Why and How to Include a “Change of Control” Clause in Business Contracts

Contracts are inherently risky, and a number of things can go wrong that may result in a costly contract dispute. Of course, there may be a change in circumstances that is not even addressed in a contract, and thus contesting any such unwanted change is not even a possibility, or perhaps there is only a remote chance of success in the courtroom. One rather significant change that is quite likely to occur and yet not often addressed in contracts is a change in the structure or ownership of one of the parties to the contract. Companies are bought, sold, and merged all of the time, but contracts are often silent as to the impact that such a change should or will have on the existing contract. This is obviously a mistake as a change in ownership may cause changes, both intentional or inadvertent, to the established arrangement. For example, a newly formed entity may change vendors or subcontract with new parties, situations in which the nature, quality, or timing of contractual obligations is altered.

But, this potential scenario is easily avoided by simply including a provision in a contract that explicitly details how the contract must be treated in the event of a change in control. For example, a company may wish to render the contract void if the other party to the deal undergoes a change in ownership. This may be an extreme choice, but there has to be predetermined options clearly written into the agreement. Here is how to include a change of control clause in business contracts:

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Minimizing Contractual Risk Through Improved Contract Management Practice

Legal contracts are foundational for companies of any size and industry. By codifying the exact relationship between a business and its customers, contracts place weight behind the promises that both parties make to each other and provide a framework for handling disagreements.

Unfortunately, far too many companies are failing to live up to the best practices and standards of contractual risk management. The International Association for Contract & Commercial Management, for example, estimates that companies lose nine percent of their total revenue every year via poor contract management.

From a complex contracting landscape to scarce investments in good contracting processes, the potential issues that you'll face are significant. The following article will give you an overview of the challenges of contract management and what you need to do to make your processes more efficient and productive.

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5 Roadblocks in Contract Negotiations and How to Avoid Them

Although there are several discrete aspects of the contracting process, each phase ultimately intertwines with the others, and each step in the cycle influences the next. The way in which the contract negotiations unfold will no doubt have a massive effect on managing the contracting relationship and overall contract performance. Unfortunately, things can sour rather easily during the negotiation phase, but the contract often has to move forward, as there may not be time to find a new partner or even another firm available that can provide the same goods or services. Here are five common roadblocks in contract negotiations and how to avoid them:

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Tips for Success On Your Next Vendor Contract Renewal

Just because someone manages contracts for a company doesn’t necessarily guarantee that negotiation comes easily to them. If you don’t feel like you have a natural talent for negotiation, contract renewal can spark feelings of uncertainty. The following vendor contract renewal best practices can improve your chances for success.

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How Local Governments Can Negotiate Better Contracts

It is often said that negotiation is an art form and a skill that must be carefully honed with diligent practice. Unfortunately, for government agencies and other public sector organizations with rather tight budget constraints, it may not be entirely realistic to devote the resources and personnel hours to developing this craft. In addition, brief timelines and expectations for immediate action often hinder local governments from bargaining effectively. But, this inability to haggle for the best deal can end up costing the government a lot of taxpayer dollars when they are subjected to overly expensive and/or inefficient contracting arrangements. Here is how local governments can and must negotiate better contracts:

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4 Ways to Leverage Your Legal Counsel in Contract Talks

Startups and small businesses are often hesitant to retain the services of legal counsel, generally due to concerns over the hefty price of such advice. This is certainly understandable, although it may end up proving costly in the long run. With contract drafting, in particular, it is very important to confer with legal counsel to ensure that the bargain struck is equitable and allocates risk appropriately. There may be issues down the road that lead to expensive litigation if a company fails to receive the input of an attorney with respect to a legally binding document such as a contract. Rather than be reactive and shell out a bunch of money for a lawyer to clean up such a mess, it is wise to be proactive and engage counsel as early as practicable. Here are four ways to leverage legal counsel when it comes to contract negotiation and drafting:

 

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What to Do When a Contract Severely Underperforms

Hopefully, dealing with underperforming contracts is not something that your company encounters very often, if ever. In the unfortunate event that it does occur, the contract management team must be well equipped to address the situation swiftly and effectively. Ideally, when there is even a mere indication of performance problems, it must be tackled before it becomes a much larger issue with costly repercussions. Here is what to do about an underperforming contract:

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Tips for Communication & Transparency In The Contract Drafting Process

Communication and transparency are key in the early stages of the contract drafting process. From navigating contract terms to making sure involved parties are on the same page, the beginning of the contract cycle relies on an open and ongoing dialogue between individuals for the best results.

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Contract Interpretation and The Importance of Unambiguous Terms Part 3 of 3

It may be hard to believe that there is so much to say about contract interpretation that it necessitates multiple blog entries, but the content of these particular installments is really just the tip of the iceberg. Contracting is a routine part of business operations, and even though it has gone on for centuries, it continues to be a complicated process, frequently subject to confusion and disagreements. And, more often than not, these disputes center on conflicting interpretations of a contract's terms. So, here is a continuation of the discussion on the principles of contract construction.

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Contracting: Understanding the Buyer's Perspective

In a business transaction that involves the sale and purchase of some good or service, the seller of that good or service usually has a bit more power and influence when it comes to shaping the contract between the parties. However, to ensure a positive working relationship, not to mention one that will endure beyond the initial transaction, it is important for sellers to take into consideration what most buyers want from their vendors. Here are several things to keep in mind:

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