Managing Contract Risks for SMEs

To manage effectiveness in the growth phase of any sustainable business, management of contracts is a critical success factor, regardless of the function or operations that are being outsourced or in-sourced. Lease agreements can be one of the most practical and immediate needs when entering into new markets. Calculating potential contract risks should be a priority activity to manage potential impact on the organisation, staff morale, or even public perception of the company. Understanding these risks realistically are also important when attempting to manage the risks in the implementation phase.

For SMEs, it is useful to know that a comprehensive approach to breach of rental contracts occurs when one party to a lease fails to deliver a contractual obligation. A typical example would be when the landlord or tenant has not performed its obligation as per the agreed rental contract. In considering this risk, client SMEs have expressed that they either have experienced this risk or perceived that they could experience a breach of rental contract and, in the spirit of managing risks, could prevent the potential losses that could be incurred.

In a recent article shared with us by one of our guest article presents on the Up4Scale platform, the mandate was to break down the important aspects of the article in such a way that it assists clients in understanding and addressing the risk of breach of rental agreements. The article written under the title of, “Breach of Rental Agreement – Insights, Implications and Solutions” is a practical entrepreneurial guide to what a breach of rental agreement refers to and some of the legal implications that a rental agreement can have on a business entity. To assist our SME clients and potential clients, we are dedicated to helping our SMEs manage the potential risks associated with the specific issues addressed in the article.

We understand that our client SMEs have tight schedules that could result in minimal time for review or assessment of an article published. The core focus is on assisting our SMEs make sense of these articles. Our focus is on ensuring that our clients have sufficient time to consider the risks and consequences of all potential legal concerns before implementation.

While this article primarily focused on the real estate and commercial aspects of South African businesses, our approach is founded on the principle of assisting our clients across multiple industries at the same time. As SMEs increase their operational markets, they should also be aware of how a breach of contract could impact the company as a whole. For the sake of brevity, we will focus on the above discussed situations and process each of the points outlined in the context of SMEs.