Contract Cheat Sheet aka Common Contract Language of Concern Aug2011 by QCCMhB6Z



Subject:              Common Contract Language of Concern

The following “cheat sheet” outlines contact language problems commonly encountered in client
originated agreements. Be aware that these examples are not comprehensive of all potential
concerns. The issues/possible solutions are not always applicable due to possible modifying
language within a particular contract clause or in other location within the agreement. In
addition, there may be several alternatives to the “possible solution” language provided below.

OFFENDING LANGUAGE                                                WHY IT'S BAD                        POSSIBLE SOLUTION

CONSULTANT shall indemnify                                        Infers protection from "non-        Insert "negligent" prior to acts or
CLIENT for its acts, errors or                                    negligent" acts or performance      performance (a)
omissions (or performance)

CONSULTANT shall be liable and CONSULTANT may be 1%                Delete "in whole or in part"(a)
indemnify CLIENT for damages    negligent but responsible for 100%
caused, in whole or in part, by
CONSULTANT'S negligent acts
CONSULTANT shall name                                             Cannot name CLIENT as               Provide exception for workers
CLIENT as additional insured on                                   additional insured on workers       compensation and professional
all insurance policies                                            compensation or professional        liability insurance (a)
                                                                  liability insurance policies
CONSULTANT shall procure                                          Professional liability insurance    Delete subs or provide
insurance that protects from its                                  does not cover acts of              requirement for subs to maintain
acts and those of its                                             subconsultants                      their own insurance (a)
CLIENT may require complete                                       Policies include information that   Insert "relevant sections" of
certified copies of insurance                                     should be keep confidential (i.e.   insurance policies
policies                                                          application and premiums)
Ownership of all work product,                                    Need to maintain ownership to our Insert limitations on ownership,
including copyrights, will vest to                                designs for our reuse/modification particularly intellectual property.
the CLIENT                                                        on other projects and protect      Insert “reuse” clause limiting use
                                                                  CONSULTANT from reuse which to current project only (with
                                                                  CONSULTANT could be held           indemnity, if possible).
CONSULTANT shall maintain:                                        Most CONSULTANT’s don't have Delete (a)
Contractors Protective Coverage                                   these for professional liability
Contractual Coverage                                              insurance
Extended Reporting
“All Risk”
CLIENT may distribute or reuse                                    Could use in other unrelated        Insert “reuse” clause (a).
the work product in any way                                       projects
CONTRACTOR shall correct any "Defective" may be too broad; may Replace "defective" with
defective work               require CONSULTANT to correct "negligent"
                             non-negligent work

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Any dispute will be settled by                                    Mediation is preferred.             Insert ", mediation or other
binding arbitration                                               "Arbitration" needs more specifics, method of alternative dispute
                                                                  such as making sure all parties     resolution when both parties
                                                                  are subject, discovery is allowed, agree". Arbitration may be
                                                                  and decisions are consistent with acceptable with certain additional
                                                                  state laws                          provisions.

CONSULTANT to indemnify                                           CONSULTANT responsible for        Delete "sole" (a)
CLIENT for all except the sole                                    client's negligence
negligence of CLIENT
CONSULTANT will use it best                                       Higher standards of care          Delete "best" or "highest"; insert
efforts (highest quality)                                                                           "perform to the professional
                                                                                                    standard of care " (a)
CONSULTANT will require any                                       All subs likely will not have     Make sure subs can comply
subconsultants to maintain the                                    minimum insurance
same level of insurance
CONSULTANT will require all                                       Must pass down to subs            Can you? Will sub agree?
CONSULTANT will conduct the        "Safest" may constitute higher                                   Insert perform to the professional
work in the safest possible manner standard of care                                                 standard of care

CONTRACTOR warrants that          Warrants/warranty impose                                          Insert perform to the professional
Goods & Services are free from    requirements above the                                            standard of care
defects                           professional standard of care.
                                  "Defects" may be interpreted
                                  beyond negligent
CONTRACT will be interpreted by CONSULTANT may not be                                               Replace with "state in which the
laws of the State of "insert your familiar with laws in many States                                 work is performed"
CONSULTANT will indemnify                                         All acts can be considered        Replace "intentional" with "willful
CLIENT for its negligence and                                     "intentional"                     misconduct"
intentional acts
Copies of all documents, notes                                    ALL                               Exclude internal documents and
and any other work product shall                                                                    non-final notes, documents and
be transferred to CLIENT                                                                            work products. We must be able
                                                                                                    to retain copies of all documents.
CONSULTANT shall keep all                                         Too broad                         Insert limitations to confidentiality;
information confidential                                                                            at a minimum, must be able to
                                                                                                    respond to court order or
CONSULTANT shall maintain             Professional liability insurance is                           Replace "per occurrence" with "on
professional liability insurance with written or a claims made basis                                a claims made annual aggregate
limits of $1 million per occurrence                                                                 basis"

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Any claims made policies shall                                    Extended reporting or future        Replace with "Consultant shall
provide extended reporting                                        coverage is a specific rider to a   maintain professional liability
coverage or cover negligent acts                                  professional liability insurance    insurance for a minimum of 3
for a period of 3 years following                                 policy which costs more             years following projection
project completion                                                                                    completion"

CONSULTANT shall proceed with One sided authorizations to modify Modifications to scope/terms can
any CLIENT directed change while scope without agreement of      only be effected upon written
an equitable adjustment is       CONSULTANT                      agreement of CLIENT &
negotiated                                                       CONSULTANT

      may be a "deal breaker"


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