Thoughts on Contract Management and Contract Literacy

[Stuart Udis]

I frequently encounter investors and contractors involved in performance, payment or insurance disputes. In most instances, these disputes were avoidable or at the very least could have been resolved far more efficiently if a contract management system was in place. I repeatedly find very little emphasis is placed on contracts, especially in the real estate industry which is incredibly reliant on independent contractor and 3rd party vendor relationships. I personally believe contract literacy is the root issue. Despite the importance contracts, very few understand them.

I am preparing a seminar that will cover contract clauses you should expect to see or include in contracts you sign or prepare along with how to implement a consistent review process. I frequently see posts on bigger pockets and discussion elsewhere on entity formation and liability prevention strategies which leads me to believe there is collective value placed on risk mitigation. Surprisingly, contract management, if used effectively can be a powerful tool yet is largely ignored. Aside from liability prevention, studies indicate small businesses experience 8.6% in revenue loss as a direct result of inadequate contract management. I am curious to hear if my thoughts are on point and if there’s particular subjects or experiences members of this community have encountered that would be helpful if covered.