It’s Easy to Get Lost in CLM — But Don’t Forget the Contract! Part I

Contract Lifecycle Management — which includes contract creation, management, analytics, and renewal — is becoming big and will likely get bigger still as organizations rely more and more on contracts to control price and mitigate risks. And since no one can ever find a paper contract once it’s been sent to filing, the ability for anyone anywhere at anytime to access a relevant contract, compare deliverables and prices to negotiated deliverables and prices, track (evergreen) renewals, and determine which party is responsible for a loss is almost priceless.

That being said, a contract lifecycle management system is not only useless without contracts to manage, but is also useless without good contracts to manage. Poorly created contracts that don’t define anything more than a bulk price and a term don’t ensure defensible pricing, loss management, or risk control. Nor do they ensure termination, as evergreen status could be implied if orders are still made after termination and pricing is still honoured. Nor do they even imply that the supplier even has the right insurance or certifications to even produce or ship the products the supplier is selling to you.

In order to control risk, mitigate loss, and realize the expected benefits, a good contract is critical. This not only requires good negotiation, but good contract drafting that covers all of the necessary T’s and C’s, including those you never hope to need. All of them. And, more importantly, that spells out all of the requirements of both parties in terminology that cannot be easily misinterpreted or twisted by leeching litigious lawyers who will bleed both parties dry in legal fees before an agreement or decision is reached.

So how do you get a good contract? Well, as the legendary Dick Locke once wrote in our classic post on Blogging on International Contracting, not only should your contracts be in plain English, but they should be written with a high reading ease score (40 or more in Microsoft Word) and a grade level requirement of 11 or less. Especially since the contract is not likely to be in the supplier’s native language if the contract is with an international supplier.

After all, as Mr. Locke so keenly pointed out in a follow up piece on Simplified Contracts, Part 3, if you let a litigious lawyer write a contract from a supplier with a slimy sales team, he could easily insert just one word in a twenty page contract with an average sentence length of 73 words and paragraph length of half a page that negates the entire contract, and you’d never know.

So how do you write a good contract? We’ll explore that in this series.

One thought on “It’s Easy to Get Lost in CLM — But Don’t Forget the Contract! Part I

  1. CleanMark Labels

    Seems like the start to a great series. It’s funny how elements like you mentioned, which one would think are common sense, can get overlooked so easily. Thank you for putting the spotlight on this topic.

    Reply

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