Mark Pestronk
Q: As a consumer, when I sign up for a paid travel app, like a flight tracker, I don't worry about the app's lengthy terms and conditions because I know that I can cancel my subscription at any time at no additional cost. In contrast, when I sign up for new software for my agency such as an unused ticket tracker, destination-safety advisor, or a GDS, I worry because I am presented with a multiyear contract with substantial monthly fees. Assuming that my agency has enough bargaining power to negotiate at least a few changes to the vendor's standard agreement, can you please give me a checklist of typical terms to try to change?
A: Most software contracts have the following unfavorable terms in common, and here are my suggestions for ameliorating them:
• A fixed term of years with no way for you to get out of the contract unless the vendor breaches it: Try to add a clause stating that you can terminate after six months or one year if you are not reasonably satisfied with the system. If the vendor refuses, try to get a shorter term coupled with a right to renew.
• The vendor's right to raise prices each year: Ideally, prices should be fixed for the term of the contract or at least limited to each year's Consumer Price Index increase or 5%, whichever is less.
• A vague or circular description of the system, such as "The 'Ajax System' means the software system offered by Ajax Software": If promotional material on the vendor's website or slide deck describes the functions in detail, then try to incorporate the descriptions into the contract, either as an exhibit or by referring to the webpage existing as of the date of the contract.
• The vendor's right to use your agency's name in its promotional material: If you are unhappy with your choice and would not recommend the software, it would be embarrassing for you to be listed as a customer, so try to require that the vendor must get your consent before using your name.
• If you are late in payment, the vendor can terminate without notice: Try to require that the vendor give you 15 days' written notice of nonpayment (and opportunity to pay) before the vendor may terminate.
• A waiver of all warranties, which means that if the system does not work as promised, you have no remedy: The vendor should warrant that the system will perform according to the description in the contract.
• A waiver of your right to sue for damages for loss of business (so-called consequential damages) or to sue for breach of contract, negligence or misrepresentation: Try to get such a clause deleted.
• Damages cannot exceed the preceding year's (or six months') monthly payments to the vendor: As is the case with the point directly above, try to get this clause deleted entirely.
One more tip, and this one is nonlegal: always check references from satisfied clients, especially if the system is new.