Are Your Commercial Contracts Still Fit for Purpose?
Commercial agreements are often put in place at the beginning of a business relationship and then left unchanged for years. During that time, services may be altered, prices may be increased, responsibilities may change and new suppliers, subcontractors or territories may be introduced.
The agreement originally signed may therefore bear little resemblance to the way in which the commercial relationship now operates.
Well-drafted commercial agreements should provide clarity over what is being supplied, what is expected from each party and what should happen when things do not go according to plan. When agreements are outdated, incomplete or based on terms that are no longer appropriate, unnecessary commercial and legal risks can be created.
When Should a Commercial Agreement Be Reviewed?
A contract should not necessarily be regarded as a document that is completed once and then forgotten.
A review should be considered whenever significant changes are made to the commercial relationship. These may include:
- changes to products or services;
- revised pricing or payment arrangements;
- the introduction of new suppliers or subcontractors;
- changes to delivery arrangements or service levels;
- expansion into new markets or overseas territories;
- changes to responsibilities between the parties; or
- significant changes within the business itself.
Even where no obvious change has taken place, periodic reviews can be beneficial in identifying provisions which have become outdated or no longer reflect current business practices.
Terms & Conditions: Do They Reflect How Your Business Operates Today?
Terms & Conditions form an important part of the contractual relationship between a business and its customers.
However, problems can arise where generic terms have been adopted or where existing terms have not been updated as the business has developed.
Payment terms, cancellation provisions, delivery obligations, liability, intellectual property and dispute arrangements should all be considered within the context of the particular business.
Clarity should be provided before a dispute arises rather than after one has already developed.
Supplier and Subcontractor Agreements
Reliance is frequently placed on suppliers and subcontractors to deliver an important part of a product or service.
Where responsibilities have not been clearly documented, uncertainty can be created over standards, deadlines, payment, confidentiality, liability and what should happen if the required service is not delivered.
Appropriate agreements can be used to establish expectations from the outset and provide a clear framework through which the commercial relationship can be managed.
Distribution Agreements in the UK and Overseas
Additional considerations can arise when products or services are distributed through third parties, particularly where overseas markets are involved.
Territories, exclusivity, performance expectations, intellectual property, termination arrangements and applicable legal jurisdictions may all need to be addressed.
An agreement that may be appropriate for a UK commercial relationship should not automatically be assumed to be suitable for an overseas arrangement.
What Happens When a Commercial Relationship Goes Wrong?
The value of a carefully drafted agreement is often demonstrated when difficulties arise.
If obligations, responsibilities and procedures have been clearly recorded, the position of each party can be more easily understood. Where an agreement is vague, outdated or incomplete, disagreements can become more difficult and costly to resolve.
Commercial contracts should therefore be considered an important part of business risk management rather than simply an administrative requirement.
Commercial Agreements Tailored to Your Business
Terms & Conditions, Service Agreements, Subcontractor Agreements and UK and Overseas Distribution Agreements can all be prepared or reviewed by Ilisi Expert Legal Compliance.
Rather than relying upon generic documentation, agreements can be developed around the way in which your organisation actually operates.
For further information or to arrange a review of your existing commercial agreements, contact Ilisi Expert Legal Compliance.
