Contracts are essentially the lifeblood of a business. They ensure that a company has the workers and facilities it needs to operate. Contracts lock in vendor delivery dates and supplier prices. They may help make outsourced services like payroll reliable.
Companies may have employment agreements, contracts they sign with service providers, vendor contracts, leases and a host of other written agreements. Frequently, those running organizations may assume that their contracts remain valid and enforceable indefinitely. They may use the same contract template over and over for certain types of business arrangements.
Businesses who have operated successfully for years may be overdue for a contract review. Almost every business may benefit from an occasional contract review.
What is a contract review?
As the name indicates, a contract review involves going over existing written agreements. Contract reviews may involve going over templates in general or an in-depth review of every outstanding contract that could affect the company.
Contract reviews can help companies find warning signs that their contracts have become outdated or that some of their operations may not currently have enforceable contractual protections. They may need to look for signs of outdated language based on legal changes that could make contracts unenforceable.
What follows the contract review?
A successful contract review often precedes the renegotiation of various agreements. Companies may decide to update employment contracts with all of their workers. They may refresh the contracts they have on record with vendors and service providers.
Many times, basic contracts established early in a company’s development may not protect it as effectively when the business becomes successful. Companies may want to integrate additional clauses ranging from severability clauses in their vendor contracts to restrictive covenants in employee agreements.
In some cases, organizations may need to significantly revise their contracts to make them more thorough and to better protect the company from various forms of liability. Particularly in scenarios where an organization has used templates downloaded from the internet as the baseline for written agreements, the organization may benefit from an in-depth contract review.
Employment agreements and other business contracts may not adequately protect a business when terms no longer reflect company operations or changing legal standards. A contract review and the negotiation of new agreements can be helpful in such cases.