Welcome to “Making Legal Your Superpower”, a series designed to help you rethink your relationship with legal teams—whether you’re working with in-house counsel or outside advisors. We’ll cover everything from picking contracts to common pitfalls and how to build a strong partnership with your legal team.
Although I am not your lawyer, I am a lawyer, and I am here to help you make legal your superpower. In our first post, we’re focusing on the foundation of every deal: choosing the right contract.
Focus on Substance, Not Semantics
One of the most important—and sometimes most confusing—aspects of any business deal is how to choose the right contract. Whether it’s a Non-Disclosure Agreement, CSA, MSA, EULA, license agreement, or Data Processing Agreement, the variety of contracts and acronyms can feel overwhelming.
But does it really matter what the contract is called? Yes and no.
The truth is, the name of the contract is less important than what’s inside. Far too often, companies get bogged down in debates over which agreement to use, rather than focusing on the goals of the deal itself. The real focus should be on the terms and provisions that are most relevant to your specific transaction. It’s not about whether you call it an MSA (Master Service Agreement or a TOS (Terms of Service); it’s about ensuring the contract is fair, clear, and protects both parties while achieving each side’s business objectives.
Picking the Type of Contract
The type of contract you choose will depend on the nature of your deal and the company or person on the other side, but remember: the title is just a name, and different people use different names to refer to the same kind of agreement. After all, a rose by any other name would smell as sweet. What matters is that the terms within the contract match your business needs. The next time someone tells you that a contract isn’t correct simply because of the title, look beyond the text and focus on the substance of what’s written in the contract.
To help you navigate the confusing web of contract titles, here’s a quick rundown of some common contract types and what they are generally used for:
Contract Type: Confidentiality
Contract Title: NDA, MNDA, CDA
Also known as:
– Non-Disclosure Agreement
– Mutual Non-Disclosure Agreement
– Confidential Disclosure Agreement
Contract Purpose:
What it’s for: Used for preliminary conversations between companies considering entering into a business relationship.
What it does: Protects confidential information that one company shares with another—think sensitive data like security audits or proprietary information that shouldn’t be made public. NDAs are common in B2B settings where sensitive details need to be protected upfront.
How it’s Done:
Negotiated: Sometimes
Execution: Signature, sometimes clickthrough
Contract Type: SaaS sales
Contract Title: CSA, MSA
Also known as:
– Cloud Service Agreement
– Cloud Subscription Agreement
– Master Service Agreement
Contract Purpose:
What it’s for: Used for enterprise or more complex purchases where sales support is involved.
What it does: These contracts govern customer access to a product and handle critical aspects like payments, termination, and customer responsibilities. MSAs and CSAs allow multiple purchases under a single agreement, making them efficient for recurring customers.
How it’s Done:
Negotiated: Often
Execution: Signature
Contract Title: SLA
Also known as:
– Service Level Agreement
Contract Purpose:
What it’s for: Reassuring customers that your product or service will be available when they need it.
What it does: Defines uptime commitments, response times, and customer credits if service levels aren’t met. It’s usually paired with a sales contract, rather than standing alone.
How it’s Done:
Negotiated: Rarely
Execution: Posted online or signature
Contract Type: Clickthrough sales
Contract Title: TOS, TOU, EULA
Also known as:
– Terms of Service
– Terms of Use
– End User License Agreement
Contract Purpose:
What it’s for: Best for self-service or product-led sales that don’t involve a sales team.
What it does: Like a CSA, these agreements give customers access to a product but without the option to negotiate terms. EULAs, TOSs, and TOUs are most often agreed to by an individual during account creation or product purchase.
How it’s Done:
Negotiated: Never
Execution: Clickthrough or clickwrap
Contract Type: On prem or downloadable software sales
Contract Title: Software License Agreement, MSA
Also known as:
– Master Service Agreement
Contract Purpose:
What it’s for: Covers downloadable, on-premise, or self-hosted software.
What it does: Similar to a CSA, but tailored specifically to software that a customer installs or hosts on their own systems. It allows for multiple purchases under one contract, making it a flexible option for larger customers.
How it’s Done:
Negotiated: Often
Execution: Signature
Contract Type: Services sales
Contract Title: PSA
Also known as:
– Professional Services Agreement
Contract Purpose:
What it’s for: Engaging a company for professional services, whether or not deliverables are involved.
What it does: A PSA enables one company to hire another for specific projects, often involving specialized services or deliverables. It also allows for ongoing engagements under one agreement.
How it’s Done:
Negotiated: Often
Execution: Signature
Contract Type: Business terms of a deal
Contract Title: SOW, Order Form
Also known as:
– Statement of Work
Contract Purpose:
What it’s for: A key part of contracts like CSAs, PSAs, or Software License Agreements.
What it does: Outlines the specific business terms of a deal, such as pricing, delivery timelines, or quantities purchased. It’s also the go-to document for customers making multiple purchases under a single agreement, like expanding their licenses or adding new products.
How it’s Done:
Negotiated: Sometimes
Execution: Signature
Contract Type: Pre-product sales
Contract Title: Design Partner Agreement
Contract Purpose:
What it’s for: Used with early believers when a startup’s product isn’t quite ready for general release.
What it does: Secures a commitment from a target customer to collaborate in product development and provide feedback. These agreements are crucial for startups seeking product-market fit, offering a formal framework for early-stage partnerships.
How it’s Done:
Negotiated: Rarely
Execution: Signature
Contract Type: Data privacy
Contract Title: Privacy Policy
Contract Purpose:
What it’s for: Compliance with privacy laws that govern data collection and use.
What it does: Explains what personal data is collected, how it’s used, and the purposes behind the data collection. Every company needs this to stay compliant with laws like GDPR or CCPA.
How it’s Done:
Negotiated: Never
Execution: Posted online
Contract Title: DPA
Also known as:
– Data Processing Agreement
– Data Processing Addendum
Contract Purpose:
What it’s for: Used when one company shares personal data with another. Often a legal requirement under privacy laws like GDPR.
What it does: Spells out the roles and responsibilities of each company in handling personal data, including what data is shared and why. Usually attached to a broader agreement, like an MSA or CSA.
How it’s Done:
Negotiated: Sometimes
Execution: Signature or posted online
If you’re still not sure what contract fits your objectives, check out our guide on when to use which SaaS contract.
Stay tuned for future posts in this series, where we’ll dive into common contract pitfalls and how you can avoid them, as well as explore strategies for working hand-in-hand with your legal team. Throughout this series, you’ll be able to develop tools to collaborate with your lawyer and tackle negotiations with confidence and speed.