All contracts are different. There are various ways in which they can be different. This
includes their parties, nature, purpose, the number of pages they run into, the intended
outcome etc. One thing that is common with contracts is the review and tracking
requirements. It is important to identify important provisions of the contract and ensure
that they are complied with in order to complete performance under the contract.
This involves reading through the contract and identifying the important information and
classifying them into different categories. These categories depend on the nature and
contents of the contract and are not exhaustive. The process also involves marking relevant
portions for revisit, creating alerts and notifying the concerned teams for request of their
input. No matter whether one uses a product for this process or does it manually, the
portions to be tracked and classified into categories are present in every contract.
1. Money Obligations
Without any doubts, money forms the most important of all obligations in a contract and thus
needs to be efficiently tracked and strictly complied with. Any amount to be given out or
received, the frequency, any rate of variation etc. are the fields to be tracked and
complied with as per the contract terms.
2. Penalty
Contracts include penalties for non-compliance as an encouragement for strict and due
compliance and performance of contract obligations. The tracking and keeping mindful of the
penalty clause carries the same good-faith intention - to ensure performance and avoid
penalty. Penalties are generally in the form of monetary loss to the defaulting party, and
hence carry the same significance as money obligations.
3. Lock-in Period
This refers to the period where neither party can bring the contract to an end through
termination, opt-out, vacation, variation etc. The lock-in period is the duration of the
contract where the parties to the contract are strictly bound by the contract to perform
their obligations therein without the option to terminate or vary.
4. Contesting Provisions
These provisions deal with instances of dispute and include both the jurisdiction for
litigation procedure and provisions for arbitration. Both litigation and arbitration
provisions may not be present in a contract. Similarly, where present simultaneously, both
the jurisdiction for litigation procedure and site for arbitration may not be the same, and
hence need to be noted independently under the same head.
5. Notice Periods
Notice Periods do not always relate to termination. They may also refer to remedying a
default, break portions, incoming elements, requirement for variation, implementation of
variation/amendment etc. Hence, notice periods need to be noted for each type of notice
relevant to the contract. If multiple notices are present, they can be maintained with the
help of tabular form of information recording.
6. Date Bound Obligations
a. Strict
These obligations refer to those obligations that are date bound strictly, which means the
non-compliance of the obligations shall constitute a material breach/default of the
contract. These may also not have a period to remedy the said breach/default. Non-compliance
or non-performance of such obligations may lead to a penalty or even termination for cause.
b. General
These obligations generally have a prescribed date by which they need to be complied with
and come with a remedy period in case due to any reason, the said performance/compliance
could not be completed. Where these obligations have not been performed even during the
remedy period, they may constitute a default on the part of the party.
Get on top of your Contracts
Reading of contracts in the process of contract lifecycle management is an entire process that involves expert inputs and procedure. Along with the mentioned categories, categories otherwise recorded as part of contract lifecycle management include parties, duration, purpose, notice persons etc. The list is never strict and never exhaustive. It is entirely dependent upon the many different variations included in the contract and their purpose. It is generally considered a good practice to read through the entire contract thoroughly in order to avoid any obligation that may be present in the fine print. The above mentioned obligations simply point to the most common and significant of obligations present in contracts and their lifecycle management process.
