For most small to medium sized businesses, the issue of keeping up with improved technology is often best dealt with by outsourcing. If, however, your company's success depends upon the skill and expertise of a non-employee, you need a solid procurement contract in order to protect you from liability.
Your agreements should be in writing to ensure that the terms of the agreement are clear and that nothing has been overlooked. This article will provide a few tips on some of the clauses you should look for in a procurement contract. As with all legal agreements, you should consult a lawyer if you have any questions or concerns.
Original Work - A provider of technology or services should be able to promise, in writing, that the material he or she provides is original and is owned by that person. Usually, this promise includes a clause that the material does not infringe the intellectual property rights of any other person and that the provider has the right to assign or license the material. An original work promise ensures the end user that no other person can legitimately interfere with the end users right to use the material. If your provider cannot provide this promise, you should consider finding another supplier.
Indemnity - The promise that the material supplied is original work is almost meaningless unless it is coupled with an indemnity from the supplier. An indemnity clause operates to protect the end user from the financial effects of a lawsuit by a third party who claims to own the material that the end user obtained from the provider. That is, a provider who promises that the material is original work should put his money where his mouth is and offer to pay you back for any money you lose or have to pay as a result of a lawsuit by another party who claims to own the material. Again, if your provider cannot offer you this assurance, you should think about taking your business elsewhere.
Performance - When you enter into an outsourcing or procurement contract as the end user, you have certain expectations about how the technology or services will assist your business; no doubt that the provider has assured you that its material will meet, or exceed, your expectations. In order to protect your right to terminate the contract if the material does not perform, you should ensure that those promises or assurances are clearly set out in writing in the procurement contract. If the performance promises are vague or incomplete, you run the risk of having to pay for and keep material that you are dissatisfied with. Make sure that you are happy with the length and scope of any warranty that the provider is able to offer as well before you sign the agreement.
Confidentiality - Whether you are procuring hard drives or system design expertise, it is likely that you will communicate confidential or proprietary information about your company to the provider. A reputable provider will promise to keep all of your confidential information confidential, and will not disclose it to anyone. This promise is especially important where one provider must service the needs of you and all of your competitors. You should also ask the provider to ensure that all of his or her employees are bound by the same confidentiality guarantee. You may wish to offer the provider the same promise - that you will keep his or her confidential information that you are exposed to completely confidential.