Every company runs on contracts. They set forth the rights and duties of both parties involved and ensure that everyone knows what to expect. Countless potential issues should be considered when drafting and entering into these relationships. Here are three tips to help you make sure your contracts are both enforceable and compliant from the start.
1. Make sure the right people are signing the contract.
This may seem like a no-brainer, but you would be surprised how often this issue arises. Make sure that the person who is signing the contract on behalf of the company is actually authorized to do so. Otherwise, the contract may not be valid. With LinkSquares, this is made easy – all you need to do is ensure your users have the appropriate permissions.
2. Use clear and specific language.
A common issue with contracts is that they have too much legal jargon. This can make them difficult to understand, leading to otherwise avoidable problems. To remedy this, use clear and unambiguous language in your contracts. Write in plain English, and define any nuanced terms.
Be as clear and specific as possible. This will help ensure that everyone involved understands exactly what’s expected from them, which reduces the likelihood of disputes. Where it’s possible, standardize your contract language. Contracts can’t always be simple – they often won’t be – but standardization has the potential to eliminate a variety of complications where contract language is concerned.
Got LinkSquares? Build out your Clause Library and use templates wherever possible to make the use of standardized contract language a no-brainer across the organization.
3. Comply with applicable laws and regulations.
Depending on the industry you're in, there are certain laws and regulations that apply to your agreements. For example, if you're entering into a contract for the sale of goods, the Uniform Commercial Code will likely apply. Make sure you're familiar with all relevant laws and regulations and that you’re drafting compliant contracts. If GDPR just came to mind, LinkSquares has you covered there too. Learn more about that in this video.
So, what about your existing agreements? How do you ensure their compliance? That’s where software comes in to save you major headaches. Here’s the technology that you need.
- Optical character recognition (OCR) software turns any printed document into a standard computer text file that can be analyzed and edited.
- Natural language-processing (NLP) Artificial Intelligence (AI) software understands the written content of those text files and recognizes the legal concepts described within your contracts.
Between AI and OCR, you can automate nearly every tedious part of contract auditing. If OCR can turn scanned images into traditional Microsoft Word documents, AI can turn those documents into Microsoft Excel spreadsheets.
By "reading" the document, AI recognizes and extracts key terms, or Smart Values as we call them at LinkSquares, like effective dates, termination clauses, governing law, renewal options, payment schedules, and much more. Like any good software program, it can arrange those extracted values into reports and dashboards for you to review, analyze, and act upon.
At the end of the day, entering into a contractual relationship is serious business. It's important to make sure that everything is done correctly in order to avoid issues down the road. By following these tips, you’ll help ensure that your contracts are compliant and enforceable. Want to learn more about how technology can help you in this process? Contact LinkSquares today.
