I help clients negotiate SAAS deals, and I like this as a template. It's better than 95% of the contracts I see. But since this is the internet, I will use the rest of this post to complain about things:
1. Formatting: One column of text is better than 2. It's digital, we don't need to cram words in to save paper.
2. Information Architecture. Contracts longer than 2 pages should have a table of contents. In most use cases, people are only looking for 1 or 2 specific terms in the contract. ToC helps.
3. Naming is Hard. Names should suggest some unique aspect of the thing they represent. In this contract, the parties are defined as "Company" and "Client." But both parties are companies. Using "Company" to refer to only one of the two companies invites confusion. Yes, it's defined. Yes, it's standard practice. But a better defined term might be "ASP" or "Host" or "Provider", etc.
4. "Herein." I don't like herein.
4.1 Herein is stuffy. No one talks like that.
4.2 Herein is ambiguous. http://www.adamsdrafting.com/herein/
4.3 Instead, use "in this agreement" or "in this paragraph."
5. Arbitration? Going to court is a hugely expensive distraction. Arbitration is slightly less expensive and distracting. Any reason not too ask for arbitration?
I have a personal rule never to throw MCSD at opposing's draft, but this is a form, so I'm down. Ken Adams has a posse. We should make t-shirts.
On the other hand, from a practical point of view, all the nits you pick add up to a certain kind of camouflage over the agreement. If the point is not what the contract says, but that YC said it, now it's "standard", and you can not think about it, then enlightened style is at odds with (facilitated indifference to) substance. For a first sale in particular, the immediate benefit of the fact of a sale probably outweighs probability times cost of any conceivable drafting flaw that doesn't produce uncapped liability, a cloud on IP, or some other existential threat.
When I look for a ray of hope, it's the number of blanks. If this thing has to go back and forth, and nobody is going to sign it as presented, then by all means make it as modern as possible. If it's going to be read and handled, it ought to read and handle well.
" For a first sale in particular, the immediate benefit of the fact of a sale probably outweighs probability times cost of any conceivable drafting flaw that doesn't produce uncapped liability, a cloud on IP, or some other existential threat."
I had to parse this sentence about 10 times and still don't entirely get what you're saying
Touche. Thanks for making such an effort to understand the sentence.
What I tried to convey is that the ability to say you've made a sale is worth a lot. It's a milestone, and it comes in the vulnerable make-or-break days of a company.
A flawed contract provision only hurts when circumstances force you to live by or enforce that provision. The chance of that happening for any provision of any particular contract is usually low. On the other hand, if the flaw in the language can shut your business down, even a small chance of that bad outcome is worth worrying about.
I assume that a very orthodox proposal will draw less attention, prompt less negotiation, and get more deals signed quickly. My conclusion is that, because the first sale is worth so much when you need it, you might be better off with a traditional, error-prone form that's easier to get signed than a modern, technically superior form that protects you in edge cases and after long negotiations. Your business might fail because you never sold, long before anyone has any reason to sue you.
In my defense, I don't choose to express myself personally in the style of my contracts. You'd probably have understood me better if I did, but no one should have to live that way.
1. Formatting: One column of text is better than 2. It's digital, we don't need to cram words in to save paper.
2. Information Architecture. Contracts longer than 2 pages should have a table of contents. In most use cases, people are only looking for 1 or 2 specific terms in the contract. ToC helps.
3. Naming is Hard. Names should suggest some unique aspect of the thing they represent. In this contract, the parties are defined as "Company" and "Client." But both parties are companies. Using "Company" to refer to only one of the two companies invites confusion. Yes, it's defined. Yes, it's standard practice. But a better defined term might be "ASP" or "Host" or "Provider", etc.
4. "Herein." I don't like herein. 4.1 Herein is stuffy. No one talks like that. 4.2 Herein is ambiguous. http://www.adamsdrafting.com/herein/ 4.3 Instead, use "in this agreement" or "in this paragraph."
5. Arbitration? Going to court is a hugely expensive distraction. Arbitration is slightly less expensive and distracting. Any reason not too ask for arbitration?