Funding your competitors’ advantage

Sunday, February 15th, 2015

From time to time most organisations have a need to engage consultants.

The precise nature of the scope of work requires expert definition, otherwise there is scope for a dispute. Some organisations have their own Contract Terms and Conditions, whilst others will sign the Consultants’ Contract.


Will procurement have an involvement in this process?

In our experience they may, but are likely to be asked to place ‘an order.’ You will find it informative to read some extracts from an actual Agreement for an international Consultant’s professional services.

Would you sign them off as acceptable?

The Consultant’s name appears as xxx, although the Agreement is in the public domain.


Clause 6 “Work Product.” [What could be in store here?]

It reads,

“Client shall have a perpetual, irrevocable, non-transferable, paid-up right and licence to use and copy the Materials and prepare derivative works based on the Materials for its internal use, subject to the terms of Section 5.

All other rights in the Materials, subject to the terms of Section 4, remain in and/or are assigned to xxx.

The parties will cooperate with each other and execute such other documents as may be appropriate to achieve the objectives of this Section.

Client acknowledges that xxx may develop for itself, or for others, problem solving approaches, frameworks or other tools or information similar to the Materials and processes developed in performing the Project and any additional Services, and nothing contained herein precludes xxx from developing or disclosing such materials and information provided that the same do not contain or reflect Confidential Information.


Clause 8 “Client acknowledgement.” [Those who scan read contract clause headings to get a clue what the clause is dealing with would be in for a surprise if they guessed what this will deal with].

It reads,

“It is the long-standing practice of xxx to serve multiple clients within industries, including those with opposing economic interests, as well as counter-parties in potential and actual merger, acquisition and alliance transactions.

xxx is committed to maintaining the confidentiality of each client’s information (generally as described in this agreement) in all such situations.

Accordingly, the Client acknowledges the possibility and agrees that xxx may have served, may currently be serving or may in the future serve other companies whose interests are adverse to those of the Client, including parties with whom the client

(i) competes;

(ii) has a commercial relationship or potential commercial relationship (e.g., suppliers, distributors);

(iii) enters into competitive bidding situations; and

(iv) enters into or considers entering into merger, acquisition, divestiture, alliance or joint venture transactions.


Perfectly acceptable clauses? – so, would you sign them off?

Hey, if you want our commentary highlighting the risks of accepting clause 6 and 8 drop me a note and I’ll share my perspective (FWIW, its not wholly positive :))




More on contracts  and risk here, here and here


Here’s how we can help you…

Brian Farrington, works with Leaders to help them improve the way they buy. And we’re increasingly working with technical specialists to help them leverage value from their relationships with commercial colleagues – to deliver successful projects.

We provide some valuable free resources, like ‘Think Procurement’ for more useful insights – and opinion – on procurement, risk, contracts and negotiation straight to your inbox (sign-up for free in the box below and also receive “10 Questions you should ask about purchasing and supply chain risk management”).

Also, don’t forget to check out the free procurement risk demo at Procurisk®.