal terms, and the ordering documentation that contains primarily commercial terms.
We recently discussed the merits of revisiting and refreshing your standard template agreements. During these updates, attorneys should be mindful not to overlook the corresponding standard ordering documents. Although ordering documents are often seen as purely business forms, they may contain terms critical to the overall agreement and deserve close legal review. These ordering documents memorialize the terms of the underlying transaction—be it a purchase or sale of goods or services, a subscription to software or other technology solutions, or any other commercial transaction—and allowing these documents to be an afterthought in your standardized contracting process can undermine the agreement and create future complications.
The importance of these ordering documents, especially considering the relative effort it takes to review, update, and confirm that your template orders match the underlying contracts as compared to negotiating disputes or amendments to the agreement, can make such a review a worthwhile undertaking.
Below is a brief primer on topics typically addressed in standard ordering documents for commercial transactions, along with some considerations to better harmonize these ordering documents with the corresponding agreement:
- Commercial Terms: The commercial terms remain the core component of ordering documents. Along with the actual pricing, these terms include any additional relevant variables, fees, or metrics (e.g., discounts, minimum order quantities, user limits or similar use restrictions, or subscription packages).
- Start Dates, Term and Renewal, and Cancellation:
- Start Dates: It is important to consider what relevant dates the underlying master agreement contemplates being included in the ordering document and ensure their inclusion in templates of those ordering documents. Ordering documents frequently identify multiple critical execution dates—including, for example, the order effective date, the subscription start date, or the services start date. These dates are often embedded in important provisions in the underlying master agreement, such as payment terms, term length, renewal, or termination rights. Failure to include these dates can lead to uncertainty and potential disputes around these critical requirements.
- Term and Renewal; Cancellation: Ordering documents typically identify the term length as well as any renewal terms, including if the agreement is subject to autorenewal, and, where applicable, the contact and process for canceling subscriptions. These terms warrant special attention since they may supplement, or, if permitted by the underlying agreement, supersede the default standards under the agreement. Lawyers reviewing these documents should also consider if the contract may be subject to certain regulatory requirements, like the forthcoming Federal Trade Commission requirements, with respect to disclosure of such terms and processes.
- Product and Service Descriptions:
- If ordering documents identify products with specificity, the terminology should be consistent across the agreement and ordering documents, including terminology for any bundled or packaged products.
- If services are involved in the transaction, there can often be distinctions between more substantial or customized services like development or implementation work to be provided under a statement of work or similar detailed document, and more standardized services like maintenance and support where service descriptions may be attached to, or hyperlinked from, the ordering documentation.
- Key considerations with respect to product and service descriptions include:
- Confirming whether the template agreements contemplate the actual product descriptions being included within the ordering documents, as opposed to being contained in separate product documentation or specifications on a website.
- Identifying any specific products or services excluded from the purchase, any add-on services that are being offered as optional, any prerequisites for the purchase (e.g., requirements to purchase a higher-level subscription package in order to obtain certain support), or underlying assumptions in the commercial terms that need to be identified in the ordering document.
- Reviewing the terms of the master agreement for any requirements around integrated third-party materials or components, such as requirements that third-party materials or components to be separately identified on the ordering document.
- Authorized Forms: Ordering documents can take various forms, including electronic order forms executed via e-sign technology or through customer relationship management solutions; click-through orders accessed through an application, platform, or other site; or physically signed written order forms. It is important to ensure that the underlying master agreement, including any terms defining what constitutes an order or delineating the process through which the parties may enter into an order, contemplates all forms in which the parties are authorized to agree to orders and the manner in which the parties are authorized to accept and agree to orders.
- Acceptance and Incorporation of the Agreement: Last, but certainly not least, ordering documents must contain clear and sufficient language indicating the parties’ acceptance of the order, identification of the underlying master agreement or terms and conditions, as applicable, and agreement that such agreement or terms govern the order.
How We Can Help
Whether businesses want an overall review of their ordering documents, standard agreements, or both, our lawyers can assist with any updates or other questions about templates or the general contracting process.