If you’re anything like me, you’ll appreciate a good sort out every now and then. There’s no point denying it – we all love a spring clean! There are no exceptions when it comes to your business and its contractual arrangements.
Here's our top 10 tips on why it’s a good idea to review your contracts:
1. Automatic renewals
Do your contracts automatically renew, meaning that you might be tied in for another fixed-term period? It is important to familiarise yourself with this in case you want to get out of a contract before it locks you in. Quite often, you will have to give a certain amount of notice.
2. Price reviews
If you are a supplier, have you got the ability to increase your prices and when can you do this?
3. Performance reviews
How does the contract deal with performance and more importantly, is it working? Do you need to revise KPI’s/SLA’s and do you have the option to vary the contract to take account of this? If a supplier isn’t performing, can you use the contract to help them improve, potentially through a contract review?
4. Rights and Responsibilities
It is a good idea to regularly remind yourself what obligations you have under a contract, to ensure that you don’t find yourself on the receiving end of a breach of contract claim. The devil is in the detail I’m afraid, so it’s a good idea to familiarise yourself with the whole contract. It is unlikely that contractual obligations will sit in one part of the contract.
Remind yourself what the causes for termination are. If the relationship isn’t working for you, it’ll help you to understand how you can use the terms to get out of it, whilst taking note of any required notice periods.
6. Legislation updates
Hopefully by now your contracts will be GDPR compliant (?!). Are there any upcoming changes, specific to your industry, that need amending in your contract? Dare I say the “B” word?!
7. Consequences of termination/expiry
If your contract isn’t rolling, when is it due to expire? Do you have options for renewal? If you are a customer, have you thought about replacement suppliers and what you will need from your current supplier to effect a smooth handover? Are there any TUPE implications? Are you liable for any other costs on termination, e.g. costs of equipment?
What are you liable for under the contract? Are there any sweeping indemnities hiding in the small print? It’s a good idea to understand what you will/won’t be liable for if something goes wrong. If you’re in the process of negotiating the terms of a contract, there are lots of ways in which you can mitigate your liability.
Is the description of the services being provided under the contract still relevant and correct?
Does your company have specific policies that you need your contractors to comply with? Does your contract oblige the contractor to comply with these policies, as and when they are updated?
If you would like any assistance with your contractual arrangements, whether it be a general contract review, advice on a specific point, or would like a contract to be prepared, please get in touch with our Commercial team in Stoke on 01782 202020 or email firstname.lastname@example.org who will be happy to discuss.
Nicola Cooper is an Associate in Freeths' Commercial team, based in our Birmingham and Stoke-on-Trent offices.