5 Challenges of Contract Management

by TechloverSAhmad

With potential profit-making opportunities arising every, many companies are getting into agreements with other authority brands. However, despite all the lucrative benefits that come with forging meaningful partnerships with other companies or individuals, challenges are bound to arise.

This article focuses on the challenges of contract management and how to overcome them.

Let us delve into specifics.

1. Verbal contracts

It is no doubt that the agreements that we get into by word of mouth are the riskiest. As much as the idea of a contract is mostly forged from initial verbal communications, it is vital that you put every word into writing.

Verbal contracts are deemed viable in a court of law. However, the real problem comes in its interpretation. The terms and conditions stated by each party may be subject to misinterpretation. For this reason, putting everything into writing is imperative.

By leveraging written contracts, you will have a reference point to confirm each party’s details, responsibilities, and obligations, especially when problems arise.

If you are a company with tens and hundreds of written contracts, an online contract management system will help you keep everything in order. Instead of manually going through hundreds of files to find one contract, you have a digital platform where you can search for the relevant documents within seconds.

2. Navigating Compliance Requirements

Navigating Compliance Requirements

Governments and various independent bodies have put in place stringent measures to ensure businesses operate according to the law.

Particularly for large corporations that have expanded to other countries and entered into partnerships with local businesses, navigating compliance requirements can be challenging partly because government regulations and protocols differ from one country to another.

Having a lawyer who is well-versed with the international laws of trade is a great first step. In addition, they will be able to enlighten you on the steps to take to ensure your business remains compliant in areas such as employee safety, client data security, social and environmental responsibility, etc.

The lawyer will ensure that the contract operates in line with these regulations to avoid huge penalties and, in the worst-case scenario, a total shutdown of company processes.

3. Keeping Up With Boilerplate Language

In contract management, boilerplate language is the standard language that is used across similar contracts. Since they are generic, they allow parties to execute the agreement faster.

However, considering that regulations and compliance requirements are ever-changing, keeping up with boilerplate language can be challenging.

By leveraging contract management software, companies are presented with several updated contract templates to ensure they use the correct contract language. That way, they remain in compliance, significantly minimizing the risk of being subjected to hefty fines or a termination of the contract.

4. Poor Communication Between Parties

Poor communication is a challenge facing parties entering into an agreement and especially when drafting the contract.

During this stage, an initial draft of the contract is sent to each party. They will then look at the document to see whether each partner’s responsibilities are well documented.

In many cases, the draft bears little resemblance to what the parties can expect in the final document. However, while reading through the draft, some partners can feel that their concerns are not addressed while others fail to understand the contents, or worse, take it out of context.

For this reason, it is essential to leverage technology. For example, contract management programs have features that allow parties to leave comments on the specific clauses they do not understand and highlight those they want to amend. That way, it improves communication between the parties, which is vital for the success of the project.

5. Parties Not Holding Their End of the Bargain

Another problem facing contract management is parties not meeting their obligations. This could be as simple as a supplier who does not undertake his responsibilities by failing to supply the specified amount of products, among other failures.

Unfortunately, large companies are more likely not to realize such shortcomings fast due to the hefty workloads they deal with daily. As a result, they end up losing money, time, and energy on under-performing suppliers.

For this reason, the importance of ensuring that each party holds their end of the bargain cannot be over-emphasized. Make a habit of routinely going through contracts to see whether everyone is handling their responsibilities as per the expectations. Contract management software will be of help as it will help streamline this process.


These are some of the challenges companies face during contract management. However, since they are an inevitable part of the entrepreneurship journey, you need to be ready to handle any pitfalls that may arise. By following the above guidelines on handling these issues, you can enjoy a stress-free contract management lifecycle and possibly a long, fruitful business partnership.

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