With the summer period over, it’s time to take out the winter woollies, make yourself a hot chocolate and give yourself and your contracts some much needed TLC before the festive season kicks in.
Q4 is a great opportunity to review your contracts and get them in great shape to take your business into 2019. With a 2 Part Blog Series, Lawbrief Jennifer Cowan shall discuss all you need to know about client contracts this week and supplier side contracts next week.
In general, you should consider what has changed since the last time you looked at your business contracts, but to guide you here are some top tips of what to think about and look out for:
1. Scope Review: Is the description of services or products still accurate or has there been some “scope creep” that might leave you exposed from a financial or liability point of view? Consider whether you need to amend the contract to accommodate the changes.
2. Performance Review: Do you have the capacity and the infrastructure in place to continue to deliver the services or products and meet the delivery timescales and other obligations in the contract? Could you do better or do you need to review your offering? You may want to consider looking at the market to see what your competitors are offering. Is there a risk that the client might look to end the relationship and go elsewhere? Have you had any issues with performance and are you at risk of a claim for poor or non-performance? Make sure your insurance is up to date and adequate and that you put in place any appropriate practical steps to mitigate the risk. Think about anything you can do better from a client relationship point of view, e.g. regular meetings or reports.
3. Financial Review: Is the contract still financially viable when you look at risks/costs versus financial reward? Are you having any payment issues with the client? Is the client meeting their obligations to you or has it become a difficult relationship and one you could do without? Are there any financial review clauses? Do you have rights to increase the fees or costs and are you making the most of these? Are you able to charge interest for non-payment?
4. Legal Review: Are any required qualifications, permissions or accreditations to enable you to deliver the services or products still up to date?
5. Termination/Renewal Review: Are there any break clauses or rights of termination that could be used? Is there an auto-renewal clause? Consider if you need to take any action to ensure the continuation of the client contract or if you want out of the client relationship to prevent auto-renewal or terminate the contract. If there are supplier contracts that are dependent on this client contract, then you need to look at them in parallel with the client contract to ensure you are not exposed. You need to either make sure the supplier contract continues and is adequate and appropriate to meet the needs of the client contract or that you take steps to end the supplier contract in parallel with the client contract.
Keeping in mind the timing of the year, it is important to get the business ready for Q4 to get the maximum out of the final and most important quarter of the year.
A general summary to consider for all contracts:
- Is the key contact information still accurate?
- Has anything significantly changed in law that needs to be addressed? For example, are your contracts GDPR compliant? Read the blog post by LawBrief Rachel McKinney on the importance of GDPR compliance for any disclosure of personal information for contracts.
- Remember your clients and suppliers may be carrying out the same process, so it’s important that you look honestly and objectively at your own performance as well as theirs.
- Make sure you schedule the next review date and it is scheduled well in advance of any auto-renewal dates. The appropriate frequency of reviews will depend on the nature of the contract, but should be at least annually.
Tune in next week for Part 2 on how to give your supplier side contracts some TLC. At LawBite, we can review your contracts, ensure they are compliant with any changes in law that you might not be aware of (including GDPR) and help you get things in order.
For further legal advice, you can contact the author of this article expert LawBrief Jennifer Cowan or enter an enquiry for a free 15-minute legal consultation. Alternatively please do call our friendly Client Care Team today on 020 7148 1066.