Governing Documents – Best Practices

By: Kristy Achey, Advanced Certified Paralegal

Gone are the days of conducting business per the terms of a simple 2 to 3-page agreement. More often than not, there are several documents which collectively govern business relationships. Before signing a Master Agreement (or any other contract for that matter), it is important to review it carefully (among other things) for language which incorporates and binds you to the terms of other documents which are incorporated by reference. As an example, “Purchaser agrees it will comply with the most current version of the Terms of Use and Privacy Policy made available on Seller’s Site.” By signing off on language such as this, you are agreeing to “the most current version of the Terms of Use and Privacy Policy made available on Seller’s Site,” even though you may not even know what those terms contain. Additionally, as written, Seller may update the versions as it wishes and Purchaser would still be bound.

An example best practice in this scenario would be to revise the language to: “Purchaser agrees it will comply with the Terms of Use and Privacy Policy attached hereto and incorporated herein as Exhibit “A.” This approach allows you to (1) negotiate those additional terms before signing off to indicate your agreement and (2) ensure the version you agreed to at the time of signing does not change during the course of your agreement without your express written consent.

When multiple documents govern a business relationship, it is also important to indicate the order of precedence between the governing documents. Here is some sample language, “In the event of a conflict or inconsistency between or among the Purchase Order and/or Subscription Agreement, or any other agreement which has been agreed upon in writing, the documents will control as follows (unless otherwise expressly agreed to in the applicable Purchase Order): (1) Purchase Order; (2) Subscription Agreement; (3) any other agreement which has been agreed upon in writing.”

Ensure you are not overlooking governing terms and conditions by following these steps:

Read agreements word for word and understand the terms contained therein BEFORE signing.

  1. If the agreement references another document (Privacy Policy, NDA, Purchase Order, Terms of Use, etc.), read and understand that document as well.
  2. Negotiate language you are not comfortable with.
  3. Do not agree to “the most current version” of any document. Instead, attach the exact version you are agreeing to as an Exhibit to the master agreement.

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Disclaimer: This article provides general information and materials related to contract management. This article does not provide legal advice. Agile Contract Management is not a law firm nor does it provide legal advice. You should contact an attorney to obtain advice with respect to any particular legal issues or questions.

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