Your Contractual Triage Guide


Your Contractual Triage Guide

for today and tomorrow

Since the (economic) impact of COVID-19 on society and business is yet unforeseeable, we are all going through a period of uncertainty. Maintaining an overview, insight in and control over your legal obligations and contractual body is therefore pivotal. Triaging your contracts enables you to anticipate and prioritize, and thus prevent issues from arising in these fast-changing times.

Tessie Schuurs | Dominique Poot

In order to get you started, please find below guidance concerning the contractual triage, the possibility to use automated contract management tools, a note on the human factor and to close of: next steps to consider.

Triage your Contracts

Start with the question: what if contractual obligations can no longer be fulfilled under the current circumstances? This question may rise due to the cancellation of events, declining market demand and supply chain issues within several industries. To minimize the long-term impact of COVID-19 on your business, it is important to consider the legal position of your business, today and in the future. Deciding how to get started with managing your contract portfolio is not easy. It gets even more complex when you do not have sufficient oversight, and different approaches within your company exist regarding pre-existing, renegotiated and new contracts.

The considerations below provide suggestions for managing the contractual obligations, rights, and potential risks your business may face.

  1. List all your contractual obligations

    • Create an overview of your current contracts/the contracts that are currently in place and list your obligations, rights and liabilities pursuant to the contracts;
    • Classify whether, and if so which General Terms & Conditions apply to the contracts;
    • Make an overview of any written and/or oral agreements made after conclusion of the contracts.
  2. Flag business-critical obligations and applications

    • Distinguish between obligations and applications that (e.g. in the event of non-performance or reduced availability) may form a threat to business continuity. 
  3. Highlight the obligations and rights due and payable

    • Create insight in which obligations are immediately due and payable, and which can be suspended, decreased or terminated prematurely;
    • Additionally, determine whether you are entitled to delivery of certain goods and services, and payment thereof.

While triaging your contracts, the high-level considerations as stated the contractual checklist may be of value (full checklist is available here). The following contractual provisions are included: force majeure, unforeseen circumstances, suspension, termination for convenience, termination for cause, and the penalty clause.

Adopt Automated Contract Tools

Nowadays businesses tend to have more contracts with a shorter turnaround than before. Because of this trend, it becomes increasingly difficult for Counsel to carry out all contract management manually. Adopting automated contract tools may be the answer since these technical aids help to create an overview in a vast portfolio of contracts. This may be particularly convenient when the attention of your legal team goes out to managing a small number of contracts that are significantly affected by the pandemic. If this leaves you with a lack of time, manpower and legal tech to manage the remaining contracts (e.g. those currently unaffected, and those that can still be performed with minor rearrangements), automated contract analysis tools, like the Legal Engine of Deloitte, can take the job of managing dozens of contracts off your hands, which enables you to focus on triaging those contracts that require your special attention. By using automated contract tools your business may become more cost-effective. It will also enable you to stay in control of your legal obligations during these challenging times, and in the post-COVID-19 era.

Focus on the Human Factor

We recommend you, however, not to lose sight of the human factor. Once you have mapped - manually or with help of an automated contract tool – the contractual obligations, rights and liabilities of your contracts, it is advisable to shift your focus to determining the way forward (e.g. by having a conversation with your counterparty to mitigate potential risks as to ensure future cooperation). Since unmanageable situations will occur in practice, it is recommended to remain flexible by seeking out the right moment to act and to think about out-of-the-box solutions.

Unlock Additional Value of Triaging

Once you have an overview of and insight in your contract portfolio, you could consider going the extra mile: by unlocking the additional value of triaging your contracts. Consider gaining better insight into the following: the turnaround times of your contracts, the annual price increases, business models, and contractual optimization of IP. These additional contractual insights can help you to reduce costs, achieve value beyond the contract’s original scope, improve contract writing management and optimize contractual and/or operational efficiencies.

Depending on your organization’s industry, size and profile, it is advisable to take on a tailormade approach to your contractual triage. Particularly in these times, we can help you in navigating through the complex legal and regulatory landscape and changing contractual mechanisms as your trusted legal advisor. For more information regarding this contract triage and contract management, please reach out to Dominique Poot via the contact details below.

Download the white paper Contractual Triage

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