Floating Terms in Vendor Contracts: Cloud Services, Software Licenses, and Communication Agreements
Mitigating the Risk of Unilateral Vendor Changes to Key Terms

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Commercial Law
- event Date
Tuesday, September 19, 2023
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will discuss the myriad of risks with "floating" vendor contracts for businesses. The panel will discuss why floating contracts are dangerous and best practices for businesses to mitigate the risk of vendors unilaterally changing key terms of their agreements. These issues arise in almost every type of technology contract from cloud services, to software licenses, to telecommunications agreements.
Faculty


Mr. Overly focuses his practice on drafting and negotiating technology related agreements, software licenses, hardware acquisition, development, disaster recovery, outsourcing agreements, information security agreements, e-commerce agreements, and technology use policies. He counsels clients in the areas of technology acquisition, information security, electronic commerce, and on-line law. He is the co-author of A Guide to IT Contracting: Checklists, Tools and Techniques (CRC Press, 2012).
Description
In many modern vendor engagements, both the customer's data and several key areas of the vendor contract are stored in the cloud, including provisions on service level standards, security measures, support obligations, and service descriptions.
This means that key contract terms "float" in the cloud and can be changed at any time by the vendor, frequently without notice to the customer. Even if the customer is given notice, the customer often has no right to object to the changes.
Other challenges of floating contracts include their "as-is" nature, making them less susceptible to negotiation; the customer's inability to access key functionality and performance during the term of the contract; and the customer's limited ability to terminate the agreement, even if key terms change to its disadvantage.
Negotiating floating contracts is extremely difficult. Approaches to mitigate risks include requiring the floating terms to be in writing and attached to the agreement as actual, fixed exhibits, including language that the vendor cannot materially decrease the overall levels of performance and functionality reflected in the floating terms as of the date the contract is signed, and negotiating clear termination rights in the agreement.
Listen as our authoritative panel discusses best practices for mitigating risks to businesses entering "floating" engagements.
Outline
-
What are floating contracts and why are they dangerous?
- How can businesses mitigate the risk of vendors unilaterally changing key terms of their floating contracts?
Benefits
The panel will review these and other key issues:
- The definition of floating contracts and the risks they pose to businesses
- Effective approaches to mitigating the risks of floating contracts (methods of locking in terms, safety in numbers, falling back on termination rights)
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