How to Audit Your Key Contracts and Relationships

Your most pivotal business relationships are built on the foundation of your contracts. They can also serve as your lifeline when you face unprecedented changes. Do you know which of your contracts will be most critical to your company in 2021? Do your current financial projections justify maintaining the contracts you have in place?

No Time Like the Present

With the new year weeks away and a new business landscape on the horizon, now is an especially important time to review your contracts. Most businesses in the US have undergone significant changes in the last year due to unforeseen socioeconomic events. Many companies have revised fundamental aspects of how they do business, manage their workforce, and communicate with their customers.

The end of the year is a perfect time to review your contracts to ensure they align with your goals moving forward.

Here Are a Few Steps to Get the Job Done:

1. Take some time to write out your company’s goals for the new year

Many businesses are making remarkable pivots in their business models, budgets, and product offerings. What changes have already gone into effect in your business? What changes do you plan to make next year? What is staying the same? These are all essential questions to keep in mind while reviewing your contracts.

2. Get Prepared

Although it can be tedious, start by creating (or updating) a comprehensive list of your client, vendor, and partner contracts. Using a spreadsheet, list these contracts with columns for key information that you will need to maintain to reach your goals. If you make it an annual or quarterly exercise to update and maintain this list, you’ll thank yourself later.

3. Get to work

With trusted team members and legal advisors, schedule a few hours to sit with your most important contracts before the new year. Review the most foundational elements like the timing, scope, and parameters of your agreements. Do these match the goals that you have in mind? Do any of your contracts bring up urgent issues?

Now, review the following elements of your contracts:

• Definitions – Definitions are the starting point of your contract, so you’ll want to ensure all definitions are correct and valid. Do not skip over this.
• Parties involved -Are the parties involved clearly defined? Are their respective titles still valid?
• Renewal and termination – What are the terms of renewal and termination? Are there penalty fees associated with termination? What are they?
• Terms and conditions -Make sure to list payment amounts, due dates, late fees, and default terms and penalties.
• Any boilerplate sections – Many clauses can be buried in the boilerplate portions of your contract. Don’t let them sneak by.
• Note any amendments – Don’t forget to check to see if there are any amendments to your contract, they are usually at the very end!

4. Make notes on your priority changes

Finally, note any portions of your contracts that you wish to clarify, renegotiate, nullify, or capitalize on. Then, connect with expert legal help that can assist you in making the most of your contracts.

Get help when needed

This year, few organizations can afford to leave money on the table due to unclear or lackluster agreements. What you negotiate now will dictate the outcomes of the year to come. Richards Rodriguez & Skeith are experts in contract law and are happy to review your contracts and represent your interests in contract negotiations. Contact us today.