The Moore Barlow Commercial & Technology team has recently provided successful commercial contract support to a technology client’s in-house legal team with regard to a weather platform – ensuring that its tenders were amended to protect the client’s key legal and commercial concerns and submitted on time.
About the client
Our Client is a multinational technology supplier that provides a software platform for weather data and information and serves sectors including aviation/transport/mining/energy. They are market-leaders in their field.
The background and challenges
A large part of our client’s business involves lengthy tender submissions to very large organisations. Our client has to indicate their acceptance (or not) of commercial and legal terms which are naturally slanted in favour of their client. We have recently been involved in a number of such tenders and in particular have advised in relation to a tender for a major Swedish energy provider and also with regard to one of the leading UK airport operators.
These tenders posed a major challenge as our client has to both protect its key legal and commercial aims as well as minimising amendments as far as possible to be competitive in the tender. The tender terms also needed to be reviewed against a list of key legal issues of particular importance which include: the maintenance of IP rights in their products and deliverables, a reasonable risk allocation in relation to limiting liability, the freedom to replace products as necessary and minimising warranties with regard to inherently unstable matters such as the accuracy of weather forecasts.
In addition, the tender terms were lengthy and complex and submissions also needed to be made speedily to meet the tender deadlines.
What we did to help the client
We eased the burden on our client’s in-house legal team on both tenders by reviewing and amending the tender terms by reference to their internal list of legal issues and also based on our wide experience of what is standard in this sort of technology tender and so likely to be acceptable. This allowed our client to focus on other aspects of the tender submissions.
Accordingly, we struck a pragmatic balance between protecting the vital legal interests of our client whilst ensuring that their bid was still competitive. In particular, areas that required contractual amendments and clarifications included:
- ensuring that there were no time of the essence type obligations imposed on our client;
- amending the limitation of liability terms so that a large fixed sum cap was reduced to a sum linked to the last twelve months’ licence fees;
- ensuring that there was a disclaimer of any warranty/guarantee in relation to the accuracy of weather forecasts and in relation to any operational decisions taken by a user based on information provided by our client’s systems;
- the deletion of a number of non-standard indemnities that would have increased our client’s commercial exposure; and
- advancing arguments in support of the deletion of a proposed parental company guarantee, partly based on the financial standing of the contracting entity and also the availability of indemnity insurance.
As a result of our proactive advice to our client, we were able to greatly improve the reasonableness of the tender contract terms, reduce the legal and commercial risks undertaken and relieved the pressure on their internal legal team to devote to other aspects of the tender submissions.
John Warchus – Partner | Commercial and Technology
Key takeaways
As a result of our experience and efficiency, we were able to promptly turn around tailored amendments to be put forward to the end customer which more fairly allocated risk between the parties in a way that was consistent with our client’s own internal legal guidelines and industry practice.
How Moore Barlow can help you
As competitive tenders are increasingly used for high value, complex technology systems, it is vital that technology suppliers know how to stand their ground and seek a reasonable allocation of risk in any tender contract terms; in particular, they should ensure that:
- they are not signing up to any “time of the essence” clauses;
- they retain all IP ownership rights where this is required and that any licences granted are only for the term of the underlying agreement;
- all limitation of liability and indemnity clauses are commercially reasonable, preferably by reference to annual contract revenues rather than a large arbitrary fixed sum;
- given the increasing use of AI in systems where results and outcomes are uncertain, suitable warranty disclaimers and/or exclusion of liability are inserted to avoid open-ended and onerous obligations.
Our Commercial & Technology lawyers have a wealth of experience in tender/contractual matters and regularly advises on these issues, together with advice on a range of IP matters and GDPR/Data Protection. For more information about how our solicitors can help you, contact the Moore Barlow Commercial & Technology team today.
