The Ultimate Guide to Contract Playbooks

Have you ever found yourself in a situation where a fellow cross-functional team member reached out for your expertise in reviewing or even drafting a contract, only to be met with the reality that your plate is already overflowing with tasks? 

The struggle is real, and with limited resources, the "Yeah, sure! I'll get right to it!" response becomes more elusive than ever.

Amid this chaos, there emerges a true hero—the contract playbook. 

This playbook allows those hardworking sales and procurement teams to swiftly draft contracts using pre-approved templates and then effortlessly cross-reference their drafts with the contract playbook. All that's left is your stamp of approval, and the deal is set in motion.

So, let’s figure out how a contract playbook saves the day for legal as well as other business teams! 

What is a contract playbook?

A contract playbook is a document (or set of documents) that lays out your company's standard contractual terms, explains what each term means, and suggests alternative clauses that can be used if there's pushback on any of those standard terms.

Think of it as a playbook in sports, but instead of touchdowns, we're talking about company's specific contracting terms, best practices, and favorite clauses.

Contract playbooks come in various formats. Most commonly, they're found in spreadsheets or as notes in Google Docs, Notion, Asana, etc. For an extra layer of efficiency and compliance, some of the rules are even automated through contract management software like SpotDraft, ensuring peace of mind.

Benefits of using a contract playbook

A contract playbook is designed to empower businesses and teams, giving them the tools to handle important parts of the contract process.

There are a lot of reasons for leveraging a contract playbook to enhance your contract management process.

#1 Eliminates the need for legal intervention

A contract playbook is a knowledge repository that equips teams to work on contracts autonomously. It has all the necessary information upfront, so other business teams don’t need legal intervention during every step of the process. 

“A properly prepared contract playbook allows the legal and Sales teams to stay aligned and close contracts faster (or know when it’s time to walk).”

~ Sterling Miller, CEO, Hilgers Graben PLLC
Ten Things: Minimizing Risk in Commercial Contracts

#2 Improves clarity while negotiating contracts

Contract negotiation playbooks provide a roadmap to navigate the complexities of contract negotiation. There’s a clear picture of the processes and guidelines for reviewing, negotiating, and reaching agreement on contracts, which ultimately eliminates ambiguity.

#3 Becomes an efficient training resource

Contract playbooks serve as a powerful tool for educating both new legal professionals and individuals from other departments about the contract lifecycle. The playbook's clear and consolidated rules provide a single source of truth, facilitating efficient training and onboarding.

#4 Minimizes risks and ensures compliance

A robust contract playbook acts as a safeguard against risks associated with poor contract compliance. Because of the detailed and structured guidance, people using the playbook will be able to create more consistent contracts that comply with your organization’s best practices.

Also read: Tracking Contract Compliance: Best Practices + Tools

#5 Restores legal focus on high-value work

Implementing a successful contract playbook enables your in-house legal team to reclaim their focus from low-value administrative tasks. You can now delegate routine contract creation work to departments responsible for the deals, such as sales and procurement, while concentrating on tasks that require their specialized skills and insights.

#6 Enhances cross-functional collaboration

The contract playbook sets unified standards and legal positions for various business functions, enabling sales, finance, procurement, and legal to collaborate effectively. This alignment reduces misunderstandings and strengthens collaboration across departments.

Also read: How to enable collaboration between legal and business - SpotDraft

Components of a contract playbook

A contract playbook is a well-structured resource that brings together a range of crucial elements to guide the contract negotiation and management process. And so, it must have components that describe each step of a contract’s lifecycle.

#1 Preferred contract language

For departments other than legal, legal terminology can be unfamiliar. That’s why a contract playbook includes recommended contract terms and their meanings as well.

Example of an excerpt from a contract playbook

Preferred Contract Language
‍In this section, we provide a selection of preferred contract language for common clauses encountered in our agreements. These preferred clauses have been crafted to align with our company's values, legal standards, and industry best practices. While these clauses serve as a starting point, they can be further tailored to specific situations as needed.

1. Confidentiality Clause: Preferred Language: "The Receiving Party shall use the Confidential Information solely for the purpose of [specific purpose] and shall not disclose, reproduce, distribute, or otherwise make the Confidential Information available to any third party without the prior written consent of the Disclosing Party."
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2. Indemnification Clause: Preferred Language: "The Supplier agrees to indemnify, defend, and hold harmless the Customer from and against any claims, damages, liabilities, and expenses arising out of or related to any breach of this Agreement by the Supplier."
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3.Termination Clause: Preferred Language: "Either party may terminate this Agreement upon written notice if the other party materially breaches any provision of this Agreement and such breach remains uncured for a period of [number] days following written notice."
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4. Governing Law and Jurisdiction Clause: Preferred Language: "This Agreement shall be governed by and construed in accordance with the laws of the State of [state], without regard to its conflict of law principles. Any legal action or proceeding arising out of or relating to this Agreement shall be exclusively brought in the federal or state courts located in [city, state], and the parties consent to the personal jurisdiction of such courts."

