Strategic Contract
Management Services
Get help achieving your contract management and compliance goals.
Contract Management for Small Business Owners and Real Estate Operators
For small business owners and real estate operators, contract management can be a challenge. Even a “good” contract can carry risk if it is not managed. Vendor agreements, software purchases, insurance policies, and even deliveries can all carry significant legal and financial risks if managed improperly. This article explores the benefits of proactive contract management, including renewal terms and data privacy, and offers some tips for safeguarding your business.
Understanding Renewal Terms in Contracts
Most contracts, whether in real estate or other business contexts, have a specific initial term—This is how long the contract lasts before renewal. Ignoring initial terms, renewals, or extensions can result in unexpected costs, unwanted extensions, and even termination of the agreement:
Auto Renewal Terms
Some contracts have automatic renewals that, unless renegotiated or canceled in time, will extend the agreement, sometimes with increased prices.
Notice Periods
Track notice periods for quality assurances, renegotiation, and termination.
Market Environment
Regularly review contract terms based on changing market conditions. Service contracts are particularly likely to need changes to match evolving business needs.
Data Privacy and Security Compliance
For business owners, protecting sensitive data is vital—not just for legal compliance but also to safeguard their assets. With laws like the Washington Privacy Act (WPA) and increasingly complex regulations, staying compliant is increasingly relevant. Renters and customers are increasingly demanding data privacy and security too.
Key Considerations for Data Privacy
Data Ownership
Clearly outline the roles for collecting, using, storing, and/or deleting data. Ensure secure handling of sensitive information at each step.
Consent
Obtain user consent for data collection, explaining its use and providing an opt-out option where required.
Data Minimization
Where possible, avoid collecting and storing sensitive information in the first place.
Security Implementation
Use and maintain strong security measures, like encryption and access controls, to reduce the risks of breaches. Training and supervising employees is key too.
Data Breach Notifications
In case of a breach, promptly review applicable laws and regulations for mandatory notification requirements—Businesses are generally required to notify impacted parties.
Third-Party Processors
Businesses should ensure third-party vendors and intermediary data processors also comply with the same data protection laws.
Is it Better to Manage Contracts Internally or Externally?
Businesses deciding to manage contracts internally will need to dedicate staff, spend resources developing systems, and utilize technology, all with a mind toward periodic review and consistent record keeping. On the other hand, outsourcing allows business to benefit from the resources and expertise of a third-party while shifting some liability, but this can come at the cost of reduced transparency and loss of control.
Some specific challenges of each are:
In-House Management
Managing contracts in-house offers more control but carries expense and responsibility for maintaining up-to-date compliance knowledge. Without the right systems, this can expose a business to added risks. Key factors to consider include:
- Greater Control: Choose dedicated managers to oversee deadlines, renewals, and performance.
- Improved Visibility: Use calendars and reminders to stay ahead of renewal and termination dates.
- Develop Capabilities: Regularly review contracts for compliance with current laws, market shifts, and business needs.
Challenges of In-House Management
The challenges of in-house management include the need for skilled staff with compliance, financial, and managerial expertise This complexity requires significant requires significant resources, increasing costs. For property owners, property management software to help manage leases is a great example. Scalability can also be a concern, as handling large volumes of contracts becomes complex without the right systems in place. Additionally, there is a scaling compliance risk, as mismanagement can lead to legal and regulatory issues.
Outsourcing Management
Outsourcing contract management can offer some benefits:
- Reduced Costs: Specialization can allow lower long-term costs by reducing how often costly compliance errors occur.
- Greater Efficiency: By not having to maintain a full, internal contract management function, businesses are able to focus more time on serving their customers.
- Compliance Assurance: Specialized vendors can have greater experience, allowing them to respond effectively to a wider range of scenarios.
Challenges of Outsourcing to Professionals
A big challenge of outsourcing is additional dependency on third-party providers, which can lead to reduced control over processes and decision-making. These services may also involve high costs. Integration challenges could arise, especially if software used by the third party is not compatible with existing business systems. It is also important to consider the security and confidentiality risks presented by giving third-party access to the business contracts.
Key Legal Terms to Watch For
When negotiating service contracts, software agreements, or leases, consider these key legal terms:
Indemnity Provisions
Indemnification clauses protect businesses from liabilities caused by the other party's actions.
Termination for Convenience
This clause offers flexibility when a business needs to change services unexpectedly.
Termination for Cause
These clauses define what constitutes a breach and when a business can terminate due to poor performance, or other violations.
Choice of Law
Contracts aren’t always governed by the law of where they are performed, sometimes they will specify which law applies.
Disclaimer
This article is provided for informational, educational, and marketing purposes only and does not constitute legal advice. The content is current as of its publication or last review and may not reflect the latest legal developments. Do not rely solely on this information—consult a qualified attorney regarding your specific situation.
Ensuring Effective and Compliant Contract Management
By remaining proactive with contract management, you will be able to meet renewal deadlines, protect sensitive data, and ensure legal compliance. Whether you manage contracts in-house, outsource to professionals, or use contract management software, a structured approach safeguards your business and reduces legal or financial risks. For more guidance, contact us at Cascade Counsel. We’re here to help ensure your contracts work for you, not against you.
