This chapter has discussed the reasons why companies make contracts and what we mean by "contract” and certain other terms used in this book. The chapter approaches contracts through their business and legal objectives and defines "contract risks” as risks that can lead to a negative deviation from the expected outcomes of a contract. In order to succeed in managing contract risks and opportunities and benefit from this chapter, you should:
- 1. View contracts as core business assets that require proactive management. Contracts are not merely legal tools that can be left to the lawyers alone.
- 2. Remember that reaching business objectives is the ultimate goal of contracts. Contract risks threaten the achievement of these objectives.
- 3. Plan contracting processes and documents using a holistic view and managerial-legal collaboration so that an overly legalistic view of contracts will not prevent your business from achieving its objectives. While the traditional legal emphasis remains important, it is no longer enough.
- 4. Become contractually literate because contract literacy is the foundation for identifying and managing contract risks and opportunities.
- 5. Learn to understand what the contract does not say and what that means. What is omitted can be as important as (if not more important than) what is included. Recognize and remove gaps in contracts, as these leave room for
invisible terms that may surprise you and your contracting partners.
6. Recognize and learn to use the promotive, preventive, and balancing power of contracts. Doing so will help you remove uncertainty and provide predictability in relation to both business and legal objectives and how the parties plan to work together to reach those objectives.