Cats and typewriters or: Resilience through contractual building blocks
The cat
A cat once fell into a barrel of engine oil destined for an automotive OEM. The oil was shipped, distributed into assembly, and used to fill engines during production. The final inspection revealed problems. After extensive chemical testing, the root cause analysis established that the contamination was feline in origin.
The OEM sued the supplier for consequential damages. The supplier refused to pay. The case went to court. The supplier won.
Why? Because the OEM's specification for the oil listed a detailed set of contaminants the supplier was required to screen for. Cats were not on the list. And without a "fit for function" clause - the phrase that makes a product or service responsible for its intended purpose regardless of what the specification writers thought to enumerate - there was no contractual basis for the claim.
This is a true story. After nearly 35 years across five industries, I could spend a day recounting cases that generated specific sentences, paragraphs, or clauses in standard supply contracts. The cat is just the most memorable.
The intelligent typewriter
A procurement department was measured on the contractual milestones it cleared each month up to signature. The buyers were proud of the complexity of the documents they negotiated. They kept metrics on their "workload" - the length of negotiations, the number of clauses agreed, the volume of paper produced. There were entire departments, led by former lawyers, dedicated to negotiating aspects of supplier work across multiple simultaneous workstreams, sometimes with four different procurement teams dealing with the same supplier.
Buyers spent 20 to 30% of their week on contractual language. That left correspondingly less time for cost reduction, supplier development, or innovation. The actual selection of suppliers had largely been done upstream by internal customers who chose them without market testing because, in their view, they knew better.
The buyers were functioning as intelligent typewriters for their commercial customers - producing contractual documents without adding the commercial judgment they were hired to exercise.
Both cases are real. Neither is unusual. Together they illustrate the same underlying problem: the absence of standardised contractual infrastructure.
The jungle most companies operate in
Ask yourself a few honest questions about your own organisation. How many different sets of general terms and conditions are sent to suppliers? How many payment term variants are currently accepted? I have seen one company that had 467 different payment terms in active use. How many statement of work formats are in circulation? How many NDA templates exist, and do buyers know which to use when? Are accounting addresses on contractual forms consistently correct? Is there a single repository of standard documents that procurement can draw on without involving legal case-by-case? Does the company have an online contract workflow tool, and if so, was it designed for the operational needs of procurement or the billing requirements of the law department?
In most companies, the answers to these questions reveal a contractual jungle. The reason it persists is that standardisation is fundamentally an operational discipline, not a legal one. Lawyers trained in the Anglo-American case-law tradition are expert at constructing bespoke arguments. Standardising across a global supply base requires a different skill set and tends to be no one's primary responsibility.
The result is that good procurement people - who should be focused on cost, quality, lead time, innovation, and sustainability performance - spend a meaningful portion of their time in email chains and meeting rooms debating single words in contracts. And the legal team exhausts itself on repetitive low-complexity work that a well-designed template would eliminate entirely.
Standardisation is the way out
The principle is simple: legal documents in a corporate context should be standardised as much as possible and tailored as little as necessary.
Getting there requires three steps.
The first is building legal building blocks. Company lawyers, working alongside their operational counterparts in sales, service, and procurement, agree on the core components of all contracts - liability, guarantee, compliance, termination, indemnity, confidentiality, and so on. The objective is to define as few variants as possible while maintaining legal compliance across all markets in which the company operates. Each building block should exist in three versions: the preferred version that fully protects the company; the still acceptable version that reflects the standard industry position; and the acceptable-after-approval version that represents a concession and should only be used when no short-term alternative supplier is available. The existence of three defined levels is itself a governance mechanism - it makes visible what is being traded away and requires explicit sign-off.
The second step is assembly. These building blocks are assembled into general terms and conditions and individual contracts. The guiding rule is that anything the company feels strongly about applying universally should be included in the general terms and conditions. Some supply markets also warrant special terms and conditions - IT services, chemicals, and logistics are common examples - that sit between the general level and the individual contract. All general and special terms and conditions should be published on the company's supplier-facing web presence, with older versions archived and accessible. In jurisdictions that require bilateral acknowledgement of GTCs, this can be built into the contract-to-source workflow as a standard step.
