What is the purpose of a 'contract review'?

The purpose of a 'contract review' is primarily focused on evaluating compliance with legal and organizational standards. This process ensures that the terms of the contract adhere to relevant laws and regulations, as well as internal policies and procedures. Conducting a thorough contract review allows organizations to identify any potential risks or issues that could arise during the contract’s lifecycle. It also ensures that the obligations and rights of each party are clearly defined and legally enforceable, helping to mitigate disputes and protect the interests of the contracting parties.

In contrast, negotiating better terms with contractors is a separate activity that can occur during the initial stages of contract formation or at designated points in the contract lifecycle, but it is not the primary purpose of a review. Creating new contracts is also distinctly different, as that involves drafting and establishing new agreements rather than assessing existing ones. Likewise, while improving communication between the parties involved is beneficial, it is more a byproduct of effective contract management than the core aim of a contract review. Thus, evaluating compliance is the central focus that informs all parties about their rights, obligations, and the legal validity of the contract.