A contract review is an important part of contracting. It allows you to understand all the terms and conditions you and your company agree to before signing anything. Contract reviews can help reduce organizational risks and increase the chances that an agreement will positively impact all parties. You risk making commitments you don’t have to fulfil, damaging your brand and reputation, or wasting time and money resolving disputes that could be avoided.
Contract managers and legal professionals should create a policy to recommend different review processes for various contracts to ensure that each contract is carefully reviewed before signing it. You can use ContractSafe Contract Management Software to prioritize contracts based on dollar amounts. Create a policy to determine who and how the contract should have been reviewed based on the dollar amount. Otherwise, if you are interested in ContractSafe software, follow https://www.contractsafe.com/ and start your free trial today!
A contract should be reviewed according to the type of requirements. It should also be reviewed by multiple people. A human resource manager should review employment contracts; different procurement managers should review purchasing contracts, depending on their value; and vendor agreements should be reviewed in another department.
What Is aContract Review?
A contract review is an in-depth examination of a legal contract before it is signed. This ensures that the agreement is accurate and precise, and your company can move forward per the terms. Contract reviews are essential before any contracting events like re-negotiation and opt-out windows. A contract review is your last chance to request changes and identify problems before you are locked into an agreement.
Contract Review Checklist
It is helpful to have a plan before you begin a contract review. This will ensure that the contract has been thoroughly reviewed. You should not proceed with the contract review if you discover any discrepancies or errors or if any questions arise from the contract review.
You should look out for these top things when reviewing a contract.
Revision Clauses and Terms
There will be clauses and terms in every contract that are more important than others. It is worth reviewing important terms like confidentiality, dispute resolution, indemnification, and termination. Contract terms and conditions are the basis of all contracts. Before entering into a legally binding agreement, ensure that you have clear terms and conditions.
Review the Renewal and Termination Policies
Nothing is worse than being locked into a contract for a more extended period than you originally intended. This is why it is essential to review termination and renewal terms. Pay attention to specific auto renewal terms and opt-out times. You will know when cancellations can be completed and the consequences if they are not done by a certain deadline. You can set up automatic reminders and alerts in contract management software to inform your company about important dates such as contract expiration dates, auto-renewal dates, and cancellation deadlines.
Clear, Unambiguous Language
Pay attention to how each sentence is written and search for language that may be open to interpretation as you go through a contract. Even if the terms are unclear, it is best to clarify the language, so there are no conflicts after the contract has been signed. A third party may be required to decide the next steps in cases of significant disputes based on the way they interpret the contract. Make sure that all terms are clearly stated.
There Are No Empty Spaces
Although contract templates are a great way of saving time during contract drafting, they should be considered during contract review. Before the final contract is signed, any empty spaces should either be filled in or deleted. Failure to fill in any blank spaces in an agreement can have costly consequences depending on your circumstances.
Please Read the Default Terms
By looking at default terms, you can determine the negative consequences a party may suffer if they don’t meet their contractual obligations. You can review the default rules and regulations to understand better the possible consequences of failure to meet your contractual obligations. You can also review the default terms in case of a breach of contract to understand the consequences.
Make Sure to Plan for Critical Dates and Deadlines
You can plan ahead during the contract review phase and start monitoring all tasks your organization is responsible for. This includes ensuring that specific items and deliverables are completed by the deadlines and at the right time. This will help you avoid any breach of contract. You can then plan by carefully reviewing every deadline, key date, and timeline.
You can simplify contract reviews in many ways with contract lifecycle management software. An intelligent contract lifecycle management software (CLM) solution gives your company many collaborative features that allow you to create the best contract management experience. The ContractSafe CLM software solution provides all the tools necessary to manage and monitor your contract lifecycles.It is worth investing in proven and cost-efficient contract management software to get a competitive edge in your contract business.