Having your contracts prepared and signed is only part of your contract management process. It is usually also only the beginning of what could be a long relationship with your contracting party. It makes sense to give some serious thought to an ongoing contract management process for you business. Reasons for this include –
- Legislative requirements (Companies Act, Consumer Protection Act, Electronic Communications and Transactions Act and many other Acts and Regulations have document retention requirements or deal with document retention processes);
- Maintaining accurate records to inform ongoing contractual relationships;
- Being able to deal with disputes or queries regarding parties’ obligations and rights, and so on.
If you haven’t taken stock of your contracts with other parties, a good starting point is to conduct a form of due diligence through which you collate all documents with contractual significance (these includes both contracts themselves as well as any other documents which could have a bearing on contract terms such as emails, appendices, memoranda of understanding, letters and other documents. Many people forget that a binding contract need not be a formal document setting out the contractual framework and signed by both parties. Documents with contractual significance (and which could form part of an overall contractual framework) could include letters, notes, faxes, emails, instant messages and even sms’s. All of these documents and data should be collated and analysed to determine their significance and impact.
Having conducted a review of your company’s contractual frameworks, it is a good idea to develop and implement an effective contract management processes which may include –
- review how contracts being managed (stored, filed, compliance monitored, diarised etc);
- identify who is responsible for managing contracts;
- Determine milestones like renewal dates, delivery dates, termination dates, when renewal notices are due; and
- Create repository of paper and digital contracts and related documentation, shared with key contract administrators.
Aside from managing the documentation informing your contractual frameworks, it is also advisable to implement appropriate policies within your organisation to guide how contracts are entered into and who may do so on your company’s behalf. In an environment where emails, instant messages and tweets can give rise to binding contracts, companies must clarify who has contractual authority within their organisations and with their contracting parties. Those people with authority to bind the company should be subject to a review process to ensure they are complying with the company’s guidelines.
It is also becoming a necessity that companies not only make sure they have adequate email disclaimers but also appropriate terms and conditions to govern communications on social media platforms.
Contract management processes take a fair amount of planning and work to implement but they will be more than worth the effort. There are a number of useful contract management resources online which you may find useful including the UK National Audit Office’s “Good practice contract management framework”.