Build Vs. Buy: Vendor Contract Shenanigans

(3 Min Read) Things to look for before signing service contract

Apr 02, 2022

Engineering teams will fiercely debate building vs. buy decisions. Post-debate, if they decide to buy and address the most critical and often forgotten components (cost center) of the buy decision, they can still end up on the short end of the deal.

Not because the vendor service is poor and SLAs were not tight enough, but because engineers never read the contract.

Reading the fine print in the contract is boring, and engineers run from that kind of work like its plague. And even if some engineers read it, they can't comprehend it. Not because engineers aren't smart (obviously they are), but they are not lawyer smart.

If you don't have a lawyer reviewing the contract, you will end up on the short end of the deal with the vendor.

All vendors have lawyers writing the contract on their side. You must review the contract with your lawyers before signing it. I know it's a pain, but no one said build vs. buying was easy.

Reading contract will allow you to bypass

Vendor Contract Shenanigans 😱

The type of shenanigans that are part of contracts is sometimes mind-boggling. Here are a few examples (in plain English and not lawyer English) that I came across when the lawyers highlighted it:

"The contract will automatically renew at the end of the term for the same duration as the original contract." And another section said, "The cost of canceling an existing contract is X% of the full contract." I mean, WTF!
"If we miss SLA, you have to ask for the refund within X days. Otherwise, we won't give you your SLA money". Here is verbatim from the Google Workplace SLA agreement:
“Customer Must Request Service Credit. In order to receive any of the Service Credits described above, Customer must notify Google (or, for Customers who ordered Services from a Reseller, Customer may notify Reseller and Customer's Reseller must notify Google) within thirty days from the time Customer becomes eligible to receive a Service Credit. Failure to comply with this requirement will forfeit Customer's right to receive a Service Credit. For Customers who ordered Services from a Reseller, Customer will receive applicable Service Credit from Reseller on behalf of Google.”
"Pay upfront (float the money) for the service you will consume, and we will invoice against it. If you don't consume all the floated money, you lose that money".
"We will use your company logo on our website to highlight you as our customer, even after you stop being our customer." This may seem benign, but the marketing department is not very happy about it.

I am sure there will be more such shenanigans that I will encounter in the future. If you have experienced a different, leave them in the comments. Would really appreciate it.

In summary, before you sign the contract have your lawyer review it to avoid these potholes. Trust me lawyers’ talk is different and doesn’t matter how smart your engineers are, they cannot decode lawyer talk.

If you have enjoyed this post, here are the other posts in the series of Build Vs. Buy that you may find interesting.