If your company is growing, you probably are entering into a lot of contracts. You will have contracts with vendors and contracts with your customers. How are you keeping your contracts straight? If you subscribe to the theory of constant evolution, things will change in your contracts. You will improve your forms. You will learn, and get better and better, as your business grows. If a customer is upset because something is unclear in an early contract, you can change the terms of your contract. If and when the industry changes, you can come up with a new way to do things. Your contracts should evolve over time.
For contracts, have a tracking system. Have a method of making sure you keep all of your contracts straight over time. Basically, keep a log of the date, parties involved, and contract name, but also record when changes happen and when your contracts evolve. If you need them in the future, precise records will make it easy to find whichever contract you need.
This will become highly critical as your business grows. First, you may have a dispute with your client and you will need to produce that particular contract. Second, you may want to engage in a merger or other strategic transaction. Your counter party may ask to see your contracts to understand what your business is about, and to determine whether you are an appropriate target or joint-venture partner. You may also need to look at your contracts as your business changes. The time may come to eliminate some customers and bring in new, different ones, and going back to the contracts will be important and helpful to determine which customers to keep or which ones to downsize.
The key point here is that you must have those contracts and you must have them handy. Having a disorganized mess could kill an acquisition or strategic transaction and could be a problem during litigation. Stop today, and think about what you are doing. Have you put appropriate tracking systems in place? Are you evolving your contracts over time? The sooner you get them in the right order, the better.
Each case is unique. Past results do not guarantee future outcomes. This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. FreeImages.com/photographer Odan Jaeger.
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Posted In: Business ManagementAbout the AuthorR. Shawn McBride — is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email R. Shawn McBride Law Firm or call (214) 418-0258.