Standard Form Documents

What are Standard Form Documents?

Standard form documents are pre-set templates or forms that can be used by your company to develop agreements with internal stakeholders or third parties.

Standard form documents are the pre-created templates used by your company to create a new contract or an agreement with an internal member or a third party. Most of the content in these documents remains the same such as terms and conditions and roles and responsibilities that are set by your company and are typically not altered or negotiated apart from in exceptional circumstances. The remaining content, such as the identify of the counter parties and key dates etc are added as per the requirements of each agreement.

Examples of common standard for documents include:

• Employment Agreement: Includes your company’s details, terms of employment, designation, roles and responsibilities, leave policy, employment benefits, and termination procedure
• Consulting, or Contracting Agreement: Includes your company’s details, terms of contract, penalties for any breach, and rights and obligations for both parties
• Customer Agreement: Includes description of products, or services offered by your company, payment terms and conditions, guarantees and warranties and legal liability of both parties
• Purchase Order: Includes your company’s name and address, details of product, or services purchased, purchase and payment terms and conditions and dispute resolution mechanism

Why are Standard Form Documents important for business today?

Standard form documents enable your company to:

• Increase the speed of the contracting process by having a starting point that is as close to the final agreement as possible
• Maintain consistency across teams and jurisdictions, as the same template is utilised for all agreements
• Minimise the number of different obligations that the company may have across its collection of legal agreements
• Improve efficiency in internal sign-off of new agreements by limiting the review to any modifications that may have occurred
• Efficiently incorporate any new company positions or regulatory requirements into future contracts by simply updating the standard form document
• Improve the understanding of these agreement with third parties, especially in repetitive transactions

Why are Standard Form Documents important for an event tomorrow?

Standard form documents are important for an event tomorrow, as they help:

• Potential investors to determine your company’s control, authority and responsibilities across agreements
• Reduces the potential risk exposure of the company by limiting the number of different contract clauses to which it is exposed
• Reduce the volume of work required by potential investors to review the risk exposure of the company to obligations in individual contracts by only needing to review the standard form contract and any contracts that vary from it
• Reduces the time required of the management team during due diligence preparation by limiting the number of contracts that need to be collated to only the standard form documents and those other contracts that vary from them

Pros of addressing Standard Form Documents

• Increases the speed and reduces the cost of the contracting process
• Reduced overall risk exposure due to reduced variation in contracting terms
• Increased investor confidence due to this reduced risk exposure
• Reduced due diligence time for management and investors

Cons of not addressing this topic

• Excess resources consumed in the contracting process as re-creating documents can be a time- consuming and expensive process
• Potentially increased risk exposure given keeping track of a large number of contract variations and their impact on the business going forward is very difficult
• Reduced investor confidence as a result of the number of different contractual obligations being very high
• Addition time required by management and investors to assess all of these unique contracts