During a contract’s lifecycle, changes or amendments are an imminent part, which requires proper management and monitoring. The reasons for the changes are wide and varied. A few notable causes that call for changes in contracts include price fluctuations, changes in demand patterns and unforeseen circumstances that require mandatory amendments. Whatever the changes might be, the contract manager must record the developments to ensure seamless business functioning. In this digital era, it is simpler than ever to accommodate changes. Contract management software helps to track those changes efficiently and help the team stay abreast of the contract developments.
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We’ve curated a list of best practices to manage and monitor contract amendments effectively.
When it comes to contract management, the decision-making team is responsible for negotiations and effecting amendments in contracts. Whereas, the management team is responsible for the meticulous organization of documents, which enables stakeholders to access and understand contractual developments effortlessly. While the contract experts deal with the partners/clients/vendors in negotiating on the terms during the contract’s lifecycle, the management takes the responsibility of recording such amendments. Addendums are the optimal method of recording the amendments and extra additions, effected by the involved parties. Once the contract partners reach a consensus on the revised terms, conditions, provisions, and clauses, the content team drafts the language for the addendum. The legal team verifies the legality of the amendments and the management team executes the additions by linking the addendums with the original contract. Leveraging a robust contract lifecycle management software , the contract team establishes the amendment workflow to add changes seamlessly.
Corrections in Contract
Although contract management tools eliminate the risks of manual errors, there are a few instances, where small mistakes in the content with the potential of creating adverse consequences occur. For example, while incorporating the dates of renewal/cancellation, the team might have chosen the wrong day/month, which can incur losses for the company. In such cases, the executed contract can be corrected after informing the involved parties. The changes must be highlighted to provide context to the contract holders on why it was changed. Another instance is where the terms and conditions, which were agreed upon in unison, do not have legal validity. It is especially true in the case of international trade, where the contract laws differ from country to country. Every change made to the original contractual language must be highlighted with strong evidence behind such changes.
While making changes to a contract, it is essential to provide a reason for changes to the involved parties. The contract team, the stakeholders, the contract partners, must be notified of the changes duly. If the notifications are not sent out diligently, it may lead to further challenges and create confusion among the team.
Amendments and addendums must correspond with other linked documents/activities. For example, if there is a specialized tracker that records the addendums included during the year, it is imperative to include the changes in the tracker. With an agile contract management software system, the changes, addendums, and notifications can be effectively managed and stored.
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Although it is complex to maintain and accommodate the amendments, with effective software and experienced team, the changes can be handled efficiently.