Contract Finalisation Procedures: What to Include in Your Final Contract
Contract finalisation is one of the most important stages in contract management. It’s the moment when everything comes together, and your final contract becomes enforceable. However, it’s also one of the riskiest phases in contract management, meaning it requires special attention to avoid mistakes.
The importance of contract finalisation
Contract finalisation is one of the most critical stages in contract management because you are locked in after signing the document. To prevent issues down the line, you must ensure that the final contract contains no mistakes or discrepancies. To do this, your company must have an efficient finalization workflow that’s consistent across all types of contracts.
If you do not have a thorough finalization method and any requirements are overlooked, you may wind up with:
A contract that cannot be enforced
This indicates that a transaction is legitimate, but it would not uphold in court. So, you’ve specified the terms and obligations, but you won’t be able to hold the other party liable in court if things go south.
Unnecessary confusion regarding terms and conditions
You can expect an expensive and time-consuming back-and-forth if you use unclear wording to outline terms. Furthermore, the other party may file a lawsuit and pin you for not upholding your obligations, all because of a misunderstanding.
A shortened statute of limitations
When necessary provisions aren’t included in the executed agreement, the counter-party will probably take several years to uphold their end of the deal. Avoid becoming trapped in a delayed schedule that undermines your goals, jeopardizes corporate growth, and increases liabilities.
What are the necessary contract finalisation procedures?
Many organizations that regularly engage in business deals discredit the importance of the execution phase. However, by not putting effort into revising the contract and ensuring that everything is correct, they open themselves up to unnecessary risk.
Here are the steps you should take during contract execution to avoid costly mistakes and bottlenecks:
Compare the contract versions
After negotiation, the parties redline the document for necessary and suggested revisions. If both parties create separate versions, inconsistencies are noted for further discussion. The parties can then work together to create a final version to ensure there are no misunderstandings.
Conduct final approvals and reviews
After the parties agree on a final contract version, internal stakeholders will conduct a final review. They check that the contract has all necessary elements, clear terms, and no errors. Any last-minute revisions are made, and then the contract is ready to be signed.
Sign the contract
A contract must be signed by authorized representatives or signatories from both parties to be legally valid. Physical or electronic signatures can be used for signing, depending on the parties’ preferences.
File and distribute the document
The signed document can now be finalized and distributed to all appropriate departments and entities within your company. This ensures they’re informed of all commitments and responsibilities that your company must meet.
What comes after contract finalization?
After a contract is finalized, there is still some work to ensure that it performs well. This includes the following:
Tracking commitments and duties
Both parties must follow through on the contract’s obligations and commitments. Therefore, you have to be aware of all obligations and deadlines in order to ensure total compliance. You must also be informed of the other party’s obligations and deadlines.
Auditing and reporting
All executed contracts must be available to relevant parties for auditing, including legal staff. You should also produce reports on the performance of all contracts in your system.
Amendments, addendums, renewals, and terminations
When a contract’s provisions are fulfilled or the contract’s expiration date approaches, you can terminate or renew the agreement. Renewals can either continue the contract’s existing terms or change them through revisions or addendums.
The benefits of a comprehensive contract finalization process
Given how much time and money organizations invest in legal agreements, it’s logical that flaws in contract finalization can result in significant losses over time. You can avoid this fate by implementing a smart contract management platform to streamline most of the steps of executing agreements such as version comparison and signing. Automating your contract finalization process allows you to surpass your competitors and close successful business arrangements faster and with fewer mistakes.