Importance of Contract Management & Legal Processes

What are legal processes?

In law, legal process includes criminal procedure, civil litigation arbitration, administrative proceedings, the electoral process, the legislative process, constitutional process, and others.

Why is it important?

Legal processes help in maintaining status quo, law and order in society, it also ensures freedom of individuals and satisfy the basic needs of people.

What is contract management?

Contract management is the process in which a contract is created, executed and analysed. It helps business organisations in reducing financial risk and maximise operational and financial performance by creating adequate timelines for their projects.

Why is it important?

  1. Contract management is an efficient way of ensuring smooth functioning of organisations.
  2. It structures the expectations of the businesses, rules out mechanisms that would facilitate the fulfilment of the expectation.
  3. Helps in identifying ways in which revenue can be optimised and cost can be minimised.
  4. Softwares can be installed to reduce manual labour and save time thereby increasing the efficiency of business and minimising the scope of errors.
  5. Manual labour may be used to evaluate the performance of the contract and identifying scope for improvement.
  6. Helps in tracking the expenses of transaction between businesses and enables in identifying cost saving opportunities.
  7. Helps in tracking suppliers, evaluating their performance based on contract and building perennial relationships.
  8. Enhances the level of compliance amongst pertinent stakeholders in the contract.

What justifies the need for contract management?

The increased dependence on third parties, expanding regulations and stricter standards of compliance, internationalism, the greater need for coordination and collaboration between company’s departments, all of these can be most efficiently handled by a contract manager who has specialised skills and knowledge in the field of contract & commercial management. These managers make a streamlined system for managing the operations of business, draft documents  keeping in mind the current laws and regulations pertaining to the businesses.

The process of Contract management

  1. Both the organisations must first identify the objectives and goals of their businesses objectives and define risk appetite
  2. Second step involves the drafting of the contract
  3. Next step is to negotiate the contract with involved stakeholders and the interested parties (pertaining to price structure, obligations, rights, terms and conditions, renewal of contract, warranty provisions, etc)
  4. Finalise by incorporating the required changes ruled out after negotiation and execute the amended contract
  5. Manage post-execution contract obligations and audit the performance and identify risk mitigation mechanisms
  6. Manage contract termination and renewals by keeping track of the closing date of contract.
  7. Implement terms of standard contract in ERP system to ensure that terms are standard and easily followed, and all payments and taxes are remitted on time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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