Is Your Business Overdue for a Contract Review?

In the operation of many businesses, owners and managers are constantly analyzing and evaluating the business’s processes, procedures, and policies to ensure that the operation of the business is fully optimized.

The legal documents reducing those operations to writing should be no different, and as we turn the page to 2026, the beginning of this new year is a good time for business owners and managers to take stock of their suite of contracts and agreements, to ensure they are still appropriate.

That means reviewing not only the standard agreements used in the business’s primary operations, but also the company’s governance documents.

Why Periodic Contract Reviews Matter

A business is a living thing, constantly evolving over time, and legal terms that were adequate in the past may not be adequate now, particularly as businesses grow and expand into new markets or new lines of business.

In reviewing its standard form agreements, owners and managers should thus pay attention not only to the business and financial terms, but should verify that the legal terms are still appropriate for the level of risk that the business regularly deals in, and is aligned with the company’s risk tolerance.

Key Legal Terms to Revisit

For example, is the level of insurance that a vendor or customer is required to carry high enough to provide protection to the business?

Is the business providing an appropriate level of indemnification, and receiving an appropriate level in return?

Does the business’s standard agreement contain proper limitations of liability to protect the company from uncapped legal exposure?

Are the payment terms and timing accurate, and in the best interest of the business?

These are only a few key legal terms that businesses should always ensure are proper in light of their operation and level of risk.

Governance and Ownership Agreements Shouldn’t Be Overlooked

The act of periodically reviewing agreements applies not only to the business’s contracts in the ordinary course of its operations, but also to its governance and ownership agreements.

It is not uncommon for business owners to enter into standard, boilerplate agreements at the outset of their ownership, and set those agreements aside for years, all while the business itself is constantly evolving.

When Changes Trigger the Need for Updates

For example, new owners or investors may enter the picture over time that may necessitate an update to the company’s Operating Agreement or Shareholder Agreement and particularly its buy-sell provisions that govern what will occur in the event of death or disability, or its provisions related to distribution rights.

A company’s tax status may change, which may render certain provisions of its Operating Agreement or Shareholder Agreement inapplicable or worse, invalidate their tax election (this is of particular importance for businesses who have elected to be taxed as “S-corps”).

Final Thoughts

These are of course only very high level, general items to consider, and each company requires its own individual analysis.

If your business has underwent a change, or is overdue for a contractual review and would like to meet with legal counsel, please feel free to contact Austin Stevenson from Strauss Troy's Corporate/Business Department at RAStevenson@strausstroy.com, or at 513-768-9745.