Why regular contract reviews are critical for growing businesses 

If you run a growing business, the chances are that at least some of the contracts you rely on have not been looked at since they were signed. That is not unusual. When a business is finding its feet, the priority is getting agreements in place so that work can begin. The contract is signed, filed away, and attention returns to the day-to-day. 

The difficulty is that your business today is not the same business that signed those contracts. Turnover may have increased, teams expanded, and operations become more complex. Your client base, supply chain, risk profile, and regulatory obligations may all look very different. If your contracts have not kept pace, they may no longer be doing the job you think they are doing. 

Here, we look at why regular contract reviews matter, the risks of neglecting them, and how to approach reviewing your agreements in a practical way. 

Why contracts stop working 

A contract captures a commercial relationship at a fixed point in time. It reflects the scope of work, the value of the deal, the level of risk involved, and the legal framework that applies at that moment. As a business grows, all of those factors evolve. 

One of the most common issues is a mismatch between the contract and the commercial reality it now governs. Clauses around liability can quickly become redundant as commercial relations change and the exposure of the parties under the original contract differ. Requirements around insurance limits and thresholds, caps on liability and events arising to liability or termination, will change as your commercial relationship changes. Ensuring that the agreement is updated, or flexibility is built into that original agreement to allow for these changes, is vital to ensure you remain protected under that contract. 

Payment provisions can create similar problems. A clause allowing payment on 30 days’ terms may have been low-risk when the contract was a small part of the business. Over time, that same arrangement (if used in multiple contracts) may have become operationally critical with regards to cash flow and projections within the business.  

Nothing dramatic needs to happen for this misalignment to arise. It is simply the result of a business moving forward while its contracts remain static. 

The real cost of recycled clauses 

As businesses grow, they often develop a set of standard clauses that are reused across multiple agreements. A clause that seemed to work well in one contract is carried into the next, with clauses on termination, indemnities, or confidentiality often falling foul of this. Over time, contracts become a patchwork of provisions that were never drafted for the agreements they now sit within. 

Whether a clause is effective depends entirely on the context of the specific contract and the interpretation of that wording. The same wording may be appropriate in one agreement and ineffective in another, because the parties, risks, and commercial stakes differ. For example,  limitation of liability that is proportionate in a low-value arrangement may be considered unreasonable in a higher-value one and vice versa and could ultimately mean at a time of need, the contract doesn’t offer you the clarity and protection you thought it did 

Other clauses present similar risks. A non-compete restriction that is drafted too broadly, perhaps because it has been lifted from a different role or context, may not be enforceable within the other scenario it is intended for because it is over-reaching or exhaustive on the other party.  

Force majeure clauses are another common example. These provisions only operate if the specific event in question is covered by the wording. If the clause has been copied from an earlier agreement and does not address the disruption that has occurred, it will not provide relief, regardless of how severe the circumstances are. 

Where to start 

If contracts have not been reviewed for some time, the first step is to bring all active agreements together in one place. This should include supplier contracts, customer terms, employment agreements, leases, and any other arrangements the business relies on. 

A central contract register can be a simple but highly effective tool. Recording key details such as renewal dates, notice periods, and the date of last review provides visibility that many small and medium enterprises (SMEs) lack. Without this, contracts can roll over unnoticed and opportunities to renegotiate or update terms are easily missed. 

What an effective contract review looks like 

A meaningful review goes beyond checking dates. It considers whether each agreement still reflects the business’s needs and whether it would hold up if tested. It also allows you to look into what’s worked well within your business and what clauses and wording have brought about challenges for your business. Do you even follow what the contract says still?  

The starting point is accuracy. The contract should reflect what is actually happening in practice. If services, deliverables, or working arrangements have changed, the written terms should be updated to match to remove any ambiguity or implied terms being created. 

Risk allocation is equally important. Liability caps, indemnities, and insurance provisions should remain proportionate to what is at stake. It is also necessary to consider whether those clauses would be enforceable in the context of the current agreement (which even then, will only be stress tested if but before a court, tribunal or similar). 

Termination rights should be clearly understood on both sides. Auto-renewal clauses can easily be overlooked, leading to contracts rolling forward on outdated terms. Equally, the impact of the other party exercising termination rights should be considered in light of the business’s current reliance on the arrangement. 

Intellectual property and confidentiality provisions should reflect the business as it now operates. As new products, services, or processes are developed, contracts should ensure that ownership and protection of those assets are properly addressed, or captured in additional or subsequent agreements to ensure the parties are protected accordingly. 

Regulatory compliance is another key area. Contracts should be reviewed against current legal requirements, particularly in areas such as data protection, employment, and consumer law, where obligations continue to develop. 

Finally, dispute resolution mechanisms should be practical and proportionate. For many SMEs, alternatives to court proceedings, such as mediation initially, can offer a more efficient way to resolve issues. 

How we can help 

Working with a commercial solicitor can add considerable value. A solicitor can identify risks that may not be immediately visible, assess whether key clauses are likely to be enforceable, and ensure that contracts reflect current legal requirements. The cost of a review is typically modest when compared with the potential cost of a dispute or compliance failure. 

A contract that worked at the outset will not necessarily support the business as it grows. Commercial relationships evolve, legal frameworks change, and the business itself develops. Regular contract reviews are not simply an administrative exercise. They are a practical step in protecting the business and supporting its continued growth. 

If you would like to discuss a review of your business contracts, or have concerns about a particular agreement, please get in touch with our Corporate and Commercial team. We work with SMEs and growing businesses across the country, and we are here to help ensure your contracts evolve alongside your business. 

About the Author: Kirsty Davey is Head of Corporate and Commercial at Coodes, leading a team that advises businesses across a wide range of sectors including manufacturing, technology, retail, tourism and the not-for-profit space. She has extensive experience in corporate transactions, mergers and acquisitions, and complex restructurings, regularly supporting clients on high-value deals, succession planning and growth strategies. Alongside her technical expertise, Kirsty is actively involved in the South West business community, having previously worked with the Cornwall Chamber of Commerce and currently serving as an Enterprise Advisor to Penryn College. She is also a past President of the Cornwall Law Society.

Get in Touch: kirsty.davey@coodes.co.uk 01326 214 034