The creation of agreement templates is one of the more difficult tasks for any company. The problem is that many small- to medium-sized companies fail to recognize the inherent problems.
The easiest way for a company to get a template is to use one that some executive brought over from a previous life (metaphorically). That document may be unsuitable for many reasons:
- It came from a company with a different business model, so how can it fit the current company’s practices? I have seen companies try to convert a sales agreement to a service agreement, with predictable outcomes.
- That re-used agreement is the end point of a previous negotiation. Key provisions may have been conceded in the initial negotiation for something of value, or because the point just could not be won. Using the template now as a starting point means that those concessions have already been surrendered without receiving anything in return. That violates one of the prime rules of negotiation.
- Key people may not have been included in the process of preparing the template. Perhaps protection of intellectual property was not a problem at the old company but is at the new one. The old template is often used without consulting people in development, maintenance, finance or engineering to determine what new provisions or major changes are required.
Starting your draft with an old agreement template is sometimes a good way to save money and speed the process. It is a pitfall if the adopter does not understand the issues involved and how to modify the agreement appropriately.