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A Guide to IT Contracting by Michael R. Overly, Matthew A. Karlyn

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vii
Contents
Acknowledgments ...............................................................................xix
About the Authors ...............................................................................xxi
Preface ............................................................................................... xxiii
Chapter 1 Collecting Basic Deal Information ...................................1
Checklist .......................................................................................1
Overview ....................................................................................... 3
Key Considerations .....................................................................4
Performance .................................................................................5
Intellectual Property Issues ........................................................5
Personal Information Privacy and Security ............................5
Information Security ..................................................................6
Other Unique Issues .................................................................... 6
Summary ......................................................................................6
Chapter 2 Software License Agreements ...........................................9
Checklist .......................................................................................9
Introduction ...............................................................................10
Four Critical Questions ............................................................10
License and Restrictions ........................................................... 11
Acceptance Testing ...................................................................12
ird-party Soware ................................................................13
Fees ..............................................................................................14
Warranties ..................................................................................15
Indemnication .........................................................................16
Limitation of Liability ............................................................... 17
Specications ..............................................................................18
Condentiality and Security .................................................... 19
Maintenance and Support ........................................................ 21
Announcements and Publicity ................................................23
Term and Termination .............................................................23
Additional Contract Terms ......................................................24
Summary ....................................................................................25
viii  •  Contents
Chapter 3 Nondisclosure Agreements ..............................................27
Checklist .....................................................................................27
Overview .................................................................................... 28
Key Considerations ...................................................................29
Essential Terms ......................................................................... 30
Additional Considerations .......................................................33
Summary ....................................................................................36
Chapter 4 Professional Services Agreements ................................... 37
Checklist .....................................................................................37
Overview ..................................................................................... 39
Key Considerations .................................................................. 40
Essential Terms ..........................................................................41
Term and Termination ......................................................... 41
Acceptance Testing .............................................................. 42
Personnel ............................................................................... 43
Subcontracting ..................................................................... 43
Warranties ............................................................................ 44
Indemnication ................................................................... 44
Limitation of Liability ..........................................................45
Intellectual Property Ownership ....................................... 46
Change Order ........................................................................47
Condentiality and Information Security ........................47
Force Majeure ........................................................................ 47
Nonsolicitation ..................................................................... 48
Insurance .............................................................................. 48
Fees and Costs .......................................................................49
Relationship to Other Agreements .....................................52
Summary ....................................................................................52
Chapter 5 Statements of Work ..........................................................55
Checklist .....................................................................................55
Overview ..................................................................................... 57
Essential Terms ..........................................................................59
Scope of Work and Business Requirements ......................59
Technical Environment .......................................................61
Acceptance Testing ............................................................... 61
Contents • ix
Deliverables ...........................................................................62
Documentation .....................................................................63
Roles and Responsibilities of the Parties ...........................63
Project Management Processes ..........................................63
Issue Resolution and Escalation Procedures ................... 64
Risks ...................................................................................... 64
Pricing and Cost ...................................................................65
Service Level Agreements ................................................... 66
Change Orders ..................................................................... 66
Summary ....................................................................................67
Chapter 6 Cloud Computing Agreements........................................69
Checklist .....................................................................................69
Key Considerations and Essential Terms ...............................71
Service Levels ........................................................................72
Uptime Service Level .......................................................72
Response Time Service Level .........................................74
Problem Resolution Service Level .................................74
Remedies for Service Level Failure ................................74
Data ......................................................................................... 75
Data Security ....................................................................76
Disaster Recovery and Business Continuity ................77
Data Redundancy ............................................................77
Use of Customer Information, Data Conversion,
and Transition ..................................................................78
Insurance .............................................................................. 80
Indemnication ................................................................... 80
Limitation of Liability ..........................................................81
e Limitation of Liability Should Apply to Both
Parties ................................................................................82
License/Access Grant and Fees ...........................................82
Term ........................................................................................83
Warranties ............................................................................ 84
Publicity and Use of the Customer Trademarks ............. 84
Notication for Security Issues...........................................85
Assignment ............................................................................85
Pre-Agreement Vendor Due Diligence ...................................85
Summary ................................................................................... 86
x  •  Contents
Chapter 7 Click-Wrap, Shrink-Wrap, and Web-Wrap
Agreements .......................................................................87
Checklist .....................................................................................87
Overview .................................................................................... 88
What Is a “Shrink-Wrap” License? ..........................................89
Products Purchased Under Shrink-Wrap
Agreements—Common Elements ..........................................89
Methods of Purchasing Shrink-Wrap Products ................... 90
Typical Shrink-Wrap Terms and Conditions ........................91
Key Risks of Shrink-Wrap Products .......................................93
Mitigating Risk ..........................................................................95
Summary ....................................................................................97
Chapter 8 Maintenance and Support Agreements ..........................99
Checklist .................................................................................... 99
Overview .................................................................................... 99
Scope of Support and Maintenance ..................................... 100
Predictability of Fees ............................................................... 101
Support Not to be Withheld...................................................102
Term ..........................................................................................103
Partial Termination/Termination and Resumption
of Support .................................................................................104
Specications ............................................................................104
Availability ...............................................................................105
Support Escalation ..................................................................106
Service Levels ...........................................................................106
Summary ..................................................................................107
Chapter 9 Service Level Agreements .............................................. 109
Checklist ...................................................................................109
Overview ...................................................................................110
Service Level Provisions Commonly Found in the
Terms and Conditions ............................................................110
Root Cause Analysis, Corrective Action Plans,
and Resolution .........................................................................110
Cost and Eciency Reviews ..................................................111
Continuous Improvements to Service Levels ......................112
Contents • xi
Termination for Failure to Meet Service Levels ..................113
Cooperation ..............................................................................114
Service Level Provisions Commonly Found in a
Service Level Agreement or Attachment .............................114
Measurement Window and Reporting Requirements .......115
Maximum Monthly at-Risk Amount ...................................115
Performance Credits ...............................................................116
Presumptive Service Levels .................................................... 118
Exceptions to Service Levels ..................................................119
Supplier Responsibilities with Respect to Service
Levels ........................................................................................ 120
Additions, Deletions, and Modications to Service
Levels ........................................................................................ 120
Earn-back ................................................................................ 122
Form of Service Levels ........................................................... 123
Summary ................................................................................. 124
Chapter 10 Idea Submission Agreements ........................................125
Checklist ...................................................................................125
Overview .................................................................................. 126
Key Risks of Submissions ...................................................... 126
Essential Terms ....................................................................... 128
Beware Reverse Submissions .................................................129
Summary ..................................................................................130
Chapter 11 Joint Marketing Agreements ......................................... 131
Checklist ...................................................................................131
Overview ................................................................................... 132
Key Considerations and Essential Terms ............................. 133
Determine the Scope of the Engagement ........................133
Marketing Obligations ...................................................... 134
Referral Arrangements ..................................................... 134
Condentiality ....................................................................135
Intellectual Property Issues ...............................................136
Warranties and Disclaimers ..............................................137
Term and Termination .......................................................138
Summary ..................................................................................139

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