The Legal Risk Management Handbook

06

Contract risk

Introduction

Let’s be honest: contracts are a bit boring. To some they are a ‘necessary evil’ that add legal paper to the excitement of the deals they negotiate, and when the excitement of the deal is over, many companies refer to them (if they can find them) only when they are in commercial dispute, and rely instead on individual knowledge of deals to ensure commercial relationships stay on track. There are two reasons this is a bad idea.

First, contracts are a source of legal risk in themselves. Poorly-worded agreements can increase your liability, or open you up to regulatory sanction or class-action from angry customers. If you don’t know what is in them, you don’t know whether, or when, these risks will materialize. Secondly, ...