When Is A Contract Not A Contract?

The other day a client, a software vendor, asked me to take a look at their standard proof of concept (POC) contract. It was about 8,000 words long. The full contract – the one they sign when the deal gets done – was about 11,000 words long. So not that much difference between the two.

8,000 words? That kind of defeats the whole point of the POC. When you are proposing a POC, you are in sales mode. You want your potential customer to spend time with your product, decide they really like it, and end up committing to spending the big bucks on it.

In legal terms, whoever created the 8,000 word POC contract was correct. In legal terms, there is no real difference between a software licence for 1 day and a software licence for 10 years.

But, in business terms, he had totally missed the point. Formally it is indeed a contract, but that’s not really the intent. The intent is to provide a sprat to catch a mackerel.

Yes, there’s formality around a POC. Yes, a vendor may also charge for various elements of the POC. And yes, there’s a theoretical risk that the customer may make hundreds of copies of the software and sell them down the market on Saturday.

But at the POC stage we are still in sales mode, and the primary objective is to make it as easy as possible for the customer to make the decision to buy. Putting forward an 8,000 word contract is the opposite of that.

Formally it is indeed a contract, but that’s not really the intent. The intent is to provide a sprat to catch a mackerel.