Contract Life Cycle Management

Contract Life Cycle Management sounds like one of the buzz catchphrases expensive business consultants throw around but it is a very important tool that can save you thousands of pounds and hours.

It is essentially the process of dealing with the contract from initiation, negotiation, implementation, and termination.

Getting the process right, from the start, can assist in ensuring the terms and conditions incorporated into the contract are clear from the start, deal with breaches or anticipated breaches before they escalate too far, and deal with the orderly handover of things at the end of the contract.

When two parties are at the start of negotiations there should be consideration as to whether as part of negotiations confidential information is likely to be shared. If it is then you should consider putting in place a non-disclosure agreement. The terms of such an agreement will depend on who is sharing the information, whether it will contain personal data, and what the possible consequences of that information being misused, may be. For example, it may be necessary to include a clause to expressly prevent reverse engineering.

Where the two contracting parties have their terms and conditions and swap these as they exchange quotes, purchase orders and acknowledgments, this can lead to what is known as the “battle of the forms” and would likely mean an assessment to see who had won and so which party’s terms had been incorporated. A contract signed by both parties provides much more certainty.

However, before you get to that stage it is important to assess what the heads of the agreed terms are – what services/products are being provided, to what specification, what are the delivery terms, what is the price and payment terms, what happens if there is a problem, how can the agreement be terminated and what would the consequences of termination be.

Its also important that those who are negotiating contracts are aware of the terms and conditions you are trading on. Anything agreed that falls outside of your normal terms will need to be properly recorded and incorporated into the contract.

Getting the terms right at the beginning and including the right clauses in the contract can help manage disputes, breaches, and performance during the life of the contract. It can also be useful to include provisions regarding changes in circumstances in long-term contracts – such as supply chain issues, price increases, and cost savings.

This is particularly important in contracts that will span a period of time. However, even short-term contracts can benefit from similar and proportionate clauses.

Service-level agreements with consequences for breach, product warranty conditions, and internal dispute resolution clauses can all be useful additions to a contract where appropriate.

It’s important to think about what will happen on termination. Does it occur naturally through the performance of the contract or over time, or does it take a trigger event such as a material breach, insolvency situation, or service of notice?

Then what are the practical consequences? Does information or equipment need to be handed back, is it a situation where TUPE may apply because there has been a service provision change or does there need to be some sort of handover assistance, will there be outstanding invoices to be raised or will there still be residual contract obligations to be performed?

Common Questions About Putting a Contract Management Process in Place

In putting in place a process the starting point is your existing terms and conditions – are they fit for purpose?

Are those who are negotiating contracts trained in what they are doing, are they aware of the correct contracting process, do they have the authority to negotiate what they are negotiating?

Who is the point of contact during the life of the contract?

Do you have the internal admin processes to track the life and progress of the contract?

At Thursfields Solicitors, our commercial team specialises in guiding businesses through the complexities of contract management. Contact us at info@thursfields.co.uk or call our team on 0345 20 73728 to learn more about how we can assist you in optimising your contract processes and protecting your business interests.