Contract Management Body of Knowledge (7th Edition)
ISBN: ISBN-13: 978-0-940343-92-4
Publisher: National Contract Management Association
Publication Date: 2022
Scenario:
You are the Senior Contract Analyst for Horizon Software Corp. Your company is negotiating a $1.2 million agreement to provide a SaaS platform to a major enterprise customer (Global Retail Inc.). Global Retail’s legal team sent over their draft agreement containing three specific clauses that your executive team is concerned about.
Assignment Tasks:
Analyze the three drafted clauses below and draft a formal memorandum to your Chief Revenue Officer:
- Clause 1 (Indemnification): "Seller shall indemnify, defend, and hold harmless Buyer from and against any and all claims, losses, damages, liabilities, and expenses (including legal fees) arising out of or related to any breach of this Agreement, performance of services, or product failure, regardless of fault."
- Clause 2 (Limitation of Liability): "Buyer’s total liability for any and all claims arising under this Agreement shall be capped at $10,000. Seller’s total liability shall be uncapped and include indirect, incidental, special, and consequential damages."
- Clause 3 (Termination for Convenience): "Buyer may terminate this Agreement for convenience at any time upon 3 days' written notice without further obligation or payment for unbilled work in progress."
Deliverables in Your Memo:
- Risk Assessment: For each clause, explain why the current wording creates severe commercial or operational risk for Horizon Software (SLO 2).
- Proposed Redline/Revision: Rewrite each clause to establish a balanced, market-standard allocation of risk between buyer and seller.
- Negotiation Rationale: Provide a brief 2–3 sentence justification for your proposed changes that your sales team can present to Global Retail during negotiations.
Note: This submission must contain no fewer than 500 words, and must be a Word document.