Forget Michael Meyers and the newest installment of the Halloween franchise. If you really want to be scared, you should read some of the most hair-raising items that managed to make it into actual financial institution third-party vendor contracts.
1. We might have lied to you to get you to sign this contract. Too bad.
Here’s a ghastly contract clause:
This Agreement, and attachments hereto and future agreements contemplated herein, when executed (all of which are incorporated by reference), constitutes the entire agreement between the parties and supersedes any prior, collateral or contemporaneous negotiations, representations and agreements, oral or written agreement, between the parties with respect to the subject matter hereof, including all representations made by each party which induced the other party to enter into this Agreement.
It’s a little hard to understand if you’re not up on your legalese, so let me translate. Between all the heretos and hereins, it basically says that the vendor can lie to you about its products and services to get you to sign this contract, but there is nothing you can do about it once you sign this agreement.
That’s not exactly a good start to a vendor relationship, nor does it bode well for the future.
2. I’m sorry. You didn’t expect us to actually read the contract, did you?
Cut and paste is a handy tool, but only if you make sure you proofread the entire document when you’re done. Otherwise, you can end up with an agreement like this lease which contains clear contradictions:
No cooking shall be done or permitted in the Premises without the Landlord’s consent, except that use by Tenant of Underwriter’s Laboratory approved microwave ovens or equipment for brewing coffee or similar beverages shall be permitted… Landlord does consent that Tenant may test cook on the outside patio its regular menu type items.
The first part is pretty standard, but the second part clearly conflicts with the first and doesn’t apply to a financial institution. If a vendor contract contains errors like this, it makes you wonder what else they aren’t being careful with.
Don’t just fill in the blanks. Read the entire agreement.
3. Congratulations! This software may get old and outdated, but it will still outlive you.
I once saw an agreement with a 99-year license for software. Think about that for a minute. Halley’s Comet will come and go. Twenty four presidential elections will pass. Marvel Comics will probably be on its 25th Spider-Man movie. Your institution will still be paying for access to a piece of software so old it’s almost guaranteed a spot in a museum of dead software.
A lot changes in 99 years. Just think back to 1919. That’s the year pop-up toasters and short wave radios were invented. You don’t even want to use a mobile phone from five years ago. You definitively don’t want to saddle your institution with Jurassic software.
Make sure you carefully read every contract your institution signs. If a clause doesn’t make sense or you can’t translate legal jargon, ask for help. It’s cheaper to pay for a bit of legal advice than end up with an expensive, long-term commitment or a shady partnership.
Not ready to review every line of every vendor contract? Request a demo of our contract management solution, and let our team make sure you don’t get surprised by contract clauses.