In addition to the factors that influence the TermScores of all provisions, which can be viewed here, TermScout also considers the following factors when reviewing specific provisions. Information on industry-specific provisions can be found below.
|Provision||Factors affecting customer favorability|
|Limits on Company’s Liability|
- Is the limit on types and amounts of damages rationally tied to the value and risk of the services?
- If the limit on amounts of damages is tied to fees paid:
- Is it fees paid for all services, or just a subset of services?
- What is the amount of time used to measure fees paid, and when does the time period begin?
- Are there reasonable and customary exceptions to the limits on types and amounts of damages sufficient to protect the customer against the types of liabilities that could be most harmful and/or over which the customer has little or no control?
- Are there other provisions that might materially impact a customer’s ability to recoup damages from a vendor, such as limits on the period of time during which a claim can be brought or unreasonably broad force majeure provisions?
|Your Indemnification of Company|
- If the customer must indemnify the company, is the scope of the indemnification rationally tied to the legitimate needs of the company?
- Is the indemnification narrowly tailored to protect those legitimate needs?
- Could the provision be interpreted to require the customer to indemnify the company for harms caused by the company?
|Limits on Your Liability|
- Does the company offer any limitations on the types or amounts of your liability?
- If so, how do these limits compare to the limits on the types and amounts of the company’s liability?
- Are the exceptions to the limits on types and amounts of your liability narrowly tailored and rationally related to the company’s legitimate needs?
|Company’s Indemnification of You|
- Does the company indemnify you against harms caused by the company over which you have little or no control (e.g. claims that your use of company’s software infringes a third party’s IP) or other claims that could be especially damaging to customers?
- If there are exceptions to the company’s indemnification obligations or procedures that must be followed in order for the obligations to be binding, are the exceptions and/or procedures reasonable?
- Are indemnification obligations clearly carved out of the limitation of liability? Are there other issues potentially denigrating the effectiveness of the indemnification (e.g. exclusive remedies provision)?
- Does the company offer warranties sufficient to protect the customer’s reasonable expectations about the product or service?
- Are the disclaimers of warranties narrowly tailored? Do the disclaimers strike a balance between the company’s reasonable and legitimate business interests and the expectations of its customers?
- Does the company disclaim its own actual warranties (e.g. does it broadly disclaim “all express warranties,” without qualification)?
- Does the company disclaim the implied warranties (e.g. the implied warranties of merchantability, fitness for a particular purpose, etc.)?
|Termination for Convenience|
- When a contract is entered into for a defined term, do the customer or vendor have any rights to terminate for convenience?
|Termination for Cause|
- When a contract is entered into for a defined term, do the customer or vendor have any rights to terminate for cause?
- If the company does have such rights, are they reasonable?
- Will the customer receive a refund for any prepaid fees if it terminates an agreement for cause?
- Upon expiration or termination of an agreement:
- Does the company place any unreasonable burdens on the customer?
- Does the company commit to returning the customer’s data and confidential information (if applicable)?
- Are there any unexpected or unreasonable consequences?
|Readability of the Agreements|
- How difficult is it to make read and understand the contracts, policies and other agreements that govern the use of the products and services in question?
- Are there multiple layers of nested agreements that are difficult to sort out?
- When there are multiple documents that must be understood, is it clear how the documents interact with one another and which govern in the event of inconsistencies among them?
- Does the company itself offer plain language explanations of any of its provisions?
- Is it relatively easy to find the documents needed to conduct a comprehensive review?