For people who are outside the contract drafting domain an executed contract will be a mere contract only.
But contract negotiators/business deal makers will perceive executed contract as standard and non-standard contracts from legal and business perspective.
A Standard contract template will be designed by a company to reflect the legal and business terms/conditions of such company in line with the business objectives of such company.
Non-standard contract template is the template which is not a standard and contract template of other party to the business deal.
From the contract drafting perspective, it is vital to understand the variance amid the standard and non-standard contract template as contracts are the basis for legal formation of the business collaborations across the globe.
With the surge in business deals across the globe it is imminent for the companies to execute different contracts on rolling basis to legally define rights, duties and obligations of the parties involved in the business deals.
In general large companies will execute numerous contracts on daily basis. Such companies will build a contract library of their own standard contract templates to facilitate quick closure of business deals by executing the contracts on their standard contract templates.
In most of the cases such large companies will influence the counter party (who will be medium/small player in the business) to execute the contract on the standard contract template of the large company. In such cases, executed contract for large corporation will be a standard contract template and for counter party (medium/small player) the same executed contract will be the non-standard template.
To better understand the variance amid standard/non-standard contract template:
For illustration purpose, Company ‘X’ is involved in the business of the software licensing. ‘X’ will issue license of its software to different customers on regular basis accordingly it will executive contracts with all these customers on daily basis in regular course of business.
For this purpose, it will develop standard software licensing contract template with its own legal and business terms/conditions. Say, ‘X’ has decided to license its software to ‘Y’ subject to the execution of software licensing agreement by both ‘X’ and ‘Y’.
Here a question will arise on which party (i.e either X or Y) standard contract template the agreement to be executed?
We will have two scenarios in this regard:
a) Scenario 1: If ‘Y’ agrees to execute the licensing agreement on ‘X’ standard software licensing contract template. In such scenario, the executed contract will be standard contract template of ‘X’ and will be non-standard contract template to ‘Y’.
b) Scenario 2: If ‘Y’ insists on execution of the licensing agreement on its standard contract template and ‘X’ agrees to execute the licensing agreement on the ‘Y’ standard contract template. In such scenario, the executed contract will be standard contract template of ‘Y’ and non-standard contract template to ‘X’.
From the aforesaid illustration it is evident that the contract can be executed on only one of the parties’ standard contract template. Depending upon which party standard contract template the contract is executed – The executed contract will be ‘Standard’ contract template to such party and ‘Non Standard’ contract template to the counter party.
The distinction of standard and non-standard contract template will assume prominence during the negotiation or renewal of the contract.