Challenges & Benefits of Contract Standardisation

Introductions

Contract Standardization involves building and implementing a contract template that represents a standard framework governing business positions agreeable to all stakeholders of a business. It can cover all relevant technical functions ranging from business to legal, from construction to language, and from interpretation to implication, among other things.

Degree of challenges

An entity that has not followed Contract Standardization in its commercial dealings and negotiations may face various challenges. Some of the challenges are listed here and are labeled in terms of the degree of issues that the entity may face or may need to tackle.

First Degree Challenge

• No contract templates covering party’s rights and business interests
• Contract templates are of other contracting parties

Second Degree Challenge

• No contract clause or draft available to tackle specific need
• Business positions are not aligned
• Commercials are subservient to other party’s interest
• Higher chances of adopting the other party’s terms and conditions

Third Degree Challenge

• Multiple templates for addressing a single line of services
• Multiple business positions or languages employed among different stakeholders
• Liabilities and other financial leakage
• More focus on business operation without  streamlining contract functions

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Tackling the challenges

The challenges will possibly lead to multiple financial, legal and commercial compliance issues/implications. Some of the issues/implications are presented in the paragraphs below. Contract Standardization can effectively tackle such implications and bring effectiveness, uniformity, and security in commercial dealings.

Tackle Implications of Challenges…

• Slippage in presenting business positions
• Leakage of financials
• Detrimental to business reputation
• Non-transparency and governance issue
• Contract compliance issues

And bring Uniformity, Continuity and Efficacy….

• Uniformity in drafting
• Uniform use of standard templates
• Uniformity in responses to counterparty push-backs
• Efficient change control
• Cost efficiency

In order to bring business Efficacy and Compliance

• Uniformity and enhanced effectiveness in contract negotiations
• Well written contract drafting and negotiation process and guidelines
• Bring standardized compliance procedure of contract obligations
• Shapes client’s business in the desired direction

If you are facing any of the issues mentioned above, we can help you with our Contract Standardization expertise to enhance efficacy in your contract, compliance and other legal requirements. We will enable you to mitigate risks by creating solutions in any drafting or legal issues related to agreements, negotiation guidelines.