When Businesses Should Review and Update Existing Contracts

Businesses should review existing contracts when their operations, costs, business relationships, or legal obligations change. A review may also be appropriate before a contract renews, during a merger or acquisition, or when recurring disagreements reveal problems with the existing terms. Reviewing contracts at these points can help you identify provisions that no longer fit how your business operates. 

It is easy to sign a contract and put it away until a problem develops. However, your business may change significantly while the agreement stays the same. Terms that worked when you signed the contract may no longer address your current pricing, services, responsibilities, or business relationships. 

At Howell Law, we help business owners from our Charlotte, North Carolina, office with contract drafting, contract review, and other business law matters. We can review your existing agreements, explain provisions that may affect your business, and discuss appropriate changes. Contact us to schedule a consultation. 

Before a Contract Renews 

Do not wait until the renewal date to review an important business agreement. Some contracts renew automatically or require advance notice if you want to terminate the agreement or renegotiate its terms. 

Before renewal, check the contract's expiration date, renewal provisions, notice requirements, pricing, termination rights, and each party's responsibilities. Consider whether those terms still work for your business. 

This is also a good time to address problems that developed during the current contract period. If payment schedules, service requirements, delivery deadlines, or other terms have caused repeated disagreements, you may want to address them before committing to another term. 

When Your Business Has Changed 

Growth or operational changes can affect obligations established under an existing contract. You may need to review the agreement again if your business has changed significantly since you signed it. You may want to review an existing contract when you: 

• Expand into new locations or markets: The agreement may not address additional locations, customers, services, or geographic areas. 

• Add or change products and services: The contract should accurately describe what your business currently provides or receives. 

• Change pricing or payment practices: Existing terms may no longer match your costs, billing practices, or payment arrangements. 

• Change how work is performed: New technology, staffing arrangements, delivery methods, or responsibilities may affect the parties' obligations. 

Not every business change requires a new contract. The important question is whether the change affects the rights or responsibilities addressed in the existing agreement. 

At Howell Law, our North Carolina business law attorney can review your existing contracts against the way your business operates today. We can identify terms that need attention and discuss whether revisions or a new agreement are appropriate. 

When the Business Relationship Has Changed 

Business relationships can develop beyond what the parties originally anticipated. A vendor may begin providing additional services, a customer may request different delivery schedules, or a contractor may take on responsibilities that were not included in the original agreement. 

If the parties regularly operate differently from what the written contract states, it may be time to review the agreement. Otherwise, a disagreement may develop over what each party must do. 

You may be able to address the change through a written amendment rather than replacing the entire contract. Before doing so, check whether the existing agreement establishes requirements for making changes. 

After a Merger, Acquisition, or Ownership Change 

A merger, acquisition, sale, or other significant ownership change is another reason to review important contracts. For example, an agreement may contain provisions addressing assignment, transfers, changes in ownership, notice requirements, or termination. Whether those provisions apply depends on the contract language and the transaction structure. 

Reviewing important agreements during a transaction can help identify obligations, restrictions, and approval requirements that need attention. At Howell Law, we can review transaction documents and other agreements as part of our work with businesses involved in mergers and acquisitions. 

When Changes in the Law May Affect Your Contract 

A contract can remain in effect while the laws affecting your business change. Depending on your industry and the agreement involved, legal changes may affect employment agreements, restrictive covenants, privacy obligations, regulatory requirements, or other contract terms. 

A change in the law does not necessarily mean you need to rewrite every agreement. Instead, consider whether the change affects a provision your business currently uses or relies on. For long-term contracts, periodic review can identify provisions that may need attention before you rely on them in a transaction or dispute. 

When a Dispute or Recurring Problem Develops 

Repeated disagreements about invoices, deadlines, performance, responsibilities, or termination are another reason to review the contract. Start by checking what the agreement actually requires. Depending on its terms, the contract may contain notice requirements, procedures for addressing a breach, or a process for resolving disputes. 

If both parties want to continue the relationship, they may also consider whether changing an unclear or outdated provision could address the recurring problem. Putting agreed changes in writing can provide a clearer record of the parties' responsibilities going forward. 

Before Changing an Existing Contract 

Do not assume that an informal change in how you and the other party do business automatically changes the written contract. The legal effect of a proposed modification depends on the type of contract, its existing terms, and the circumstances surrounding the change. 

Under North Carolina law, parties generally can agree to modify an existing contract when they meet the legal requirements for the modification. Different rules can apply to certain agreements. For example, North Carolina's Uniform Commercial Code provides that an agreement modifying a contract for the sale of goods does not require consideration to be binding. A contract may also establish specific requirements for how modifications must be made. 

State courts have also recognized that a contract may include a valid provision allowing one party to change certain terms under specified circumstances. Because the rules can differ depending on the agreement, review the original contract and the proposed changes before relying on a new arrangement. 

Discuss Your Business Contracts With Our Business Law Attorney 

Contract review should not be limited to the time you first sign an agreement. Renewals, operational changes, major transactions, changes in the law, and recurring disputes can all provide reasons to review existing terms and determine whether updates are appropriate. 

At Howell Law, we help businesses review, draft, and revise contracts from our Charlotte, North Carolina, office. We serve clients throughout Mecklenburg County, Catawba County, Union County, Cabarrus County, Gaston County, Lincoln County, Stanly County, Rowan County, and Davidson County, as well as clients in Georgia.

We can review your existing agreements, explain how their terms may affect your business, and help you address proposed changes. Contact us to schedule a consultation.