Tech & Sourcing @ Morgan Lewis

The conditions created by the coronavirus (COVID-19) pandemic and resulting government shutdown orders have raised questions across various industries regarding contractual rights and obligations during the crisis.

Please join us as we examine highlights from the Contract Corner feature on our Tech & Sourcing @ Morgan Lewis blog. The series reviews essential issues and practical pointers for technology, outsourcing, and commercial agreements.

There comes a time when every contract will come to an end; however, what happens when the parties don’t want that to happen but there are no provisions in the contract dealing with extension rights? In this blog we analyze good practices in relation to extending contracts where there is no express right of extension.

There are two primary models by which vendors will make software available to customers (1) software as a service (SaaS); and (2) on premise. In a SaaS model, the vendor provides, maintains, and hosts (either itself or through a hosting SaaS vendor) the desired software, and grants the customer access to the software functionality via the internet.

In cloud services, whether it is infrastructure as a service (IaaS), platform as a service (PaaS), or software as a service (SaaS), service availability is often a significant customer concern because the customer is relying on the vendor to provide and manage the infrastructure and related components that are necessary to provide the services.

In a long-term outsourcing, software as a service (SaaS), or other services agreement, the customer will typically push for a termination right relating to the service provider’s breach, and perhaps for an insolvency event or change in control of the service provider.

Are you about to sign a service agreement with a third-party service provider under which it will access and use technology of your company? Have you checked your applicable third-party contracts to see if you need any consents?

You signed a long-term deal. It would be embarrassing if, in a few years after signing, the pricing is significantly higher or your service levels are significantly lower than market. Benchmarking provisions are intended to provide a mechanism for ensuring that your pricing and/or service levels are within market (taking into consideration the unique factors applicable to your deal). Set out below are some of the key components of a meaningful benchmarking provision.

In this contract corner, we consider the concepts of “good faith” in commercial contracts under English law.

Set out below are 10 contractual mechanisms for providing meaningful performance commitments and consequences if the commitments are not met. Maybe you will not need to invoke these mechanisms, but having firm rules may help drive good behavior (you know the old adage, “good fences make good neighbors”).