#2 Strategic escalation protocols

Contract playbooks establish well-defined escalation protocols, indicating when and how contract-related issues should be escalated. These guidelines ensure timely resolution by involving the appropriate stakeholders.

Example of an excerpt from a contract playbook

Strategic Escalation Protocols
Effective communication and timely issue resolution are essential during contract negotiations. This section outlines strategic escalation protocols to ensure that challenges are addressed promptly and appropriately. These protocols provide a clear path for escalating issues while involving the relevant stakeholders.

1. Issue Identification and Initial Review: When an issue or concern arises during contract negotiation, the contract manager assigned to the deal will perform an initial review. If the issue can be resolved at this stage, the contract manager will address it and proceed with negotiations.

2. First-Level Escalation: If the issue cannot be resolved at the initial review stage, the contract manager will escalate the matter to the respective department head or team lead. This escalation is intended to gather insights and perspectives from higher-level decision-makers.

3. Executive Review and Decision: If the issue remains unresolved after the first-level escalation, the matter will be escalated to the executive team. The executive team will review the issue, considering its impact on the contract's objectives and overall business strategy. A decision will be made collaboratively, and the contract manager will communicate the decision to all relevant parties.

4. Legal Consultation: For complex legal matters that require specialized legal expertise, the contract manager may escalate the issue to the legal team. The legal team will assess the legal implications, provide guidance, and recommend potential courses of action to address the issue effectively.

5. Counterparty Engagement and Resolution: In cases where the issue involves a counterparty, the contract manager will engage with the counterparty's representative. This engagement aims to reach a mutually acceptable resolution by addressing concerns, clarifying positions, and exploring possible alternatives.

6. External Mediation or Arbitration: If efforts to resolve the issue directly with the counterparty prove unsuccessful, external mediation or arbitration may be considered. The decision to pursue this option will involve senior leadership and legal consultation.

#3 Seamless approval workflows

Contract playbooks detail streamlined approval workflows, maintaining efficiency while ensuring compliance with necessary reviews. These workflows enable swift decision-making while adhering to established procedures.

Example of an excerpt from a contract playbook

Seamless Approval Workflows
Efficient and well-structured approval workflows are essential for ensuring that contracts receive the necessary reviews and approvals while minimizing delays. This section outlines the streamlined approval processes that contribute to effective contract management.

1. Contract Initiation and Review: When a contract is initiated, the contract manager is responsible for conducting an initial review. This review assesses the contract's alignment with company standards and key terms.

2. Functional Review and Input: Once the contract passes the initial review, it is forwarded to relevant functional teams for their input. These teams provide insights related to specific areas, such as legal, finance, and operations.

3. Legal Review and Compliance Check: The legal team conducts a thorough review to ensure legal compliance and mitigate risks. Legal experts assess the contract's language, terms, and overall alignment with legal standards.

4. Senior Management Approval: Contracts with a significant impact or potential risk require senior management approval. The contract manager submits the contract to senior management, who assess its strategic implications and provide final approval.

5. Final Legal Sign-off: After senior management approval, the contract returns to the legal team for final sign-off. Legal ensures that all negotiated terms are accurately reflected in the contract's language.

6. Counterparty Engagement and Signatures: Once all internal approvals are obtained, the contract is shared with the counterparty for their review and signature. Efficient communication ensures timely completion of this step.

7. Archiving and Recordkeeping: After signatures are obtained, the contract is archived in the designated repository for future reference and compliance purposes.

#4 Amendment guidelines and adaptation

Contract playbooks may include instructions on amending contract language and adapting to changing circumstances. It provides guidance on responding to counterparty proposals and maintaining consistent terms.

Example of an excerpt from a contract playbook

Amendment Guidelines and Adaptation
Contracts are dynamic documents that may require adjustments over time to accommodate changing circumstances or evolving business needs. This section provides guidance on amending contract language and adapting to new requirements while maintaining clarity and alignment.

1. Recognizing the Need for Amendments: Contract managers and negotiators should proactively monitor contracts to identify situations where amendments are warranted. This includes changes in scope, terms, legal requirements, or unforeseen events that impact the contract's original intent.

2. Assessment of Proposed Changes: When considering amendments, contract managers assess the impact of the proposed changes on the contract's overall objectives and legal compliance. It's essential to maintain alignment with the company's values and standards.

3. Collaborative Discussions: Contract managers engage with relevant stakeholders to discuss proposed amendments and gather insights from various perspectives. Collaborative discussions ensure that all potential implications are considered before making amendments.

4. Drafting Clear Amendment Language: When drafting amendments, it's crucial to use language that is precise, clear, and consistent with the existing contract terms. The amendment language should accurately reflect the intended changes and avoid ambiguity.

