Business readiness

Unusual Agreements

What are Unusual Agreements?

Unusual agreements are contracts which your company is not typically expected to enter into, and contain non-standard terms and conditions.

Unusual agreements are non-standard arrangements between your company and a third party. The terms and clauses of unusual agreements differ from those of standard contracts.

Examples could include:

  • Non-standard Employment Agreements: Include fixed working hours, employment term and wages; and do not include standard incentives such as insurance and bonuses
  • Non-standard Customer Agreements: Where prices, quantity and delivery time period for products and services cannot be determined in advance and vary across jurisdictions and customers
  • Non-standard Supplier Agreements: Where prices, quantity and delivery time for products and services cannot be determined in advance and include a clause for early termination
  • Fixed Price or Bargain Purchase Agreements: Include the right to buy a leased asset at the end of the lease period for a predetermined price that is below its fair market value
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Why are Unusual Agreements important for business today?

Maintaining a comprehensive and up-to-date collection of unusual agreements enables your company to:

  • Continually monitor the company’s compliance with the terms and conditions of unusual agreements

Why is it important for an event tomorrow?

Unusual agreements are important for an event tomorrow, as they help:

  • Understand the terms and conditions, nature and type of unusual agreements of your company
  • Determine the number of employees, customers, suppliers and assets that have an unusual agreement with your company
  • Assess the bargaining power of your company in finalizing the terms and conditions of these agreements
  • Evaluate your company’s control and authority across unusual agreements
  • Assess the factors, or situations that made your company to enter into unusual agreements
  • Reduce the time and cost of due diligence to both management and potential investors associated with identifying and collating these documents

Pros of addressing Unusual Agreements

  • Mitigates the risks and liabilities of your company related to the non-compliance of non-standard clauses
  • Reduced due diligence time and costs

Cons of not addressing this topic

  • Increased potential for obligations under unusual agreements to not be satisfied
  • Increased potential for the impact of satisfying those obligations to not appropriately considered in future planning
  • Increased time and cost of due diligence.

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