You see this typewriter? It looks old. It may not even function correctly causing you to make mistakes that cost you time and money. Contracts are the same. If you are someone who frequently deals with contracts, such as a business, and you do not review or update your contracts regularly, you run the risk of your contracts also being old and obsolete.
I am constantly updating my own contracts within my practice too. Contracts are essentially living documents that are subject to change based on the growth and changes of your business (if applicable), the nature of your relationships, the changes related to those relationships, and just overall experiences with people. Like anything that remains stagnant, it runs the risk of being outdated and obsolete.
For example, if you are a business and there is a recurring problem you are having with vendors or customers, you can change your future contracts to reflect a potential solution. Another example, if you thought one incentive (say, for productivity) would work for your employees but it turns out it is not helpful at all, then again, update your contract to reflect a new system of incentives.
Another reason to update your contracts is to address any changes in the law. From time-to-time, courts strike down or uphold certain contract terms or there are changes in the law, such as employment law, that your contract should reflect.
I recommend that clients review their contracts annually (assuming no measure hitches have occurred that would otherwise prompt a contract update) and consider what business decisions or outcomes could have improved if the contract were better worded. Additionally, it’s good to check the law in your industry, and contract law generally, to ensure that certain clauses are not outdated. So you can avoid your contract looking like an outdated document.