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How to Track and Manage Contract Obligations

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Contract obligations are legal commitments to provide a service or goods, perform a duty, or do anything specified in a contract. These obligations are legally binding, and the other party can take legal action against you if you fail to fulfill them.

This is why it’s important to establish a master checklist of contract obligations that you can use every time you create a new contract. You can even get help from contract review services to assess the contract obligations of each new contract. This will help you manage them better and ensure you don’t skip or forget to fulfill any obligation.

The Challenge of Managing Contract Obligations

Identifying contract obligations can be difficult and time-consuming. This is especially so if the contract terms and wording are unclear, unconcise, and poorly written. Some contracts are also written in complex contract language that ‘hides’ important contractual obligation details in technical jargon. This leads to a lack of visibility, making it difficult to identify all the obligations and deliverables.

Another challenge also arises when there aren’t clear details on who or which department is supposed to handle certain contractual obligations. These unclear details cause departments or the involved parties to deny or refuse to take ownership of these obligations. This quickly leads to missed deadlines and unfulfilled sections of the contract.

So How Can You Track and Manage Contract Obligations?

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The first step of a smooth contract agreement is ensuring that all the obligations, expectations, and requirements are spelled out in a way that leaves little to be understood. All clauses must be explained comprehensively and should dictate who is responsible for each obligation.

To ensure that you have an iron-clad contract that stipulates all the obligations, you need a master checklist. Here are the steps you should follow when creating an agreement to help you manage the contractual obligations.

Have a Clear Outline of What is Achievable

You should always commit to what you can achieve and fulfill when making contracts. Do not give deadlines you can’t make or include deliverables you can’t acquire. The same courtesy should be extended to your contract partners. Do not give them unreasonable deadlines or extreme obligations.

In addition, you should also ensure that you get into a contract with obligations you are comfortable committing to. This means that you shouldn’t accept obligations that will be difficult to fulfill simply because the negotiations are tough.

Have Your Obligations in One Section

When drafting your contract, all obligations should have a separate and distinct section. This makes it easier to track and manage them. This section can have a summarized bulleted list and another section that explains these obligations in detail. Sprinkling the obligations across the document makes it difficult to track them, and it’s easy to forget or skip an obligation accidentally.

Use Simple Language

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You should avoid using any confusing language or obfuscating legalese. Every obligation detail should be spelled out, so anyone can understand the document. You should not leave anything open to interpretation, as it can lead to miscommunication and conflicting roles and responsibilities.

Provide as Many Details as Possible

Communication is all about providing details. If you want something done in a specific way, then the contract should clearly state these details. You can never go wrong with providing too many details. Include the due dates and deadlines, who is responsible for what, and how much money is involved.

Clearly Mention the Responsible Parties

You should establish ownership for each obligation by clearly stating who is responsible for each deliverable. This prevents conflicts and ensures each department and contract party understands what is required of them and the deadlines for their tasks.

You can also create a notification system that reminds people and lets them know of upcoming deadlines and deliverables. Contract management software can help you automate the creation, tracking, and management of contract obligations.

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