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Valentine's Day celebrates trust, commitment and long-term partnership and technology contracts are no different. Yet while romance may be unpredictable, tech contracts shouldn't be. Poorly structured agreements can expose organisations to significant financial risk and result in expensive heartbreak. Two recurring issues frequently emerge during technology contracting negotiations which, if not addressed proactively, can contribute to a legally and commercially imbalanced relationship. The first is the late introduction of pricing during negotiations, while the second involves the creation of supplier lock-in through contractual mechanisms that restrict the customer's ability to exit the arrangement in practice.
When these late pricing and lock-in's arise together, they materially weaken the customer's negotiating position and significantly affect the allocation of contractual risk. These dynamics resemble patterns found in unhealthy personal relationships, where material issues are deferred until commitment has already been secured and leverage is applied at a point where withdrawal becomes difficult. In the technology contracting context, this often results in contracts that favour the supplier and expose the customer to higher legal, operational and financial exposure.
At the outset of engagement, a technology supplier typically presents itself as a long-term strategic partner offering innovation and operational efficiency. However, one of the earliest indicators of potential risk is the absence of clear and transparent pricing during the initial stages of negotiations. Instead of presenting definitive commercial terms upfront, pricing is introduced only once the customer has invested substantial time, resources and internal approvals into the proposed solution.
By the time pricing is disclosed, the customer is often under commercial pressure to proceed due to project deadlines, procurement processes and operational reliance on the proposed technology. Pricing therefore becomes a source of contractual leverage rather than a transparent commercial term. The late disclosure of pricing also has a direct impact on the negotiation of liability and risk allocation provisions. Customer concerns regarding cost are often met with proposals to reduce liability caps, narrow indemnities or introduce broader exclusions of liability in exchange for financial concessions. In this way, pricing becomes linked to the dilution of legal protections.
Supplier lock-in further exacerbates these risks. When technology agreements are structured in a manner that makes exit legally or commercially impractical, even where termination rights exist on paper. Long fixed terms, automatic renewal provisions, restrictive intellectual property arrangements, limited data portability and onerous termination fees operate collectively to bind the customer to the technology supplier for extended periods. These provisions may be legally enforceable, yet they significantly reduce the customer's ability to manage ongoing performance and risk.
This risk is particularly severe where the supplier controls critical systems, platforms or business data. Once operational dependence is established, the customer's leverage diminishes further. The cost and complexity of migrating to an alternative supplier become prohibitive, leaving the customer exposed to long-term contractual obligations that may no longer align with its operational or regulatory requirements.
From a legal risk perspective, the warning signs are often present at an early stage. A reluctance to provide pricing clarity, resistance to meaningful termination rights, vague assurances regarding flexibility and pressure to conclude negotiations quickly should be treated as indicators of potential future imbalance. These are not merely commercial concerns. They are risk indicators that the contract may fail to provide adequate protection over its intended duration.
This Valentine's Day, organisations may wish to reflect on the legal health of their relationship with their technology supplier. Where pricing is introduced at the last minute, liability protections are traded away under pressure, and exit becomes practically impossible, the question arises whether the contractual framework truly supports the organisation's long-term interests.
If your organisation is experiencing late-stage pricing pressure, supplier lock-inor contractual terms that constrain your ability to manage legal and regulatory risk, it may be time to re-assess the structure of those agreements.
ENS' TMT team is able to advise clients on complex technology contracting arrangements across a range of sectors. Get in touch with the authors below should you require assistance in reviewing or renegotiating your technology agreements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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