When businesses are focused on growth, contracts and terms and conditions rarely top the priority list. The attention is usually on winning new customers, recruiting staff, investing in technology and increasing turnover.
However, contracts agreed several years ago may no longer be fit for purpose. As businesses scale, the risks become larger, supplier and customer relationships become more complex and the commercial consequences of getting things wrong become far more significant. The reality is that many businesses do not discover weaknesses in their contracts until a problem has already arisen.
Here are five reasons why growing businesses should review their contracts and terms and conditions.
1. Rising costs can erode margins
Many businesses have seen significant increases in employment costs, energy costs, transport costs and insurance premiums over recent years.
The key question is whether your contracts allow you to recover those increases. Can prices be increased during the term of the contract? Is there a mechanism for reopening pricing discussions if costs rise sharply? Can additional regulatory costs, tariffs or duties be passed on?
If the answer is no, your business may find itself taking on more work while making less profit.
2. Supply chain disruption is now part of normal business planning
Businesses have had to navigate everything from global supply shortages and shipping disruption to cyber incidents and extreme weather events.
Many assume that force majeure provisions will automatically protect them if something outside their control affects performance. In reality, protection depends entirely on the wording of the contract.
Businesses should consider whether force majeure clauses cover delays as well as complete inability to perform, what notice requirements apply and at what point either party can terminate the agreement.
If a key supplier cannot deliver, or your business cannot meet its own obligations, the contractual position can quickly become critical.
3. Liability provisions may no longer reflect the business you are today
A limitation of liability clause that seemed appropriate when the business was smaller may no longer provide the right level of protection.
As businesses grow, they often take on larger contracts, higher-value projects and more significant customer relationships. At the same time, customers frequently seek higher liability caps and broader protections.
It is important to ensure that liability limitations remain commercially realistic and enforceable. Equally, businesses should understand the exposure they are accepting when signing contracts proposed by customers or suppliers.
The aim should be to strike the right balance between winning work and managing risk.
4. Cash flow protection matters more than ever
Growth can place considerable pressure on working capital.
Businesses often need to purchase stock, invest in equipment, recruit employees or fund production costs long before they are paid by customers. If payment terms are not properly managed, growth can create cash flow challenges rather than commercial success.
Contracts should clearly address payment terms, deposits, staged payments, late payment interest, suspension rights and termination rights where a customer's financial position deteriorates.
Retention of title provisions should also be reviewed to ensure they reflect how products are supplied and used in practice.
5. Your contracts may not support future growth plans
Many growing businesses are considering acquisitions, external investment, new technology or eventual succession planning.
However, existing contracts can sometimes become an obstacle. Key agreements may contain change-of-control provisions, restrictive termination rights or obligations that make future transactions more difficult than expected.
Technology contracts also deserve particular attention. Businesses are becoming increasingly reliant on software, automation and AI tools, yet many have not considered issues such as ownership of data, service levels, pricing increases or what happens if a supplier withdraws support.
The best time to identify these issues is before they become barriers to growth.
A simple contract health check
A useful exercise is to take your five most important customer and supplier contracts and ask three questions:
What happens if a major cost increases by 20%?
What happens if a critical delivery is delayed by six weeks?
What happens if the other party becomes insolvent?
If the answer is unclear, there is probably a risk that deserves attention.
Final thoughts
Strong contracts do more than manage legal risk. They protect margins, support cash flow, provide certainty during disruption and help create a platform for sustainable growth.
For ambitious businesses, a regular review of customer contracts, supplier agreements and standard terms and conditions is often one of the simplest and most cost-effective ways to protect value and avoid problems before they arise.
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