Tips For Effective Contract Management
Contract management can be an arduous task, but these 10 steps can streamline the process.
1. Investigate the business and legal backgrounds for the contract, the proposed transaction, and the overall business relationship. Interview all relevant and appropriate parties to understand the business relationship and what commitments may have already been made. Make sure to consider the actual and potential impacts on the company’s existing obligations and relationships.
2. Identify the steps that need to be taken for the contract to be reviewed and approved. Also, if needed, determine what can be done to expedite contract review before it can be signed.
3. Determine what contracts and related documents are required to memorialize the transaction. Collecting and reviewing existing examples of the necessary contracts will help expedite the drafting process and isolate specific questions that the company will need to answer in order for the contract to be complete and accurate.
4. Prepare a time and responsibility schedule for drafting, reviewing, discussing, revising and completing the first draft of agreement.
5. Negotiate the essential terms of the contract and, if needed, prepare a term sheet or letter of understanding to confirm that the parties are in agreement regarding the essential terms before time and effort is spent on contract drafting.
6. Draft the initial version of the agreement or, in cases where the opposite party is responsible for drafting, review the initial draft, discuss and negotiate necessary changes in the initial draft and make sure that revised drafts are reviewed. The timing of the drafting and revision process is crucial since delays can push the relationship off track and jeopardize closing the transaction.
7. Set up meetings and/or calls to review revised drafts.
8. Get the contract executed by the parties.
9. Make sure that fully executed copies of the contract are delivered to all interested parties.
10. Establish a plan for ongoing review of the performance of each of the parties under the terms of the contract. Calendar key dates identified in the contracts that may require follow up action.