How do you know your contract terms are unreasonable?

Tim Cummins, president of International Association for Contract and Commercial Management, recently wrote a post on his Commitment Matters blog about how courts had thrown out contracts related to software and cell phone contracts. While the court rulings, should they stand, may impact various niches of contract law, we might want to follow Tim’s advice and not put unreasonable clauses in our contracts. I asked how companies can know in advance, without waiting for a court ruling, and Tim posted a thoughtful response.

Here’s another tip– talk to your sales people. If your sales people are selling around, under, or through your contract terms because they think the contract is unreasonable, you have a problem. We recently worked with a company whose sales force actively encouraged customers to sign on to contracts whose terms they didn’t really meet, along with advice on getting out of the terms. In addition to creating suboptimal outcomes for the company and customers on contracts, the issue clouded the value proposition for customers who should be on the contract and interfered with the ability to develop new offerings that would better address the customers who shouldn’t have been on the contracts. Getting out of this mess takes time, but at least they’re on their way.

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