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Good change control procedures in contracts
Arjen van Berkum |
February 5, 2024 |

 19,871 total views

Eight ways to improve legal and compliance risk management

One of the things that amazes me quite often is a lack of good change control procedures in contracts. There are not many contracts that reach the finish unscathed and that number is dwindling down fast.

Now the classical legal Pavlovian reaction is to describe every risk and create clause after clause after clause. That’s not sustainable.

A change control procedure is an important aspect of contracts because it helps establish a structured process for managing changes that may occur during the course of a project or agreement. It allows both parties to effectively address any modifications or deviations from the original terms and conditions of the contract.

The relevance of a change control procedure lies in its ability to provide clarity, transparency, and fairness in handling unforeseen circumstances or requested modifications. Instead of trying to capture every potential situation that might arise in the contract, a change control procedure serves as a mechanism to address these situations on a case-by-case basis.

Here are a few reasons why a change control procedure is more relevant than capturing every potential situation:


Flexibility

Contracts cannot foresee every possible change or situation that may arise throughout the duration of a project. By having a change control procedure, the contract can adapt to changing circumstances, allowing the parties involved to negotiate and agree on modifications in a structured manner.


Efficiency

Rather than attempting to anticipate and include all potential situations in the contract, a change control procedure allows for a streamlined process when changes occur. It saves time and resources by providing a framework for evaluating, documenting, and implementing changes without having to renegotiate the entire contract.


Mitigation of Disputes

Inevitably, changes and deviations from the original contract may lead to disagreements between the parties involved. A change control procedure helps minimize the potential for disputes by establishing a formal process for addressing and resolving changes. It provides a clear framework for negotiations and decision-making, reducing the likelihood of misunderstandings or conflicts.


Documentation

By implementing a change control procedure, all changes to the contract are adequately documented. This ensures that there is a record of modifications, approvals, and any associated impacts on timelines, costs, or other contractual terms. Such documentation is crucial for maintaining transparency, accountability, and legal compliance.

Source: Arjen van Berkum

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