New Delhi, September 9: Contract management in today’s market plays a crucial role for every business across the globe. Put simply, Contract Management is basically the terminology used to describe a company’s management of contracts between themselves and employees, vendors, customers and partners. It is imperative that every party understands the expectations, cost, risk and success of each SMEs move at all levels. Contracts are like insurance you need them, to cover yourself from the unforeseen loss/dispute which may arise, but you always wish that need never arises for them to be enforced.
Generally, the users of this system boast four main benefits for SMEs:
• Reduced administrative costs
• Better accountability
• Enhanced forecasting
• Happy customers
• Avoidance of future disputes
• Understanding the expectation of the other party
Before you go rushing into outsourcing contract management services you should make sure that you understand it completely. Here we will run through the various areas that you may require from your outsourcing legal counsel. Different Areas of Contract Management for SMEs
There are certain contract management professionals who help you to prepare legal agreements. They all help to minimize risk whilst maximizing company profits. The contract management services are used by every business/service professional across the globe. The following are the key areas to consider whether the said services are to be availed on a deliverable basis or on a continuous basis. The areas where contract management or contract drafting services are required, are as follows:
Document Drafting – It is the most imperative and crucial area of an organisation. Drafting of documents by understanding the business and laying the commercial terms in the manner fit for organisation is the most vital part. An legal counsel who is drafting the agreements needs to be appraised about the intricacies of the business of the organisation in order to lay out the terms which not only covers the present terms of the business between the parties but should also cover the terms which may lead to disputes in future. This can only be done by understanding the industry and the challenges of the seed industry by the legal counsel.
Customizing the Documents on need basis – Most of the times the organization’s work on template which are either copied from some other competitor business or drafted one time by a legal counsel. It is very important that each agreement is customized and perused as per the requirement of each business transaction because the terms of your competitors may not cater to the needs of the business of one’s own organization. Templates can be used for certain documents like NDA or vendor enrollment agreement, but in the event of any change flagged by the other party the same need to be consulted with the legal counsel. It is also important that the documents should be reviewed by the legal counsel, from time to time, as the changes in the law laid down by various judgments of various courts are to be effected in order to give full effect to the documents.
Document Management – The Legal arm (whether outsourced or in-house) helps in the management of all the documents which are on the verge of expiry, renewal, amendment etc. by tracking the documents which are in the presence.
Documentation Of Change In Terms – It is very important for an organisation to give effect to any change in the terms of the agreement between the parties by way of addendums. Even if there is a change in the price, of goods or services, the same needs to be brought into effect by way of addendums otherwise the said change in terms shall not hold sanctity in the eyes of law when a dispute arises between the parties.
Although each and every area requires to be covered by the contracts, but one of the most basic areas for any organization to enter into a contract is contracts with their employees. Most of the SME’s enter into employee contracts with vague/unenforceable terms like non-competition, bond not to leave company, work hours contradicting labor laws, probation period exceeding a certain period etc. The issue occurs when an action needs to be taken against an employee and the said clauses are struck down by courts jolting organization in shock.
It is possible that a big organization or even a small or medium sized organization has a number of ongoing contracts and agreements and to manage all of them securely becomes a problem and their management is quintessential as a lot of money is involved in it. So, for effective management and security of contracts, you need an effective contract management legal firm.
Other benefits of contract management include reduction in the administrative costs, better accountability and enhanced forecasting and SMEs business predictions. Also, when your contracts are well managed, it is definite that your customers and clients will be satisfied and happy, as this way the parties are ensured that both will carry out the business by rules and conditions of the contract and that parties needs to adhere and abide by them.
If any of the parties intends to violate the terms of the contract, then the aggrieved party has a documentary evidence to put forth before the court in order to validate the violation of the terms otherwise it’s your word against the other party word and oral commitments never stand tall in the eyes of law.
Engaging a good and reliable contract management, law firm can be of great help to you, your company, clients, vendors and customers. A contract management is an essential part of small and medium size enterprises.
Ergo, it can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.
By Kanishk Agarwal