Master contracts smooth way for service charges. (terms and agreements contracts)

Banks are asking corporate customers to sign standard terms and agreements contracts that protect banks and eliminate dozens of specific legal agreements.

"This is a win-win situation," insists J. William Murray, senior vice president of First National Bank of Maryland, Baltimore. "Master agreements take a lot of standard verbiage out of each individual contract and put it in one," he says. "That makes it simple to add or delete various services. Banks now are making sure they have agreements for every service to protect both sides."

A blanket agreement can serve both parties, says James Mooney, manager of bank relations and cash management for Chevron Corp., San Francisco, which has three such agreements with major banks. "When you set up any new product, both parties want to get it installed," he notes. "You don't want to spend a lot of time dickering over agreements." A standard terms and agreement contract lets you "implement products more quickly because you don't have to fight the same battles again and again," he adds.

"Everyone is trying to make agreements more understandable," Mr. Murray explains, and master agreements attempt to resolve the issues most frequently disputed.

Liability is one of the most disputed issues. "Negotiations center on how liability is assessed and allocated between parties," Mr. Mooney says. "The bank doesn't vary its liability position from product to product. It takes a standard position on how much liability it will accept and how much it expects the company to accept or indemnify."

First of Maryland is now designing a blanket agreement, Mr. Murray says. "We have manuals that describe how things are done for many of our services," he ...