Three reasons to check your contracts are up-to-date
It is really important to keep your contracts up to date.
Careful drafting of a commercial contract at the start of a transaction is vital for numerous reasons but you should not stop thinking about that contract once the ink has dried. It is just as important to monitor your contracts over the course of time to ensure you remain both current and protected.
Here are three essential reasons to check your contracts are up to date:
- Changes to the law may necessitate changes to your contracts. This is particularly important if you regularly enter into contracts using standard terms and conditions or if you, say, have a master contract with a customer that permits future orders on the same terms too.
- Practical changes may arise over time that requires a variation to your contracts. If, for example, you have a shareholders' agreement, it might also be accompanied by a template deed of adherence for you to use in the future should a new shareholder join your company. Nevertheless, it is sensible to review both your shareholders' agreement and the template deed of adherence to make sure nothing has changed since it was prepared. With a change to the share structure, it is also possible that your shareholders' agreement may need to be tweaked or substantially varied in light of the new arrangements.
- If you ever decide to sell your business, it looks good to potential purchasers if you have regularly and efficiently maintained your contracts. Any steps you have taken that notably appear to reduce the risk a potential purchaser might face in acquiring your business will be seen beneficially. It will likely make the sale process smoother too, not least when it comes to disclosing information about your business. It is also probable that you will be asked to give warranties about the business and regularly managing your contracts should give you, and the potential buyer, more peace of mind that these warranties won't be breached.