One off Contracts vs Continuing Contracts

There’s a big difference between one-off contracts (eg. buying and selling a business) and contracts that carry on for a number of years (eg. an outsourcing contract or a long-term service contract).

In a one-off contract, the parties come together for the transaction and then (usually) there’s no need for them to ever talk to each other again.  That means – perversely – that you can be really specific about what goes into the contract.  The contract applies just for that moment in time (ok, so I’m simplifying here) and just for the specific transaction, so the contract can be very detailed and very prescriptive.

But on a contract that is expected to be in place for a number of years, where the parties are going to be actively working together over that period, you can’t be that prescriptive.  The world changes, markets change, and the businesses involved are – whether they like it or not – going to be affected by those changes.  It needs to be able to absorb change better.  It needs to have more room for flex. 

So a contract which is intended to last for a number of years needs – perversely, because it involves a bigger commitment from both parties – to be less prescriptive.  

8th November 2022