In the in-house corporate legal department, two sides comprise the whole: legal services with in-house lawyers and the legal operations team. The latter is the business side of processes and technology...
Managing legal spend without legal spend management software is impossible in today’s high-pressure law department. As budgets tighten and demand for legal services increases, legal operations professionals...
Matter management with in-house legal teams can be highly automated with enterprise legal software , or done manually with the customary and traditional spreadsheets, forms and email. The 11th annual CounselLink...
The legal profession has undergone a significant transformation with the advent of technology, particularly in the area of matter management and attorney case management software. Historically, attorneys...
The benefits of vendor management programs in today's complex legal landscape deliver greater ability to measure performance and showcase added value for the corporate legal department. Vendor management...
Improving contractual relationships is sensitive and fragile, especially if you’re contracting with a new party for the first time. You need to be aware of the clauses, risks, and consequences of not meeting obligations. It can ultimately be the make-or-break point for your business’s success.
This is where Contract Lifecycle Management (CLM) can come in handy to manage, track and optimize contract workflows. Before we look over the benefits of CLM, let’s touch upon the intricate details of contractual relationships and how to improve them.
Contractual relationships are legal obligations between two or more parties. They are legally enforceable and built upon a promise by one party to do something for the other.
These contractual relationships define the terms and conditions of a business relationship and outline the responsibilities of each party in a contract. In a business context, a usual contract would cover information relating to the delivery of goods, dispute resolutions and payment procedures. Several critical elements that help in improving contractual relationships include the following:
Businesses nowadays want to ensure that their deals are intact and avoid running the risk of lawsuits. In such cases, a holistic written contract is one of the most important aspects of maintaining contractual business relationships. These contracts outline the expectations, intended terms and consequences of revoking the contract for both parties.
Furthermore, such relationships also foster a sense of predictability, ultimately creating trust and reducing misunderstandings between the contracting parties.
The contractual relationships vary according to the parties involved and the agreement's nature. Some of the common types of contractual relationships are as follows:
A contract essentially has three fundamental stages. Let’s discover the stages of how a contractual relationship can be created.
It’s the first step to the initiation of a contract. An offer depicts the eagerness of one party to enter a contractual obligation with the other. In this first phase, a promise is made by one party to the other.
A contract is void if it doesn’t have the mutual consent of all the parties involved. Therefore, the next primary stage is acceptance. The other party should accept the offer without any additional terms and conditions to develop a valid contract.
Of course, the purpose of any contract is to exchange something of value between two parties. It could either be money, goods or services. Consider the following scenario: a customer pays $20 to purchase a loaf of bread from a bakery. In this context, the consideration for the bakery is $20, while the loaf of bread is the consideration for the customer.
The contractual obligation will be revoked if it doesn’t have the fundamental components discussed earlier. But that’s not all! A contract consists of additional conditions, principles and requirements that determine its validity. Some of the rules of a contractual relationship include the following:
The parties involved should be competent. The primary criteria are that any party to the contract shouldn’t be:
The contract can specify the governing law which could apply in case of any disputes in the contract.
The parties involved should be able to perform the contract. If the act is impossible, the contract is considered void.
Indeed, a contract is only valid if it’s for a lawful object or consideration. Anything prohibited by law or considered immoral or fraudulent can’t form a valid contract.
The contract specifies the breaches and penalties in case one of the parties to the contract fails to fulfill the obligations. Often, a contract breach results in a legal matter.
Better management of contractual relationships ensures seamless workflows, an increase in stakeholder satisfaction and a reduction in risks. Here are the best management practices to maintain contractual relationships:
A big organization often has thousands of active contracts. If each contract is stored across different IT systems, it might get extremely challenging to locate and track the progress. So, the best way is to develop a singular central repository where every contract is stored at a single location and is accessible using a few clicks.
Instead of creating a new template for each contract, the legal team can standardize a ready-to-go template to save time and increase efficiency.
Of course, stakeholders need to be aware of the contract’s progress. Therefore, it’s best to use a robust contract lifecycle management (CLM) system to integrate emails and send real-time notifications to all parties involved. This way, everyone in the organization aligns on the same page and can view the progress anywhere, anytime.
To ensure successful contractual relationship management, you should measure it using KPIs. However, it’s imperative to set sensible performance metrics that align with your goals. Some of the common ones include:
If you choose a holistic contract lifecycle management solution, you can pretty much ensure better management of your contractual business relationships. Here’s how an innovative CLM can help:
From reviewing contracts in real-time to satisfying stakeholder objectives, CLM software is crucial for successful contractual relationships in business. If you also want to cut costs, save time, and improve workflows in your organization, reach out to CounselLink® for enterprise legal management solutions integrated with CLM.