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Every Business Needs a Good Contract Management Method

Even if you are just starting your new San Diego business, you are already beginning to accumulate contracts. Contracts are anything whereby you and your business agree to obligations that can be enforced in a court of law or court of equity. Contracts come under different names such as agreements and leases and, sometimes, letters of intent. Basically, if you or someone at your business signed it or clicked on various buttons on a website, the actual or online “document” is likely to be a contract. Contracts can “hide” in plain sight. As an example, all of your utilities are all based on contracts.

As your business grows, you need a to develop a method or system of managing your contracts. Here are some quick reasons why and some suggestions.

San Diego Corporate Law: Why Contract Management is Important

There are several basic common-sense reasons for keeping good track of your contracts. First, if there is a problem or dispute, you need to have the contract available for reference. Sometimes, you sign a contract and everything is fine for two years, but then there is a problem. Who do we call? What is our account number? What is the username? What is the passcode? What did we pay for? Why is the price different now? The questions go on and on. Without the original contract, you are at the mercy of your contracting party. They may or may not be friendly and/or helpful.

Second, you want copies so YOU are in the driver’s seat if the other side has lost their copies. Third, if you have hired experienced and proven corporate attorneys to help you draft form contracts for purchase orders, vendors, customers, and the like, you need to have those forms ready and handy. Finally, you want copies of your contracts in the event of litigation.

San Diego Corporate Law: Print Contracts From the Internet

Many contracts are now website-based – that is, there is never a paper form that you physically sign. As part of a good contract management system, do not neglect to print the contract that you entered into so that you have a hard copy. At the bare minimum, print the confirmation page so you have a date, website, account number, and related information.

San Diego Corporate Law: Build in Redundancy

How your business maintains the contracts is dependent, of course, on how you keep records. Often, a paper folder is created for each contract. Sometimes, the folders are group-related (such as “utilities” or “phones-internet”). The key is to have a central file cabinet or location for the contracts. Keeping hard copies is important, but so is keeping e-copies. If you can scan them, that is probably a good idea. As with the central file cabinet, the electronic copies should be on a central computer along with an annual duplication set of files downloaded to a flash drive. Those are the redundancies. Such are important if a key employee separates from the business or one set of copies gets lost over the years.

San Diego Corporate Law: Keep the “Master” Form Safe and Clean

As noted, if you have form contracts that you use, any and all of those should be kept in a central cabinet or data file. Importantly, the “master” form contracts should be kept separate and apart from any filled out or modified versions. That is, at least one – preferably several – copies of the “master” should be kept and it/they should remain “clean.” Often, repeated modifications of a contract lead to degradation of the original lawyer-drafted, lawyer-approved form.

San Diego Corporate Law: Keep Track of Dates/Obligations

Aside from keeping track and centralizing the physical contracts, good business practice dictates management of dates. As a simple example, maybe your phone bill is priced at a special rate which expires one year after the service is started. If you do not call to renew or get a new plan, then the standard rates will go into effect. All of the sudden, your bill is $200-$1000 higher and no one knows why. So, in addition to keeping track of contracts, it is good practice to CALENDAR deadlines and other contract-based dates. Other examples might include notification dates if you plan to terminate your lease, or notification dates if you want to renew, payment dates, due dates, and similar.

San Diego Business Law: Contact San Diego Corporate Law

If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard has been named a “Rising Star” three years running by and “Best of the Bar” by the San Diego Business Journal.  Mr. Leonard can be reached at (858) 483-9200 or via email.

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Schedule a Consultation: 858.483.9200