Smooth commercial transactions are essential for the success of any company, regardless of size. Small businesses and large corporations alike rely on having robust, carefully drafted commercial contracts in order to facilitate successful commercial relationships. As we enter a new year, the importance of these contractual arrangements in a fast-paced commercial landscape cannot be overstated. Emerging technology and changing regulations require a through and flexible approach to commercial agreements. With this in mind, there are a number of key areas to consider when preparing your business’ contracts in 2024.

Embrace Technology

Advances in technology continue to revolutionise business relationships and commercial contracts are no exception to this. This is clear in the emerging use of AI for document analysis and contract intelligence, paired with an increased reliance on digital collaboration. Recent years have seen a steady rise in the widespread use and legal acceptance of digital signatures, with e-signature platforms such as DocuSign being utilised to optimise and expedite contract execution. The use of electronic signatures allows even cross-border contracts to be executed at the simple click of a button, appealing to companies’ increasing focus on efficiency and reducing costs. Embracing the use of modern technology in the execution of commercial contracts is therefore key for businesses as we enter 2024.

Increased Contract Flexibility

With continuing economic uncertainty comes the need for contracts with carefully drafted clauses to allow the necessary flexibility to protect your business. This may be the inclusion of price adjustment clauses to protect your business against rising costs by providing the opportunity to adjust agreed prices, or ensuring that your commercial contracts contain adequate protections, such as force majeure clauses. Being able to respond promptly to changing commercial circumstances through flexible, tailored contracts reduces the need for extensive, time-consuming re-negotiations down the line. Many companies are engaging their lawyers in drafting flexible template contracts that can be quickly adapted to individual transactions.

Greater Clarity

In the age of increasing global business collaboration, many companies are recognising the need for clarity in contract drafting to avoid misunderstandings between parties. Ensuring contracts are drafted in clear language can reduce the risk of disputes, particularly when parties may have different understanding of complicated terms, such as in cross-border commercial relationships. Similarly, companies who contract directly with consumers can find themselves on the wrong side of the Consumer Rights Act 2015 if they implement contractual terms that are not considered transparent. 

Contract Management

The start of a new year could be the perfect time to put in place clear systems for managing your business’ commercial contracts. If your business has entered into a large volume of commercial contracts, you may find it difficult to keep on top of key contract dates and having a clear review process in place could be essential for ensuring that all contract obligations are met successfully. This can include centralising contract storage so that all executed contracts can be easily located, as well as creating reminders for key contract deadlines to ensure that these are not missed. Scheduling in regular reviews of your standard commercial contracts, such as terms and conditions, that are used regularly is also advisable to make certain these are fit for purpose.

Berry Smith Comment

Whether your business is new or established, large or small, ensuring your commercial contracts are effectively serving your business needs is essential. As we approach the new year, it is worth considering the ways that you – and your legal advisors – can improve your commercial relationships through drafting, reviewing and amending your commercial agreements to reflect the complexities of an ever-evolving business landscape. Embracing the use of technology and drafting clear, flexible contracts could be key to your company’s success.

The Commercial & IP Team at Berry Smith can provide specialist advice on drafting, reviewing and refining commercial contracts, as well as general commercial and business advice.

Please contact us if you would like more information about the issue raised in this article or any other aspect of Commercial law at 029 2034 5511 or commercial@berrysmith.com