Contracts (making commitments). Examples of Contracts principles....

• We form clear contracts with our customers and suppliers before we begin projects or deliver services. Contracts define mutual accountabilities; they are not bureaucratic hurdles or legalistic protections.
  • Contracts clearly specify the customer and the supplier. They may be between a group and a client (or consortium of clients), or between groups within the organization (for example, as "subcontracts").

  • No contract is needed if no customer purchase decision is involved. In these situations, customers are not concerned about the organization's commitments and accountabilities. In general, these are products and tasks that benefit the provider more than the customer. Work which does not require a contract includes:....

  • Contracts are formed whether or not money changes hands. (Contracts are necessary when the design of the internal economy includes chargebacks, to make client control over their budgets meaningful. However, contracts are not in any way dependent on chargebacks; they are of great value no matter what the design of the internal economy may be.)

• We form a separate contract for each distinct customer purchase decision (eg, a feasibility study, a solution, a specific repair, a service-level agreement for help-desk support).
  • For commonly sold products, a "standard" contract may provide a template with commonly used terms and conditions. Nonetheless, an agreement by both parties is still required for each customer decision.

  • We contract for the delivery of a service for a specified period of time (i.e., "service-level agreements"), as distinct from contracts for each use, only when the customer makes a single purchase decision that covers repeated instances of a deliverable. At the end of the time period, the contract is renegotiated.