The third step is simplification. Define what constitutes a contract in the firm, which building blocks are mandatory versus optional, what a release order is, when a Letter of Intent is and is not appropriate, under what circumstances work can proceed without an NDA, and who has authority to approve deviations at each level. Define what a good Statement of Work looks like and who owns its creation versus its performance tracking. Finally, define the "licence to buy" - the minimum contractual training required to qualify any employee to commit the company commercially.
For those who prefer a visual: picture a Roman temple built from Lego blocks. The roof is the General Terms and Conditions. The pillars are the special terms and conditions for specific supply markets. The base is individual contracts gathered under the relevant pillars. The joints and crevices are filled with NDAs, LOIs, releases, and framework agreements - all assembled from the same standardised building block moulds. Every contractual relationship in the company becomes a variation of this structure.
Nine questions to assess the current state
Does the company have one set of general terms and conditions for suppliers, with minimal variations only where legal system differences genuinely require them?
Is there a standard set of payment terms - no more than twenty variants - with clear governance on approval?
Is the Statement of Work template owned by procurement, with creation and KPI tracking handled by internal customers?
Does a single set of NDA templates exist, and do all buyers understand when to use each variant?
Are topics like confidentiality, liability, quality requirements, and indemnity clearly defined with explicit approval requirements before any deviation is accepted?
Is there a repository of standard contractual documents that procurement can use without involving legal on a case-by-case basis?
Do aligned templates exist for internal procurement - one business unit procuring from another?
Is commercial contract training available to all buyers, and is there a standard onboarding process for new lawyers joining the legal team?
Is there a formal licence-to-buy qualification for anyone authorised to commit the company to commercial activities?
A clear yes to most of those means the contractual infrastructure is in reasonable shape. If most are no or uncertain, the gap is costing the company through litigation exposure, wasted resources, and supplier relationships that are more adversarial than they need to be.
The size of the prize
In well-standardised environments - the automotive industry being the benchmark - buyers spend as little as 5% of their time on contractual matters. In poorly standardised environments, that figure runs to 20 to 30%. The difference is not just efficiency: it is the quality of attention that procurement and legal can give to value-adding work - cost reduction, supplier innovation, sustainability performance, and genuine category strategy.
Risk mitigation is harder to quantify but no less real. Amateurish contracts with simplified indemnification clauses are a commercial liability that only becomes visible when something goes wrong. By then, the cost of correction - litigation, supply disruption, reputational damage - dwarfs what standardisation would have cost.
Setting up the project
The timeline is six months. The General Counsel is the board sponsor; the CPO leads. The project itself runs with dual leads - one senior procurement manager and one from the legal department - working together from the outset. This dual ownership is deliberate: it prevents the output from being a legal document that procurement cannot use, or a procurement tool that does not withstand legal scrutiny.
Start with benchmarking. Contractual standards from comparable industries are frequently in the public domain. Use them. Acknowledging that others have solved this problem earlier is not a weakness - it is efficiency.
Weekly task force with clear objectives, monthly reporting to the General Counsel, with final board reporting against clear output metrics: number of contractual standards developed and implemented, supplier-facing webpage established, training programme launched, number of employees certified, authority framework for template deviations communicated internally and externally.
Sustain success through regular contract audits by Internal Audit, online storage of all active contracts, and an annual review approved by the General Counsel. AI-assisted contract compliance checking - assessing whether live contracts align with template standards - is a mature capability now and worth deploying.
Everything here should be digital. If systems to operationalise this do not exist internally, buy an established one. Proprietary do-it-yourself contract management solutions have a poor track record; the market for off-the-shelf contract lifecycle management tools is mature and well-tested.
Watch out for
The missing adoption rate in procurement departments is the most common failure - the standards exist, but buyers continue using legacy templates out of habit or because they were never properly trained. Different legal systems across markets require genuine attention, not superficial adjustments. Translation with preserved legal meaning is harder than it looks. And the most insidious failure mode: internal overconfidence about contractual competence combined with a reluctance to acknowledge that the current state is inadequate. Misguided arrogance is more damaging than acknowledged ignorance, because it prevents the diagnosis from being made.
Contractual standardisation is corporate hygiene. Cleaning up is not exciting work. But a contractual environment that has never been cleaned tends, over time, to start to smell.
Stay safe. Be bold.
Daniel
The views expressed in this post are my personal professional opinions, based on research and publicly available information. They reflect analysis of industry trends and practices, not assertions of fact about specific companies or individuals. Nothing in this post constitutes legal, financial, or investment advice.
