This is the first issue of a new fortnightly series in which we will give practical tips on how to avoid contractual issues arising out of digital transformation and outsourcing contracts. In particular, this issue emphasises the importance of knowing the contract, providing top tips as to how best to familiarise yourself with its content.
Tip 1: Don't forget the contract!
- Once the contract is signed, it can be tempting not to look at it again until something goes wrong. However, all the terms are there for a reason and being familiar with them should help ensure that both parties properly comply with them.
- Print a copy of the contract, review it, highlight the key provisions and keep it in a convenient place, for easy reference.
- Make sure those responsible for the day-to-day operation of the contract understand its key terms and what is expected of both parties.
- If the contract is long or complex, summaries of key aspects can be a helpful starting point, but don't rely exclusively on them, as often 'The devil is in the detail'.
- Ensure that you put early reminders of key dates in your electronic calendar so that you remain in control and can monitor progress and compliance.
Tip 2: Be more demanding of your legal adviser
- Ask your legal adviser for user-friendly tools to assist with day-to-day contract management. For example, diagrams; flow-charts; decision-trees; spread sheets that automatically calculate the dates by which a next step next to be taken; or a full year calendar or project plan showing what needs to happen, who needs to do what and by which date can all be extremely helpful.
- If you don't understand the rationale behind a clause or a procedure under the contract, ask your legal adviser to explain it. If you are responsible for the performance of the contract and should be able to understand every term.
Tip 3: Be clear and consistent
- Insist on compliance with contractual procedures from the outset and apply them consistently throughout.
- Don't be embarrassed to require compliance with contractual obligations. There can sometimes be a reluctance to do so for fear of appearing to be not collaborative in the context of the day-to-day dealings with the other party, but not doing so risks inadvertently waiving rights, which could be costly if issues subsequently arise.
- Equally, it is important to understand your contractual obligations and also any limits on them. If you don't, there is a risk in deliberately or inadvertently inheriting (in whole or in part) the other party's obligations in the event that things go wrong. Disentangling what has happened and where responsibility lies in those circumstances can be very difficult.
- If a contractual provision doesn't work in practice, then amend the relevant provisions using the formal procedure in the contract to ensure certainty going forward. Consider involving your legal adviser to do this to ensure that any consequential changes in the contract are also made.