Your Business Relationship Has Changed – Has Your Contract?

Contracts are usually written at a particular moment in a commercial relationship.

They record what each party has agreed to provide, how much will be paid, when obligations need to be performed and what happens if something goes wrong.

But commercial relationships evolve.

A customer who originally bought one service may now buy several. A supplier's responsibilities may have expanded. Pricing may have been renegotiated. Delivery processes may have changed. Different people may now manage the relationship.

Meanwhile, the original contract can remain untouched.

When the Contract and Reality Start to Drift Apart

Small changes often happen gradually.

Perhaps a customer asks for an additional service and you agree to provide it. Six months later, that additional service has simply become part of the normal arrangement.

Or perhaps payment terms have gradually moved from 30 days to 60 days because that is what both parties have been doing in practice.

Individually, these changes may not seem significant. Over several years, however, the commercial relationship can become substantially different from the one described in the original agreement.

That matters when there is a disagreement.

If one party relies on what happens in practice while the other points to the written contract, establishing exactly what was agreed can become much more complicated.

Signs Your Contract May Need Reviewing

It may be time to revisit an agreement if:

• the products or services being provided have changed;

• prices or payment arrangements have been renegotiated;

• responsibilities have moved between the parties;

• important processes are now handled differently;

• the agreement has been extended or renewed several times;

• key terms are routinely ignored in practice; or

• staff regularly rely on emails or conversations rather than the contract to understand the arrangement.

  
  

The more the day-to-day relationship differs from the written agreement, the greater the potential for uncertainty.

Don't Wait for a Dispute

Contracts often receive the most attention when something has already gone wrong.

At that point, however, the focus becomes establishing what the parties agreed and which terms apply.

Regular contract reviews can help businesses identify these issues earlier.

For significant customer and supplier relationships, it can be useful to periodically ask a simple question:

If we had to sign this agreement today, would these still be the terms we would agree?

If the answer is no, the contract may need updating.

Keep Your Contracts Commercially Relevant

A good commercial contract should not simply record what was agreed several years ago. It should provide a clear framework, such as a change control process to reflect the relationship as it operates today.

If your commercial arrangements have evolved, Lawpoint can help review your existing agreements and identify where changes may need to be formally documented.