Tracking Obligations – What Is This All About?
April 17th, 2010 by aberlaw
How nice would it be if there was a way to manage, track and report on contractual obligations. As a lawyer who has worked with several companies as an in-house attorney and General Counsel, I find this concept totally new, so it really caught my attention.
Q1: Why would a company want to track their contractual obligations?
Q2: What is the benefit, and doesn’t the current system work?
I have found that contractual obligations (i.e. things a company commits to in a contract, and could be liable for if they don’t comply) is something that is left to the lawyers, a business person, an admin, a post-it-note in someone’s cube, or maybe never thought of after the contract is signed. There really is a better way!
Imagine a world where significant contractual obligations are tracked, reported on and managed. They could be assigned to the right person or business unit right away. There would be improved compliance with contracts and fewer breaches of contract claims/issues. The business can also perform better, as it would be aware of its contractual obligations as part of its regular rhythm, and as a result would build the compliance into its processes; which also avoids having the other party remind them (after the fact) of their obligations (= better customer or supplier relationships).
This is possible, and quite frankly the time is now. I think technology has finally reached the stage — and lawyers are open enough to the concept — that companies should look at this as a way the legal department/outside lawyers can help the company. What could you do if you had a system like this? You could ask your attorneys to summarize the important contractual obligations after each significant contract (provide the cross reference to that section of the agreement too), and then track, report and manage those obligations in a software system.
So the answers to the questions are:
A1: Track contractual obligations, because they are legal commitments, which the company may have to answer in money damages or harm to its reputation, if they are not complied with.
A2: Dramatically improved compliance, and there really is no current system. Look at your own company and find out what system it uses to track its significant contractual obligations.
Some food for thought, and remember that your contracts are too important to leave to the lawyers!
- Jeremy Aber
