The importance of regularly updating your commercial agreements

As businesses emerge from the festive period and settle into the new year, it is easy to ignore commercial agreements that have rolled over into 2025. In an era where artificial intelligence, data protection requirements and supply chain dynamics are rapidly evolving, many businesses are operating with contracts that no longer reflect current market realities or regulatory requirements. If your business allowed its important commercial contracts to auto-renew into the new year, now is the time to review and renegotiate these agreements to match an ever-changing and increasingly challenging business landscape.

As agreements age and become outdated, your business may be opening itself up to legal risks and liabilities, missed opportunities, and falling foul of updates in the law. We recommend reviewing your commercial agreements on a regular basis

There are multiple reasons why a contractual spring cleaning is commercially advantageous:

1. Risk management

2025 will bring new challenges and changes for your business, suppliers and industry. As the 2024 budget takes hold, market conditions will continue to fluctuate, new technologies such as AI and quantum computing will continue to mature, supply costs will continue to rise, regulatory frameworks will inevitably evolve, and consumer expectations will continue to shift. Existing provisions in many businesses’ commercial agreements may already be outdated or insufficient in addressing the risks and challenges that lay ahead. No matter the industrial sector, 2025 will be a year of significant upheaval and change. Now is the time to ensure any existing commercial agreements reflect evolving industry practices. Proactivity now may prevent costly disputes and financial losses in the future.

2. Legal compliance

Laws and regulations are subject to continual change every year, and 2025 will be no different. On the 24 February the Procurement Act 2023 will come into effect, requiring amendments to procurement agreements old and new. Market predictions are that data breaches, cybersecurity cases, and supplier and manufacturer disputes will all uptick this year. As seen with the implementation of General Data Protection Regulation (GDPR) which came into effect in 2018, many companies had to revise their data processing agreements, privacy policies, and vendor contracts to ensure compliance with the new standards. Yet still companies fell afoul of the new law. To avoid these litigious eventualities, businesses should actively review their commercial agreements early in 2025, reducing the risk of non-compliance and legal disputes this year and beyond.

3. Business needs

Contractual requirements are often complex and multifaceted, and as companies experience growth, diversification or the introduction of new products and services, it is easy to forget or ignore long standing agreements that are no longer fit for purpose. Outdated agreements, which were once suitable for the company’s previous scope of operations, may no longer accurately reflect the business come the new year. This mismatch can result in ambiguity or conflicts that hinder the company’s ability to effectively conduct business. In 2025, we advise reviewing and refreshing these agreements, so companies can ensure that they accurately reflect their current business needs, promoting clarity and alignment with their strategic objectives.

4. Commercial competition

The ability to be agile and responsive is always crucial for companies to stay ahead of competitors and maintain market share, and 2025 will be no different. By reviewing and updating their commercial agreements early, businesses can enhance their capacity to adapt to changing market conditions more effectively. This agility not only enables them to seize opportunities swiftly but also empowers them to respond promptly to shifts in the market landscape. As a result, companies that prioritise the review and update of their commercial agreements gain a competitive edge by staying nimble and capitalising on emerging trends and opportunities.

5. Cost and efficiency

Outdated agreements may contain inefficient or obsolete clauses, leading to unnecessary costs or operational inefficiencies. 2025 should be the year of streamlining and updating commercial agreements, to enhance operational efficiency and cost-effectiveness, contributing to overall financial health. By embracing this challenge, companies can position themselves for long-term success while safeguarding their legal and financial interests long after this year is over.

6. Relationship management

Finally, a new year’s resolution should be for businesses to renew and strengthen their commercial relationships. Effective commercial agreements are essential for maintaining positive and productive relationships with suppliers, partners, and clients. By reviewing and refreshing these agreements, companies can demonstrate their commitment to fairness, transparency, and professionalism, thus fostering stronger and more enduring business relationships.

The business landscape of 2025 offers unprecedented opportunities for growth and innovation – but only for organisations properly positioned to seize them. By prioritising the review and modernisation of your commercial agreements now, you are not simply updating documents; you are building a foundation for sustainable success in an increasingly complex business environment.

We understand that effective contract management is crucial for business resilience and growth. Our experienced team can help ensure your commercial agreements evolve with your business needs while maintaining robust legal protection. Contact us to discuss how we can support your contract review and optimisation strategy for 2025 and beyond.