Consensus-Based Agreement for Contract Renewal

Dynamic contract framework balancing vendor revenue stability with startup flexibility through performance-linked terms and risk-sharing mechanisms.

Consensus-Based Agreement for Contract Renewal

  1. Preamble
    1.1. Recognizing the mutual value of a long-standing partnership, both parties commit to a relationship that balances the vendor’s need for stable revenue with the startup’s requirement for financial and contractual flexibility.
    1.2. Both parties share a commitment to structured, performance-based reviews, transparency in pricing adjustments, and an adaptive agreement structure that reflects evolving market conditions and business growth.

  2. Term and Renewal
    2.1. The agreement shall commence with an initial term of 18 months.
    2.2. At six-month intervals, the parties shall conduct joint reviews to assess performance, financial forecasts, and market conditions.
    2.3. Upon a positive review, the term may be extended up to a total of 24 months provided that effective revision procedures are incorporated.

  3. Pricing and Adjustment Mechanism
    3.1. A dynamic pricing structure will be implemented, linking price increases to mutually agreed market indices and key performance metrics.
    3.2. Pre-determined, minor scheduled adjustments may occur contingent on clear changes in input costs or inflation benchmarks; any adjustment beyond these parameters must be subject to a joint review and written amendment.
    3.3. In cases where market or performance indicators deviate significantly from initial forecasts, either party may initiate a pricing review process. Such review shall be completed within 30 days, aiming to realign pricing with current conditions.

  4. Performance and Review Metrics
    4.1. The parties agree to identify and document key performance indicators (KPIs) that reflect service quality, revenue impact, and market conditions.
    4.2. These KPIs will be used during six-month reviews to determine whether contractual adjustments (price, term extension, or termination) are warranted.
    4.3. Any disputes regarding performance evaluation will be resolved through a joint, data-based discussion to ensure transparency and fairness.

  5. Termination and Flexibility Clauses
    5.1. The agreement shall include a break clause, allowing either party to terminate or renegotiate the contract if agreed-upon performance or market conditions are not met.
    5.2. Notice of intent to terminate or request a renegotiation must be submitted in writing at least 30 days prior to the next scheduled review meeting.
    5.3. During renegotiation, both parties will seek remedial actions that provide value over their respective best alternatives, ensuring a win-win outcome.

  6. Additional Provisions
    6.1. Service customizations or adjustments to support levels may be incorporated as additional value measures so long as they do not undermine the core pricing structure or performance metrics.
    6.2. Both parties acknowledge that flexibility in contractual terms is essential to adapt to emerging business realities, and agree to use performance-triggered reviews as a means of managing risk and capturing shared benefits.

Disclaimer: This draft agreement summarizes the current consensus between the parties and is subject to further negotiation and legal review before final execution.