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Colin Levy

Understanding and Creating Contract Playbooks

Contracts are the undercurrent that drives business forward. They define the contours of most business relationships, and are how most businesses make money. As a first-year law student, you are taught the law of contracts: offer, consideration, and acceptance. These concepts are useful for a lawyer, but no one (besides legal professionals) gives much thought to these things. What is far more useful for the business is understanding how contract cycles can be sped up. That’s where contract playbooks and contract templates prove their worth.

Which bring up a valid question: what is a contract playbook?

Contract playbook: (n) a document or set of documents that outlines a company’s standard contractual terms, what each one means, and what fallback clauses can be used in the event that a company pushes back against one of the standard terms. Can also include the definition of dealbreakers for the company, e.g. what terms or conditions a company simply cannot accept due to strategic, economic, or some combination of the two reasons.

A properly created playbook allows for Sales, Legal, and other functions to remain aligned during contract negotiation. It also allows for the speeding up of a deal since all stakeholders can rely on the playbook for an answer rather than waiting on a response from someone else.

What are the Benefits of having a playbook?

There are plenty of benefits of having a contract playbook including, but not limited to:

How Do i create a playbook?

Now that you know what a contract playbook is, how do you actually create one? Here are the three basic steps:

  1. Start by reviewing your existing contracts and note the commonalities among them, primarily the often agreed to positions, the areas where deviations from your contract most often occur, keeping in mind that some of those deviations may have been forced, e.g. where the company took a calculated (albeit unwanted) risk to accept an otherwise unacceptable position. Also, take note of when your company has walked away from a deal.
  2. For each commonly negotiated clause, start to create fallback clauses that are acceptable to the company. Collaborate with other functions like Finance, IT, Sales, etc. to get and incorporate their input into the playbook.
  3. Establish and document workflow for escalation, e.g. what happens when a customer will not agree to the standard or fallback positions. Document in your company who has the final authority to make and sign off on ad hoc deviations from terms.

As for what a contract playbook looks like, it often is a document that states key contract negotiation parameters, standard and fallback positions, and the escalation and approval processes. A more comprehensive playbook will contain the above as well as a deal review workflow and a list of specific clauses, the fallback language for those clauses, and dealbreaker terms. Sometimes this document may be a chart, it may be an Excel file, or it may be a combination of document and chart. It is dependent on your organizational size and needs.

What Parts of A contract does a Playbook include?

A playbook often, at the very least, will address these key parts of a contract:

The bottom line with playbooks is that, while they are often a lot of work to create, putting the time in to create one will save you boatloads of time down the road and facilitate implementing technology to assist your management and review of agreements, which is something becoming more and more commonplace among companies.