Business contracts should not be a “set and forget” part of your operation. It’s good practice to review your standard contracts periodically and update them as needed, or to revisit long-term agreements you’ve entered into, especially as your business and the legal environment evolve. Here are some guidelines:
- Periodic Reviews: A common recommendation is to review key contract templates (like your standard client agreement, supplier terms, employment contract template, etc.) annually or bi-annually. Over a year or two, laws can change and so can your business policies. For example, data protection rules might be updated (as happened with GDPR), requiring new clauses in contracts that involve personal data. By regularly reviewing, you can catch these needed changes. Industry trends might also prompt updates – perhaps liability caps have generally increased in your industry, or perhaps electronic signature has become your norm (and you want to ensure your contracts explicitly allow e-signing).
- Changes in Law: Certain legal changes should trigger an immediate contract review. If a new law or regulation comes into force that affects your obligations or your customers’ rights, you must update contracts accordingly. A recent example was the extension of the IR35/off-payroll working rules, which affected contracts with independent contractors. Another was Brexit-related changes in regulations for certain industries. Keep an ear out through business news or legal updates (many law firms and services like British Contracts share client bulletins on legal changes) – if a change hits your business, adjust your contracts right away rather than waiting. Using solicitor-reviewed templates or services can help here, because they typically update their documents in line with current law.
- Business Growth or Pivot: If your business has grown significantly or changed its model, your old contracts may no longer suit. Say you originally provided consulting services and now you’re also selling software – the client contract for consulting might not cover issues like software licensing or support. Or if you’ve started handling much larger deals, you may want to tighten your terms (for example, adding a higher liability cap or specific security requirements). Whenever your business offerings or scale change, review the contracts that go with those offerings.
- After a Dispute or Near-Miss: Your own experiences are a great teacher. If you had a dispute with a client or supplier and found that your contract language was unclear or didn’t give you the protection you expected, that’s a sign it should be revised. Similarly, if you notice a pattern of negotiation on certain clauses (maybe every client tries to change a particular term in your contract), reassess if your starting position is reasonable or if it can be improved for clarity. Continuous improvement of your contracts will make future deals smoother and safer.
- Long-Term Contracts Check-Ins: If you are in a long-term agreement (say a 5-year supply contract or a partnership deal), don’t wait until it expires to think about it. Put a reminder perhaps yearly to check compliance (are all parties doing what they promised?) and also whether any terms need adjustment by mutual agreement. Some contracts even have built-in review points or price adjustment clauses – diarize those and prepare accordingly. If the market or context has changed drastically (for instance, sudden cost increases in materials), you may need to renegotiate or at least discuss adjustments with the other party rather than silently suffering an outdated bargain.
In practice, keeping contracts current might seem tedious, but it’s part of good governance and risk management for a business. A helpful approach is to maintain a “contract playbook” – a repository of your standard terms and preferences – and update that playbook as laws change or lessons are learned. Also, ensure any templates you use from external providers are the latest versions. British Contracts provides a contract review service for a competitive fixed fee under which we can check your contracts for complete, current, legal compliance. By regularly reviewing and updating your contracts, you ensure that you’re always working with agreements that reflect the latest legal requirements and your current business realities. This diligence can save you from unpleasant surprises and reinforce that sense of certainty and confidence that well-drafted contracts provide.