5. Legal Review and Approval: All amendments undergo legal review to ensure that the new language aligns with legal standards and mitigates risks. Legal experts provide insights on the potential legal implications of the proposed changes.

6. Counterparty Communication: Before finalizing amendments, contract managers communicate proposed changes with the counterparty. Open and transparent communication helps manage expectations and fosters a collaborative approach to adaptations.

7. Documentation of Amendments: Amendments should be documented clearly and comprehensively. This documentation includes the rationale for the changes, the date of the amendment, and the names and positions of the individuals involved in the decision.

8. Integration of Amendments: Once approved and communicated, amendments are integrated into the contract document. It's essential to ensure that the original contract language remains coherent with the new amendments.

9. Monitoring Post-Amendment Performance: After amendments are implemented, contract managers monitor the performance and impact of the revised terms. This ongoing assessment ensures that the amended contract continues to meet its objectives.

#5 Comprehensive checklist of key items

Contract playbooks include comprehensive checklists highlighting essential issues and commonly overlooked elements. This checklist is particularly valuable when reviewing counterparty documentation.

Example of an excerpt from a contract playbook

Comprehensive Checklist of Key Items
Successful contract negotiation and management require attention to detail and thorough consideration of critical elements. This section provides a comprehensive checklist of key items that contract managers and negotiators should address to ensure the effectiveness and integrity of contracts.

1. Contract Parties and Signatories
- Verify the accurate identification of all parties involved in the contract
- Confirm the correct names and titles of authorized signatories for each party

2. Clear Statement of Objectives
- Ensure that the contract's objectives, goals, and deliverables are clearly articulated.

3. Scope of Work and Deliverables
- Define the scope of work, products, or services to be provided by each party.
- Specify deliverables, milestones, and deadlines.

4. Payment Terms and Pricing
- Outline payment terms, including payment schedule, methods, and currency.
- Clearly state the pricing structure and any associated fees or charges.

5. Intellectual Property Rights
- Address ownership and usage rights for intellectual property created or shared during the contract.
- Specify any licensing or usage restrictions.

6. Confidentiality and Data Protection
- Include clauses related to the protection of confidential information and data.
- Define obligations and limitations regarding the handling of sensitive information.

7. Indemnification and Liability
- Clearly state the parties' responsibilities for indemnification and liability in case of breaches or damages.

8. Dispute Resolution Mechanisms
- Specify mechanisms for resolving disputes, such as mediation, arbitration, or litigation.
- Define the jurisdiction and governing law for resolving conflicts.

9. Termination and Exit Strategies
- Outline conditions and procedures for contract termination by either party.
- Include provisions for transitioning responsibilities and transferring assets upon termination.

10. Amendment and Adaptation Procedures
- Describe the process for making amendments to the contract's terms.
- Include guidelines for adapting the contract to changing circumstances.

11. Force Majeure and Unforeseen Events
- Address unforeseen events or circumstances that may affect contract performance.
- Define how force majeure situations will be handled.

12. Notices and Communication
- Specify how and when notices and communications will be exchanged between parties.
- Include contact information for relevant points of contact.

13. Severability and Entire Agreement
- Include a severability clause to ensure that if one part of the contract is unenforceable, the rest remains valid.
- Clarify that the contract constitutes the entire agreement between parties, superseding any previous agreements.

#6 Logic behind negotiation stances

When it comes to contract negotiations, the contract playbook often has ready-to-use explanations that justify negotiation stances. These insights assist in presenting well-founded arguments during contract negotiations.

Example of an excerpt from a contract playbook

Logic Behind Negotiation Stances
Effective contract negotiation requires a thoughtful and strategic approach that is guided by a clear rationale. This section delves into the logic behind negotiation stances, providing insights into the principles that underpin our approach to achieving favorable outcomes.

1. Balancing Risk and Reward: Negotiation stances are informed by a balanced assessment of risks and rewards. Our goal is to secure terms that offer maximum benefits while mitigating potential risks that could impact our company's interests.

2. Market Norms and Benchmarks: Our negotiation stances often align with prevailing market norms and industry benchmarks. This approach ensures that our agreements remain competitive and in line with industry standards.

3. Protecting Core Values: Our negotiation stances reflect our core values and non-negotiable terms. These values may include ethical considerations, sustainability goals, and commitments to data privacy and security.

4. Strategic Leverage Points: Negotiation stances are strategically aligned with leverage points that strengthen our position. This may involve emphasizing unique strengths, capabilities, or offerings that set us apart in the negotiation.

5. Customization for Context: Negotiation stances are adapted to the specific context of each agreement. We recognize that different deals have unique requirements, and our negotiation approach reflects this flexibility.

