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The Essential Process Of Contract Modification

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August 17, 2020

Contracts may need to be modified for many reasons, including changes in the financial or regulatory regime. (One example: The coming replacement of LIBOR (the London Inter-Bank Offered Rate) by SOFR (Secured Overnight Financing Rate), which will result in the need for renegotiating and amending trillions of dollars of existing contracts.) Modifying a contract is a multi-step process that needs to be done thoroughly and carefully, explains this post from ContractPodAi, a company that specializes in digitally transforming contract management. The first step is locating all the contracts that need to be modified. At that point, legal departments “must go through each agreement, highlighting errors, changed dates, policies, and areas that need renegotiating. This process does not end until the contract is sent out and approved, and the parties agree.” In some cases, an original contract might need to be modified, in others it will need to be completely rewritten. But in any case, “because contract modification is about compliance, it is a process that needs to be done absolutely right.”

 

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