What is an Agile Contract?
Back in December 2023, Manu from Soft Fight hosted me on their weekly newsletter on pricing, to share my view on what an Agile Contract is. His view on the same topic is in this 'Legal Brief' issue. I'm expanding on that piece.
Contracts are static. Compliance is static. It's a one-and-done. That's a common misconception founders and managers have.
When applicable laws don't change, your product or services evolve - or it's the other way around. When none of the two move, you have internal procedures you need to document and reflect in agreements with your team.
When nothing really changes around you, do you really have a living business?
Contracts play a crucial role in the success of any business, as they define the terms and conditions of the relationship between parties involved. However, the importance of contracts can vary depending on the industry, the products or services offered, and the stage of development of the business.
Industry
The industry in which a business operates can significantly impact the importance of contracts. For instance, highly-regulated industries that require dealing with public authorities often have standardized Request for Proposals (RFPs), purchase procedures, and adherence contracts.
On the other hand, emerging industries may allow businesses to write their own contractual playbook or follow the conventions of incumbents.
What You Offer
The nature of the products or services offered by your business can also influence the significance of contracts. In e-commerce, for example, contracts must comply with with consumer law protection and follow the architecture of the e-shop.
For tech product companies, contracts should balance the protection of rights and assets with the need to sell quickly, especially if the business is funded by external investors.
Stage of Development
The stage of development of your business is in can also affect the importance of contracts.
Startups and SMEs often deal with constantly-improving variations of the same master contract, such as a shareholders' agreement, company articles of incorporation, or a combination of both. As the business grows and generates recurring revenue, client contracts need to reflect the optimization of costs, revenue, or both.
So what is an Agile Contract?
An agile contract is one that evolves with the business and helps it evolve. It should include
- standard clauses that should never be changed
- changeable clauses that adapt depending on the commercial reality of the relationship
- a modular framework that allows departments to change things related to their KPIs
- an autonomous character that allows managers to adapt the entire contract without seeking legal support
- a simple language that convinces the other party you are the right choice to sign the contract with
