Review Clause in Agreement: What it is and Why it Matters
When entering into a business agreement, it`s important to ensure that both parties are protected and that the terms of the agreement are clear and concise. One way to achieve this is by including a review clause in the agreement.
What is a review clause?
A review clause is a provision in a contract that allows for the agreement to be reviewed and potentially modified at a predetermined point in time or upon certain conditions. This clause can apply to various aspects of the agreement, such as pricing, services, or delivery schedules.
Why include a review clause?
There are several reasons why including a review clause in an agreement is beneficial for both parties. Firstly, it provides an opportunity to assess whether the terms of the agreement are still relevant and effective. This is especially important in long-term agreements, where market conditions may change or new technologies may arise.
Secondly, a review clause can help to maintain a good working relationship between the parties. By allowing for open and honest communication, both parties can work together to address any issues that may have arisen since the agreement was signed.
Finally, a review clause can help to minimize future disputes and avoid costly litigation. By having a mechanism in place to address any issues that may arise, both parties can ensure that they are offering the best services possible and that they are meeting the expectations set out in the agreement.
How to draft a review clause
When drafting a review clause, there are several key considerations that should be taken into account. Firstly, the clause should clearly specify when the review will take place and what aspects of the agreement will be subject to review.
Secondly, the clause should outline the process for conducting the review, including who will be involved and how the review will be conducted. This may include setting out specific performance indicators or metrics that will be used to assess the effectiveness of the agreement.
Finally, the clause should address what will happen following the review. This may include modifying the agreement, terminating the agreement, or simply continuing with the existing terms.
In conclusion, including a review clause in a business agreement is a smart move for both parties. By allowing for periodic review and potential modification of the agreement, both parties can ensure that they are offering the best services possible and that they are meeting the expectations set out in the agreement. So, if you`re entering into a long-term agreement, consider including a review clause to protect yourself and your business interests.