To set the stage for this article, we have to understand what contracts are supposed to be and what they really are. They are supposed to be an equitable agreement between the vendor and the institution that is not written to either party’s benefit. Ha! That’s a good one. An individual bank can’t afford a staff of attorneys to draft an agreement, and if it could, its vendor wouldn’t accept it anyway. So instead, the bank starts with the draft provided by the vendor. What’s wrong with that, you ask? The vendor writes the contract to protect its interests. And every time it loses some money or has a bad experience, the contract gets one section longer as a loophole-closing clause is added. The bank’s job is to review the agreement and find the most onerous terms and try to get some relief on them.
Here are some examples from the contracts that cross our desk on any given day. And before you get carried away and start saying you haven’t let your bank agree to terms and conditions like the following, perhaps you want to get your agreements out and look. We see the following ALL THE TIME! Let’s get started.
Truly Outrageous Language (outrageous to us anyway) Follows:
We hope these ruminations are helpful. Bankers who read all the way to the end of this article are already halfway to being good contract negotiators. Congratulations!
Over the past decade, Cornerstone Advisors has negotiated contracts with virtually every major technology vendor in the industry. We put our proprietary database of vendor pricing and service terms to work to ensure you receive the best possible terms, conditions and price in negotiating your new or renewing contracts.