At first glance, you may think Common Paper standard contracts are significantly different from what you’ve seen before. While there are in fact important differences, they are still fundamentally contracts. Standardization offers advantages over the traditional approach, where each company has its own bespoke template, and the standards are fully backward compatible with traditional contracts.
Lawyers can read, interpret, and advise on a Common Paper contract using the same skills they use today. What sets the standards apart is that they allow each company to start from the same, balanced position rather than going through a back-and-forth negotiation to get to the middle, where everyone suspected they would end up anyway.
To achieve this balance, Common Paper standards have a dual structure: the Cover Page, which contains variables that can change from contract to contract, and the Standard Terms, which are non-negotiable and incorporated by reference. You’re probably already familiar with this kind of approach if you’ve ever used an MSA with an SOW or Order Form. These contracts use a single page for the business terms (price, contract length) and a longer set of terms for the legalese, which can be posted online and incorporated by reference.
Standard Terms serve as the foundation for a Common Paper contract. They are hosted online and incorporated into contracts by reference. This means they remain the same for all instances of a particular agreement type across companies and deals.
The key difference between this approach and what you may have previously seen in the wild is that rather than you or the other party hosting the online portion of a contract, Common Paper hosts Standard Terms as a neutral third party. Although you have the option to include a copy, incorporating them by reference ensures that they are not changed without your knowledge. That allows you to review a particular version once and rely on it over and over. When something does get changed, it will always be as a new version posted at a new URL, preserving all prior versions and the Cover Pages that incorporated them.
Defined terms and variables
You are probably used to contracts using Capitalized Words to refer to defined terms with definitions scattered throughout the contract. The Standard Terms include these types of defined terms in one section called “Definitions”. These are the static defined terms that remain the same across all contracts.
The Standard Terms also use, or what we call variables. Unlike static defined terms, variables can change from deal to deal. Variables let you fine tune a Common Paper standard to meet the needs of your particular company or deal. Some variables are optional, so if a variable isn’t defined, then that particular clause or variable does not apply to the contract. The values of the variables are set on the Cover Page.
Because the Standard Terms never change, you only need to review them once. This allows you to focus on a simple, structured document to understand each new contract: the Cover Page. It is designed to stack on top of the Standard Terms like a building block.
Cover Pages can be as streamlined as our one-page NDA or as detailed as our multi-part Cloud Service Agreement. The important thing to remember is that this is where the specifics of your deal exist and it’s where you should focus your attention. Cover Pages can have 2 sections: Key Terms and Business Terms.
Each time you sign a new Common Paper contract, the Cover Page will contain Key Terms. Think of the Key Terms as the legal variables you can adjust, like the General Cap Amount and Governing Law.
Some short agreements, like the Mutual NDA and Design Partner Agreement, only have Key Terms. Other agreements have a second section on the Cover Page to reflect the business terms. In the Cloud Service Agreement, this is called an Order Form, and in the Professional Services Agreement, it’s called an SOW. The business terms include things like the Subscription Period, Fees, and payment terms.
Putting it all together
As an example, imagine Playnow, Inc. is purchasing access to a latex inventory management system from Vandelay Industries for $30,000 a year. Here’s how the pieces of the contract could come together.
Standard agreements streamline contract negotiation, and 63% of contracts in Common Paper get signed within 24 hours. Try it free to see how standards speed up your sales cycles.