Contracts & Commercial

Commercial contracts are the lifeblood of the business, and the CLO is ultimately responsible for the company's contracting framework, playbooks, and risk tolerances. In-house contract practice differs fundamentally from transactional law firm work: volume is high, attorney involvement in individual contracts must be triage-based, and the goal is scalability rather than perfection on every deal.

The most impactful thing a CLO can do early in tenure is establish a contract management system with a well-designed playbook and escalation matrix. Not every contract needs lawyer review; the legal team should focus its time on contracts that are strategically significant, high-value, or involve non-standard risk positions. Standard terms (MSAs, SaaS agreements, NDAs) should be templatized with pre-approved fallback positions that empower business teams to close deals within guardrails.

SaaS vendor agreements have become particularly complex in the AI era. Vendors are increasingly inserting provisions that grant them rights to use customer data for AI training, disclaim liability for AI-generated outputs, and cap liability at 2-3 months of fees — regardless of the catastrophic harm their software might cause. The CLO must establish enterprise-wide minimum standards for AI provisions in vendor agreements.

Force majeure clauses came under intense scrutiny during COVID-19. Courts largely held that supply chain disruptions and economic difficulty did not trigger most force majeure provisions. Modern force majeure drafting should be specific about covered events, address notice and mitigation obligations, and include termination rights for extended events.