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ContractsRx Featured in SBDC Newsletter

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ContractsRx

ContractsRx is on a mission to make legal contracting seamless, accessible and repeatable.  Shannon Leonard and Ramon Rhymes, co-founders, make it their aim to reduce the time, cost and risk associated with business contracting and business outcomes.

The abrupt uncertainty that COVID-19 brought to ContractsRx and other small businesses resulted in an overnight shift from the known to the unknown.
While Shannon and Ramon are fortunate to be in a technology industry
with the tools in place to work at home, they quickly realized that they would
have to pivot their skill sets and adapt to their clients’ current needs.  Their sales pipeline dried up quickly as businesses were just trying to survive—something that, today, many small businesses have in common… Read more a the link below.

ContractsRx

Electronic Contracts Can Boost the Health of Your Business

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Many businesses are concerned about the time it takes to get business deals in place and although many businesses have come to accept electronic signature they still may be a little hesitant to change their own business practices to provide electronic contracts to other parties for signature.

Your business could benefit from the speed and consistency of contracting electronically in a world where repeatability could be the difference between 10% and 50% of your deals closing faster, with less risk.  2020 is here and electronic contracts have been proven to be valid!

Back in the Day:

Historically we have agreed to terms in a contract by verbal agreement or in writing where each party makes a mark on the paper indicating agreement (now known as a signature).

To begin with, to be legally binding, contracts are comprised of the following: 1) agreement by parties to enter into a contract, expressed by a valid offer and acceptance; 2) adequate consideration; 3) capacity; and 4) legality.

These contract rules came directly from federal and state Statute and were enforced through case law.

We have evolved and so have the rules:

In addition to basic elements of a contract, to be a legally enforceable, an electronically signed contract must include the agreement of the parties to conduct the transaction using electronic means. This has been supported both by the Uniform Electronic Transactions Act (UETA) and The Electronic Signatures in Global and National Commerce Act (E-Sign Act) and upheld by case law.

There are 2 Acts that define these additional requirements:

The ESIGN Act is a federal act, which means it affects people who do business online in all 50 states. The UETA, meanwhile, has been adopted on a state-by-state basis. Individual states have the option to adopt or reject the guidelines presented in the act. In most cases, where there is a conflict between the ESIGN Act and the UETA, the state law will govern. However, the ESIGN Act specifies that while state laws do not have to conform exactly to the federal law, they must provide equivalent protection for electronic contracts and electronic signatures.

At the present time, the UETA has been adopted by 47 states, along with the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Washington, Illinois, and New York have not adopted the UETA, however similar legislation that governs how electronic transactions are handled has been enacted in each of these three states

One of the key areas where the UETA differentiates itself from the ESIGN Act has to do with the notices that both parties must agree to before entering into an electronic transaction. According to the UETA guidelines, the type of agreement that must be made in order for an e-signature to be legally valid varies depending on the context and the circumstances. This gives companies latitude when conducting commercial transactions online. The UETA expressly provides that the party’s agreement is to be found from all circumstances, including the parties’ conduct. Terms like “automatic transaction” and “computer program” are defined broadly to give companies leeway in the ways they choose to do business without sacrificing consumer protections.

Welcome to the electronic age of contracting, improving the health of your business!

 

 

Deal Life Cycle Management

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Most businesses struggle with the process of getting contracts done.  That’s because the contracts processes is usually the tail end of a long journey in getting a client’s business and getting the deal ‘over the finish line’ operates as a powerful incentive to skip important steps in the process.  But skipping steps is costly in the long run.  Building a contracts ‘ecosystem’ is critical to an efficient deal making machine.

DLM Evolution

Effective contracting system increase Deal Capability as a Company matures.  But most organizations get stuck the early phases.

Level 1: Functional – Build – Store – Create

This early stage of contracting capability is describes the basics and all companies reach this initial level at some point in their maturity.  At this stage, a company has the ability to build contract templates, create contracts based on those templates and store and, to a limited degree, retrieve the foregoing in a basic contract repository.  At this stage, organizations are focussed on revenue generation, product development and other resource intensive activities that just getting a contract in the door is a primary focus.  The contracting process at this stage is also predominantly reactive and occupied with risk discovery in the deal making process.  It’s at this early stage that organizations develop contracting processes that lead to significant systemic issues in the later stage contracting process.  Once established, contract processes are stubbornly difficult to change as the cost of systemic change increases over time.  Advanced capability at this stage includes the ability to Reuse basic deal positions and basic contract Reporting.  This stage can extend well into the maturity of an organization because this stage covers the basics.

Level 2: Rational – Reporting and Reinventing

This secondary stage in the DLM evolution is often triggered by the development of reporting on contract system outputs.  The systematic review of what the contract process is producing inevitably leads to a desire to improve it (that which is measured, improves).  Based on reporting and as demands on the contracting process increase, organizations at this stage introduce minor improvements and capabilities designed to increase the efficiency of the existing contracting process.  Examples of this phase include documented subprocesses such as signature-process, contract review process, and improved contract templates.  While this stage is a marked improvement from the previous ‘Functional’ phase, it’s only marginally better because it focuses on improvements to the prior stage.  This stage continues the outsized reliance on the contracts/legal department to accurately aggregate the company’s contracting requirements to mitigate contracting risk.  This stage inherits the challenges from the previous phase because it never addresses them and, just like the previous stage, this stage can be quite difficult to evolve out of because it does introduce a degree of systemic improvement.

Level 3: Regenerative – Operationalize

This stage reflects the first step in advance contract capability development.  In this stage, organizations begin to develop corporate contracting risk profiles through the use of checklist review artifacts and playbook positioning.  This stage affords organizations greater contracting flexibility as they move away from relying on templates (which often are of little more use than a static term library when reviewing the other party’s agreement) and rely more on pre-developed, wholistic contract positions.  At this stage, the contracting process becomes the true aggregator of the operational requirements of an organization in producing goods and services that must be addressed in a healthy contracting process.  This stage typically sees a reduced reliance on manual processes and the route memory of the contracts/legal department in deal creation and greater reliance on pre-established positions and processes.  Risks are typically understood and emerging risks timely identified.   This stage can include early-stage decentralization of conturing functions such as NDA, Change Order, and Scope of Work development tasks occurring in non-legal/contract corporate functions.  This stage can also include systemic rigidity as corporate functions build rigid artifacts and bureaucratic approval processes that can slow contracting down.