Contract Review

 1. The final step in the vendor contracting process should be getting the vendor’s standard written contract and signing the contract in time to qualify for the vendor’s pricing incentives.

 2. The credit union should only submit a vendor contract to an attorney for review after the credit union has reviewed the contract itself and has assured the vendor that the contract will be signed by the credit union.

 3. Vendors that have been in business for a short period of time should receive greater contract protection because the vendors are fighting the big, established vendors.

 4. A vendor contract should not be expected to state what the product or service provided by the vendor does because the contract is only to address issues such as how long the contract will remain in effect.

 5. My credit union’s strategic policy is to be aggressive in its operations. This means we push vendors for every cost concession possible. It would be unreasonable for the credit union to then question the terms of the vendor’s contract.

What does forum conveniens mean anyway?

 6. The longest term possible is preferable in a vendor contract.

 7. The term of a contract is determined by the vendor because it is important to have the vendor obligated to the longest term possible.

 8. The longest possible term is preferable so that the vendor can’t increase prices or change terms during the term of the agreement.

 9. The renewal term of a contract should be at least as long as the initial term.

Term. The Agreement shall remain in effect until the date on which _____ is no longer obligated to provide any Service or Software under any Addendum. Each Service shall have an initial term of five (5) years following the Commencement Date thereof (the “Initial Term”). Upon expiration of the Initial Term, the Service shall automatically be renewed for successive one (1) year terms (each, a “Renewal Term”) unless terminated by either party in writing at least one hundred eighty (180) days prior to the expiration of the Initial Term or of the then current Renewal Term.

 10. A limitation of liability clause is standard in every vendor contract. There is no need to worry about these clauses or consider requiring a change.

 11. The credit union should not agree to a limitation of liability provision unless it applies to both the vendor’s liability and the credit union’s liability.

 12. A limitation of liability provision that ties the vendor’s maximum liability to an amount equal to six months of the amounts paid by the credit union to the vendor is a fair and reasonable contract provision.

Limitation of Liability. _____ TOTAL LIABILITY FOR A SERVICE IS LIMITED IN ALL CASES AND IN THE AGGREGATE TO THE AMOUNT OF FEES ACTUALLY PAID BY CLIENT FOR THE CORRESPONDING SERVICE DURING THE SIX (6) MONTHS PRECEDING THE DATE OF THE EVENT THAT IS THE BASIS FOR THE FIRST CLAIM. NOTWITHSTANDING THE FOREGOING, _____ SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, DELAY OR PUNITIVE DAMAGES WHATSOEVER (INCLUDING BUT NOT LIMITED TO, DAMAGES FOR LOSS OF BUSINESS PROFITS OR REVENUE, BUSINESS INTERRUPTION, LOSS OF INFORMATION, OR OTHER PECUNIARY LOSS), EVEN IF _____ WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

 13. A warranty disclaimer is a reasonable contract term because warranties, especially implied warranties, are unfair to vendors.

 14. A warranty disclaimer can’t disclaim the written representations made by the vendor’s sales representative.

 15. A warranty disclaimer can’t disclaim the oral representations made by the vendor’s sales representative.

 16. The implied warranties of merchantability and fitness for a particular purpose do not apply except to the purchase of consumer goods so the implied warranties would not apply to vendor contracts.

 17. Warranty disclaimers are not enforceable against a credit union unless the disclaimer is specifically signed by the Board Chairman. The highest ranking credit union official must sign a contract.

Disclaimer of Warranties. EXCEPT AS EXPRESSLY PROVIDED IN THESE GENERAL TERMS OR AN ADDENDUM, ___ DISCLAIMS ANY AND ALL OTHER WARRANTIES, CONDITIONS, OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN) WITH RESPECT TO THE SERVICES, THIRD PARTY SERVICES, SOFTWARE, DELIVERABLES, EQUIPMENT, AND MATERIALS PROVIDED UNDER THIS AGREEMENT,

INCLUDING, WITHOUT LIMITATION, ANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE, OR ERROR FREE OPERATION (EVEN IF CREATED BY THE INTERNATIONAL SALE OF GOODS CONVENTION, AND WHETHER OR NOT _____ KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING.

IN ADDITION, _____ DISCLAIMS ANY WARRANTY OR REPRESENTATION TO ANY PERSON OTHER THAN CLIENT WITH RESPECT TO THE SERVICES, THIRD PARTY SERVICES, SOFTWARE, DELIVERABLES, EQUIPMENT, AND MATERIALS PROVIDED UNDER THIS AGREEMENT.

 18. A liquidated damages provision requires that all damages be payable in liquid funds rather than a judgment being taken against the credit union with payment arrangements being required after the judgment.

 19. Liquidated damages provisions are good for the credit union because they save time in any court proceedings by not requiring that time be taken to prove actual damages.

 20. Liquidated damages can be harmful to the credit union if the credit union wants to terminate the contract before the end of the term.

Liquidated Damages. If a Service is terminated by _____ prior to the end of its term pursuant to the terms of Section _____ above or as otherwise specifically provided in an Addendum, or if Client terminates a Service prior to the end of its term except as otherwise permitted hereunder, then Client shall pay FIS, in addition to any other amounts owed, liquidated damages equal to: (i) the greater of (a) fifty percent (50%) of the average monthly fees incurred for each such Service during the preceding six (6) months (or, during such shorter period if the Service has been in production for less than six (6) months),

(b) any minimum fees due for each such Service, or (c) the estimated monthly charge for the Service (as set forth in the applicable pricing attachment), in each case multiplied by the number of months remaining in the then current period applicable to the Service; (ii) any out of pocket expenses directly incurred by _____ as a consequence of the termination; (iii) any credits or incentives given to Client by _____ on or before the Commencement Date of a Service; plus (iv) any unpaid one-time fees relating to each terminated Service.

Client shall not be entitled to a refund of any pre-paid amounts. If termination of the obligation to provide such Service occurs prior to the Commencement Date of any such Services, then the amount due under subsection (i) above will be calculated using the minimum monthly amount due for each such Service, if any, or the estimated monthly charge (as set forth in the pricing attachment).

 21. If the vendor is a company located in the United States, federal contract law always applies to contracts. It doesn’t matter what law the contract selects as the applicable law.

The Agreement shall be governed by the laws of the state of Florida, without regard to internal principles relating to conflict of laws.

 22. If the credit union only does business in Utah, any lawsuit arising out of a vendor contract must be brought in Utah.

 23. Arbitration is preferable to litigation because the credit union can complete arbitration without needing to hire an attorney.

Any dispute, difference, controversy or claim arising out of or relating to the Agreement shall be settled by binding arbitration before a single arbitrator in Jacksonville, Florida in accordance with the Commercial Arbitration Rules (including Procedures for Large, Complex Commercial Disputes) of the American Arbitration Association.