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Moving Toward Open Source Contract Law? The IACCM Project

Let me recommend a fascinating post from David Munn called “Contract Terms and Negotiation – IACCM Project.”
David comments on a new project called the Contract Negotiations Guide project from the International Association for Contract and Commercial Management (IACCM). IACCM’s Executive Director,Tim Cummins, says:

Our aim is to create a baseline that is broadly accepted as ‘reasonable’ for both buy side and sell side, to generate greater mutual understanding of the factors that cause variations from this position, to outline the spectrum of negotiated terms that typically result. We believe such a guide will assist in cutting lead-times and reducing the extent of confrontation when one side or the other is seen as ‘unreasonable’ in its position, relative to the value or risks perceived by the other side.

The money quote (from David):

At the very least we should end up with a thoughtful analysis of contract terms that we can use for reference and training. At best it could result in a set of best-practice contract terms that reasonable buyers and sellers can use to greatly reduce the amount of time spent on unproductive contract review, revision, and negotiation.

Since I routinely review and assist in negotiation of software licenses and IT contracts in my law practice, I’ve seen some of the same trends that David notes in his post and I, too, welcome an effort that might produce some basic reasonable models that many companies will find useful to adopt as more or less standard approaches. It’s easier to make it to common ground if the starting point is closer to the likely ending point of the negotiations.
These types of group approaches at creating reasonable legal models and letting people adopt standard approaches that work well reflect some of the spirit of the Open Source licensing approach and may be help us move to both friction-free capitalism and what Bill Gates has called friction-free innovation.
I will be taking a close look at the IACCM project and encourage other technology lawyers and executives who deal with these kinds of contracts to consider getting involved in the effort.
[Originally posted on DennisKennedy.Blog (http://www.denniskennedy.com/blog/)]
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One Response to “Moving Toward Open Source Contract Law? The IACCM Project”

  1. David Munn says:

    Thanks Dennis.
    Another point I didn’t make is that I believe there are a couple of significant reasons why sales contract negotiations often become difficult.
    The first is that one or both of the parties may take unreasonable positions. That may be a conscious business decision to try to gain an advantage. If so, companies need to weigh whatever actual advantage this practice gives them (after the conclusion of the negotiation process) against the additional costs (to both sides) incurred in the contracting process, as well as the cost to the relationship. On the other hand, it could simply be the result of ignorance on the part of contract drafters and negotiators.
    In fact, ignorance may be the most significant factor in making contract negotiations more difficult than they should be. This could be ignorance of the law or the actual legal consequences of certain contract language, ignorance of what is common practice in the industry, ignorance of the true costs of certain contract terms to the organization, or ignorance about the subject matter of the contract – that is, what is actually being sold or provided, what are the buyer’s actual needs, and what’s the best and most efficient way to get the product or service to the buyer. This ignorance can lead to negotiators taking negotiating positions that have no basis other than “that’s our standard form,” “we’ve always done it that way,” or “you can’t be too careful.”
    The IACCM project could go a long way toward addressing a number of these issues.
    David Munn

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