6. Preserving Long-Term Relationships: While negotiations aim to secure favorable terms, we also prioritize the preservation of long-term relationships with our counterparts. Our negotiation stances are guided by a collaborative approach that values mutual success.

7. Aligning with Strategic Goals: Our negotiation stances are aligned with our company's strategic goals and business objectives. Agreements should contribute to our overall growth and success in the long run.

8. Factoring in Counterparty Considerations: Our negotiation stances take into account the perspective and priorities of the counterparty. By understanding their needs, we can propose solutions that create value for both parties.

9. Anticipating Future Scenarios: Our negotiation stances consider potential future scenarios and changing circumstances. We aim to create agreements that remain resilient and adaptable to evolving conditions.

10. Promoting Win-Win Outcomes: Negotiation stances are designed to foster win-win outcomes whenever possible. This approach aims to create mutually beneficial agreements that satisfy the interests of all parties involved.

Also read: NDA Negotiation Playbook Template [Free]

Best practices for creating an effective contract playbook

“It takes some effort to create a contract playbook, depending on the sophistication of your business and the number of standard contracts utilized. If your department has not created a playbook before, you should start with something relatively easy, like your standard NDA agreement which is typically just a couple of pages long with roughly 12 or so sections. Cut and paste each section of the NDA into a spreadsheet and for each section prepare a summary of the purpose of the language, i.e., why is it there? Then discuss common objections from customers. Finally, propose alternative language for the clause that is otherwise acceptable to the company.”

~ Sterling Miller, CEO, Hilgers Graben PLLC
Ten Things: Creating a Good Contract Playbook

• Define your target group: Consider the roles and responsibilities of the individuals who will use the playbook, as this will shape its content and format
• Assemble a task force: Identify the key stakeholders who should be involved in creating the contract playbook. This may include legal experts, contract managers, subject matter experts, and representatives from relevant departments like sales and finance
• Choose a format: Select a format for your contract playbook that suits your organization's needs. It could be a digital document, a dedicated section within your contract management system, or a combination of both
• Compile the information: Gather all existing contract-related materials, templates, and guidelines. This includes standard contract language, negotiation best practices, and any relevant documentation
• Sift through existing material: Review and refine the collected materials, eliminating redundancy and ensuring clarity. Consolidate relevant information to avoid overwhelming users
• Define contract types: Determine which types of contracts your playbook will cover. Whether it's sales agreements, service contracts, or others, be specific about the contract types you'll address
• Address all stakeholders appropriately: Consider the perspectives of all stakeholders involved in the contracting process. Tailor sections of the playbook to address their unique needs and concerns
• Present the contract in a visually appealing way: Use clear headings, bullet points, and visual aids to enhance readability and user-friendliness
• Get feedback from users: Before finalizing the playbook, engage test users from your target audience to gather feedback. This helps identify any usability issues or areas for improvement
• Set up a successful training process: Develop training materials and programs to familiarize users with the playbook's content and usage. Ensure that users know how to navigate and apply it effectively
• Determine measurement metrics: Establish key performance indicators (KPIs) to measure the playbook's impact. Monitor compliance with playbook guidelines and track the outcomes of negotiated contracts
• Leverage technology: Integrate technology where possible to enhance the playbook's accessibility and functionality. Consider using contract management software to automate and streamline certain processes

“Creating a playbook takes a lot of work, but the creation is not the end of the process.  Plan on reviewing the playbook annually so you can keep it current and fresh.  Add it to your department’s official goals each year.  While you’ll focus on updating the playbook for changes in your contract, updated contracting processes, customer feedback about clauses, or changes in the law, it’s also an opportunity to make your playbook more user-friendly.  Consider adding flowcharts and graphs – visuals are always helpful for creating understanding.”

~ Sterling Miller, CEO, Hilgers Graben PLLC
Ten Things: Creating a Good Contract Playbook

Also read: Positioning Your Legal Team as Key Asset in Times of Uncertainty

Embarking on the path of contract playbook mastery

For legal professionals, crafting a contract playbook isn't just a task—it's a journey towards creating a task force that adds the true value of a legal team to the organization. 

As the legal landscape shifts with evolving regulations, industry nuances, and organizational demands, your contract playbook becomes the compass for business teams. 

And in this journey, tools like SpotDraft serve as invaluable co-pilots. SpotDraft not only facilitates the seamless inclusion of a contract playbook within its platform but also empowers you to harness its potential in building contracts. Through its intuitive interface, you can infuse your contract playbook's preferred language, fallback positions, and negotiation strategies into the process of contract creation.

What's more, SpotDraft goes beyond just crafting contracts. It actively ensures compliance with the playbook, keeping your legal team's guidance at the forefront of contract negotiations. This dynamic integration doesn't just streamline your workflow; it safeguards consistency and adherence to your playbook's principles, enhancing the legal team's impact while amplifying the efficiency of your contract management endeavors. 

Want to see it in action? Get a demo!