Tech & Sourcing @ Morgan Lewis

TECHNOLOGY TRANSACTIONS, OUTSOURCING, AND COMMERCIAL CONTRACTS NEWS FOR LAWYERS AND SOURCING PROFESSIONALS
Contract Corner
Given the rapid, sweeping, and unpredictable changes in the tariff landscape, we return to the force majeure clause, a now-recurring theme following the COVID-19 pandemic and cyberattacks. Although, like many force majeure events, tariffs can significantly disrupt or alter markets, tariffs’ nature, duration, and potential impact differ markedly. Despite renewed attention, the force majeure clause may not be a tariff elixir.
Contract Corner
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.
Contract Corner
According to Forbes, “in 2025, the landscape of enterprise resource planning (ERP) is set for a thrilling transformation,” with a shift toward cloud-native ERP solutions at the top of the list.

Chicago recently experienced its first dust storm since 1934, resulting in low to zero visibility in some parts of the city.

Outsourcing and technology deals are increasingly done in “dust storm-like” conditions, with low to zero visibility into a wide range of issues, ranging from geopolitical to economic to regulatory and beyond. Navigating through these conditions requires clarity—including contractual clarity—on consistent core principles, creative thinking about resiliency, a flexible framework for decision-making, and an action plan you can implement in the worst-case scenario.    

Describing Core Principles

The core principles should be clear, concise, and deal-specific. Consider the following non-exhaustive factors when identifying the core principles for your outsourcing or technology contract:

  • Identify What is Essential: Determine what is essential, taking into account the impact a technology/service disruption would have on the customer’s business
  • Know Your North Star: Align on the objective or metric that will guide all decision-making, whether it be safety, integrity of the financial systems, legal compliance, parity with others in the same industry or market, or another relevant metric
  • Allocate Scarce Resources: Set expectations with respect to prioritization relative to other users of technology or services, either based on the industry, degree of dependency, size of the account, or other relevant factors

The Rise of Resiliency

Resilience is accepting your new reality, even if it's less good than the one you had before.” – US attorney and activist Elizabeth Edwards

Outsourcing and technology contracts often contain nuanced provisions addressing changes in law, force majeure events, cybersecurity incidents, and other eventualities, all designed to put in place appropriate plans and processes to manage foreseeable adverse scenarios and allocate related risk.

While “traditional” contractual mechanisms for dealing with adverse events remain important, resiliency as a whole is increasingly regulated, but on a targeted industry-by-industry, jurisdiction-by-jurisdiction basis (e.g., regulated of digital operational resilience of the financial sector in the European Union through the Digital Operational Resilience Act (DORA)).

Industries and jurisdictions that are not (or may not yet be) subject to resiliency-focused regulations should consider leveraging extensive work done in the regulated industries or jurisdictions in connection with these regulations for the benefit of the broader customer base. For example, a technology provider servicing the financial sector would have implemented changes to the supply chain necessary to achieve DORA compliance. The resiliency of this stronger supply chain may, in turn, increase the resilience of an automotive manufacturer using that same technology. 

Developing A Generally Applicable Framework For Decision-Making

Plans are nothing; planning is everything.” – US President Dwight D. Eisenhower

Consider supplementing existing contractual and regulatory mechanisms that address likely adverse developments and resilience topics with a decision-making framework based on the core principles described above. In other words, if there is no relevant plan or procedure and limited time to make a new plan or procedure, what is the “right” process for making decisions? Consider the non-exhaustive factors below.

Allocate Responsibilities for Monitoring, Testing, and Decision-Making

Determine the minimum acceptable level of control each party would have in a “dust storm.” Under what circumstances would unilateral action by a party be acceptable, at least on a temporary basis? For example, does the customer have the right to determine that the “dust storm” is sufficiently imminent to warrant implementation of contingency plans?

While the process for declaring an emergency or disaster is well-established in business continuity and disaster recovery principles, one of the newer trends is long-term uncertainty and volatility in highly disruptive events—whether with respect to the impact of tariffs, executive orders, the COVID-19 pandemic, and other factors where industries and organizations may make reasonable but different judgment calls.

A critical precursor to decision-making is ongoing monitoring and reporting of the relevant conditions. While macro-conditions that are not specific to the deal may be monitored by both parties, likely for different reasons, consider a flexible structure for information gathering and information sharing consistent with the core deal principles.

Set Up Lines of Communication

Determine the “always on” level of communication that can be reasonably available for nearly any situation. For example, an outage that is expected to rise to the executive level may warrant an active executive-level channel of communication if needed. Yes, this would not be a reasonable avenue for hundreds of vendor contracts that may need to be dealt with under adverse circumstances.

Identify Relevant Decision-Makers

Determine the core group of individuals who can make decisions when ordinary course processes are not available for any reasons.

Design Clear Contractual Backstops

Contractual backstops, such as termination rights and step-in rights, are increasingly viewed as key deal points, similar to pricing on the commercial side and data protection on the legal side.

In the next installment of this two-part article, we will explore current trends in these contractual backstops in the face of uncertainty.

Sports sponsorship contracts traditionally focus on category exclusivity and entitlements while overlooking data sharing language. However, with the rapid evolution of data usage in the industry, incorporating data sharing rights and obligations in sponsorship contracts is essential to maximize benefits for sponsors and sports entities.
Contract Corner
As the summer 2025 concert season continues to ramp up, we want to take the opportunity to explain why your favorite band or artist might only be performing once in your region this summer: a radius clause.
Contract Corner
Interest in offshore business centers, commonly known as global capability centers (GCCs), continues to rise as US companies across industries look to establish overseas offices and hire skilled workers to support critical business functions and technology services.
Contract Corner
In the case of the ownership of intellectual property (IP) developed by a supplier as part of a service agreement with a customer, should the traditional position that the customer should own all developed IP always be the position agreed upon by the parties?
Contract Corner
Use restrictions in software as a service (SaaS) agreements work in tandem with the scope of access and use rights provisions to clarify the scope of a user’s right to use a SaaS solution. These restrictions will be extremely important to the SaaS provider, however, consideration of such restrictions is also paramount for the users of the SaaS solution.
Contract Corner
An essential feature for customers in outsourcing software licensing and arrangements is the provision of robust protection against any software that could embed and distribute malware. To address these concerns, the inclusion of a no-virus warranty has become a common expectation on customers’ side.