Contractual flexibility: Why it can be important

Contracts serve to fix agreements. But do agreements have to be made rigidly, or can they also be made in such a way that they provide for planning security with an adjustment to changing framework conditions?

Of course, flexibility costs money. But consider this extra premium as the cost of the freedom you gain with such an agreement.

Example 1: For some years now, some banks have been offering loans that can be serviced entirely according to the borrower’s means. If it is sometimes too tight for repayment, it can be reduced or even suspended without any problems; if there is sometimes more free cash available, an unscheduled repayment can be made. Such credit offers not only help by providing cash, but also provide a certain degree of freedom.

Example 2: Framework agreements can be used to agree general conditions for goods deliveries, such as article specifications, delivery time, delivery reliability, price scales, discounts, payment targets, etc., while concrete purchase quantities are only agreed in call orders. Such a construct creates security on the one hand and freedom on the other. The buyer will have to “buy” the latter through higher prices.

Example 3: Interim managers may cost more than permanently employed managers; in return, they can be deployed on a task-related basis. Engagements are terminated when the mission is accomplished. The business model of interim managers is designed to be available quickly with no expectation of commitment.

Balance security and freedom, commitment and flexibility well, and be prepared to pay a reasonable price for flexibility. Make and keep your organization agile for contiuous adaptability. Agile working significantly differs from the conventional working mode. Flexibility must also be reflected in the organizational structure and mostly require the form of a process-oriented organization or even a project organization.


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