Should you adhere to the letter of a contract or its intent?

A potential customer posed an interesting question the other day:  If a Contract Management solution is able to provide instant visibility on contractual commitments, milestones and obligations, do these systems allow organisations to mange their contracts more effectively ‘by the letter’?

Clearly, the answer must be yes; but is this always the most appropriate way?  Most people would advocate that technology solutions are only process enablers and that the use of technolgy should not be relied on totally within a business process.  In the contract lifecycle process technolgy can play a significant part in streamlining, automating and controling elements of the contract management lifecycle, but it should be used in conjunction with the know-how and best judgement of the people involved in that process.

Tim Cummins, President of the International Association of Commercial and Contract Managers (IACCM) is a strong advocate of win-win contractual relationships.  If any side has an unfair advantage over the other, then long-term relationships are likely to suffer or fail.

Daniel Shefer goes further: “As in any agreement, there is a difference between adhering to the letter of the contract vs. its intent.  When the sides to the [contract] agreement adhere to the letter of the contract, they often damage the business relationship.  The business relationship is more than its technical details”.

If therefore, your business relationships with contracted parties are important to the overall success of your organisation, then you should use technology solutions to streamline and control your contract processes, but in conjunction with realism and common sense.


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