The Role of Ethics in Contract Management in the Digital Age

As the current world becomes increasingly digitized, so too does how we conduct business. This brings with it new opportunities and challenges, especially in the field of contract management. To ensure that contracts are handled fairly and ethically in a digital age, it is essential to understand the role of ethics in contract management. This blog post will explain what you need to know about ethics in contract management and how you can ensure that your contracts are handled ethically.

What are contract ethics and ethics in contract management?

Ethics in contracts refer to the moral principles that guide the actions of the parties involved in a contract. These principles can be codified in law but may also be based on custom or tradition. Contract ethics are designed to promote fairness and honesty in contracts and to protect the rights of all parties involved.

Contract management is the process of overseeing and administering contracts. This includes negotiation, performance monitoring, and contract termination. Contract managers must be aware of the ethical principles that apply to contracts and must ensure that these principles are respected by all parties involved in the contract. In some cases, contract managers may need to mediate disputes between parties or decide whether to terminate a contract.

Ethics in contracts and contract management are essential for ensuring that all parties involved in a contract are treated fairly and honestly. By following these ethical principles, contract managers can help create contracts beneficial for all parties involved.

Ethical issues in face-to-face contract management

In face-to-face contract management, ethical issues can arise if the contract manager is not impartial. Some of the issues that can come up include:

The contract manager may make decisions that aren’t in the best interest of all the parties involved

One challenge of face-to-face contract management is that the contract manager may develop personal relationships with the parties involved. These relationships can bias the contract manager and lead to decisions that aren’t in the best interest of all parties. To avoid this problem, contract managers must remain impartial and objective when making contract decisions.

The contract manager may be unduly influenced by one party

If the contract manager has a close relationship with one of the parties involved in the contract, that party may unduly influence the contract manager. This can lead to decisions that are not in the best interest of all parties involved in the contract. To avoid this problem, contract managers must maintain impartiality and objectivity when making contract decisions. 

The contract manager may make decisions based on personal gain

Suppose the contract manager stands to benefit financially from the outcome of a contract. In that case, they may be tempted to initiate decisions that are not in the best interest of all parties involved. This can lead to corruption and unfairness in the contract management process. To avoid this problem, contract managers must act in the best interest of all parties involved, not just themselves.

Ethical issues in digital contract management

Digital contract management, via CLM tools, presents its own set of ethical challenges because it is often conducted remotely.

Some of the issues that can arise in the process include:

There is a lack of personal interaction

One challenge of digital contract management is that there is often a lack of personal interaction between the contract manager and the parties involved. This can make it challenging to build trust and may lead to decisions that are not in the best interest of all parties. To avoid this problem, contract managers must make an effort to build relationships with the parties involved and ensure that they understand all sides of the issue before making decisions.

There is a risk of corruption

Another challenge of digital contract management is that it can be difficult to monitor and prevent corruption. This is because there is often a lack of transparency in the process, and payments may be made through anonymous channels. To avoid this problem, it is crucial for contract managers to be transparent in their dealings and to make sure that all payments are made through channels that can be tracked and monitored. 

There is a risk of cybercrime

One of the ethical issues in contract management of digital contract management is the risk of cybercrime. This is because contracts are often stored electronically and can be vulnerable to hacking and other forms of cyberattack. To avoid this problem, it is vital for contract managers to use secure CLM software and to keep all electronic files safe from unauthorized access. 

What ethical issues are there in different stages of contract management?

At every stage, there are ethical implications in contracts, although many managers view it as a dry and administrative task. From the initial contract request, through negotiation and contract redlining etiquette, to breach of contract, there are countless ethical issues faced by contract managers.

Perhaps the most common issue is simply a failure to follow proper etiquette. For example, many organizations have specific protocols for how contract requests should be submitted and processed. When these procedures aren’t followed, it can create confusion and frustration, ultimately leading to delays or even canceled contracts.

Similarly, both parties must be respectful and transparent in their dealings during negotiations. Otherwise, the process can quickly become adversarial, leading to an unfavorable outcome for both sides.

Finally, when a contract is breached, it is crucial to act swiftly and decisively to remedy the situation. Otherwise, ethical issues in breach of contract can be irreparable.

Final Thoughts

Although contract management ethics may seem like a thing of the past, they are still critical in the digital age. Here’s why: As we move into the digital age and more business is conducted online, it becomes even more critical for companies to understand contract management ethics.

After all, customers will only do business with those they trust, and if your company doesn’t have a good reputation for ethical practices, you can bet potential clients will go elsewhere.

Olga Mack is VP at LexisNexis and CEO of CounselLink^® CLM.