The concluded contract is only the beginning of the path of business relations. Monitoring its implementation, continuation, preparation of specifications, and guarantees require as much effort, knowledge, and experience as its preparation. This article will reveal the basic measures to guarantee contract compliance.
The foundations of contract compliance
The contract is a universal regulator of economic relations, a tool of commerce, and the foundation of any business activity. Thanks to the postulates on which the contract is based, the parties are free to choose the form of interaction, determine the contractual conditions acceptable to them and build an orderly business relationship. Contractual work at the enterprise, its construction, and the definition of clear and understandable mechanisms for setting up contractual processes are the internal basis of any business.
The contract is a necessary document both for private affairs and for business. In any case, the conclusion of contracts is an extremely important aspect that requires the help of real specialists and professionals. The correct conclusion of the contract can fundamentally change the business situation and protect you, your business, or any other business from threats, accidental errors, and inaccuracies. Therefore, concluding a contract observes all nuances and subtleties, especially related to the legal side or special conditions on both sides. Professional legal assistance is necessary when concluding contracts entrusted to experienced specialists.
Contract compliance corresponds with the rules and procedures set out in the contract. This procedure implies periodic reviews of the existing contract to determine compliance with mandates and compliance protocols and check for deviations.
Common measures to guarantee contract compliance
As a rule, сontract compliance constitutes a separate agreement block between the parties. These can be letters of credit, bank guarantees, special contractual terms on penalties, procedures under the contract, the procedure for fulfilling the contract, etc. Theoretically, the general list of such possible legal means for guaranteeing (enforcing) the fulfillment of obligations under the contract includes several dozen ways or forms of guarantees in the field of foreign economic activity, from which options are selected that are most suitable for a particular contract.
The results of reducing the number of risks in contract compliance and preventing their negative impact on the company’s activities can be achieved by the following measures:
- Identify existing and probable compliance risks. This task is solved with the help of internal audit and working groups;
- Establish control procedures. For example, appoint two CEOs, implement checklists, and approval forms, automate approval mechanisms with several departments, etc.;
- Appoint those responsible for compliance in the organization as a whole and by the department in particular;
- Develop and implement internal regulations: regulation on verification of counterparties, tender regulation, code of ethics, and anti-corruption code. Work out labor contracts: include appropriate compliance clauses (for example, on the regime of non-disclosure of confidential information).
Furthermore, today, the boards are actively implementing board management software to arrange secure business collaboration guide during paperless board meetings and ensure contract compliance.