Customer Audit Rights in Technology Agreements
In this article, we focus on a tool available to buyers who wish to verify that those commitments are being met: audit rights.
July 01, 2015 at 07:00 AM
7 minute read
Many of the articles in this series have focused on negotiating for strong commitments from suppliers of technology services. In this article, we focus on a tool available to buyers who wish to verify that those commitments are being met: audit rights.
Audit rights give the buyer an opportunity to pull back the veil and view the evidence of the supplier's performance. Buyers should think carefully about the scope of their audit rights.
First, what aspects of the services does the buyer want to audit? Most audit provisions in technology agreements give the buyer a right to verify the amounts being charged by the supplier. This right is especially important when the supplier's fees are based on factors that may not be known to the buyer (e.g., number of hours worked, number of resources used, or third-party charges being passed through).
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