Referring to Standards and Frameworks as Contractual Measures of Performance: Cloud Computing and Cloud Marketplace Toolkit Project

Contracting parties typically wish to set measures of performance so that the parties can determine objectively if the vendor’s performance meets the stated expectations of the buyer, which, in turn, may lead to remedies for not meeting those expectations. However, many such performance requirements do not lend themselves to simple metrics that can be baked into a contract and managed by the lawyers and businesspeople without much outside help. Often, the parties resort to poorly defined measures such as undefined “industry standards” or “commercially reasonable” performance. Or the vendor may conveniently have published (usually on a web page that can change without notice) its own vision of what the standards of performance may be, obviously designed around the vendor’s own willingness to perform. These contracting cop-outs, in turn, become a source of dispute when the parties later fail to agree on what standard of performance was contracted.
One means around these concerns is to utilize technical standards and frameworks developed by mutually trusted third parties as a way to align on technical expectations. By using a technical framework, the parties will not need to create their own terminology and rubric, and they may refer to technical standards as the agreed-upon metric of what a reasonable expectation is in the circumstance. When such frameworks and standards are utilized, particularly those that are widely adopted and respected in the industry—and where those frameworks and standards have been utilized in disputes by many others—the measure for contractual performance becomes more likely to be seen by both the vendor and the buyer as an objective and trustworthy system.
The use of publicly issued frameworks and standards is not without pitfalls. For instance, many standards allow for a range of performance, requiring the parties referring to the standard to take the time (well ahead of actual contract performance) to settle on the acceptable area of the range. Many frameworks and standards are written from the perspective of the party needing the performance (i.e., the buyer), so referring to them when it is the vendor who is doing the performing may require some language gymnastics to ensure the vendor is clearly the one living up to the requirements, even if the vendor is not the true beneficiary of the adequate performance. Still, utilizing a resource built by outside parties with well-trusted expertise in the subject matter is more likely to lead to parties getting what they expect out of a commercial transaction.
Of course, vendors are often motivated to seek ambiguity and frequently will feign ignorance of the importance of a publicly issued framework or standard. Vagueness is the friend of the vendor when a dispute arises later; the vendor often will try to use the vagueness as a means of avoiding the consequences of failure. Wise buyers who have high demands for technical excellence from their vendors are advised to have personnel on their buying team who are well-versed in the frameworks and standards and are prepared to persuade the selling team that those frameworks and standards truly are relevant and worthy of both parties’ trust. Buyers who depend on performance measured against those frameworks and standards must be insistent on their being used as the metric for adequate performance, in spite of frequent vendor resistance to be