Management contracts can be defined as a written piece of agreement which states that the operational control of an organization is vested on a separate vendor in return of fee. These contracts underline all the details that are required for the management of the organization which includes, but not limited to, accounting, facility management, personnel and marketing management. These contracts can also be helpful in sorting out issues in case of any disagreement from either end.
While structuring management contracts, the below mentioned points should be kept in mind-
- The contract should clearly and vividly state the details of the operational activities to be carried out by the vendor.
- The process utilized by the concerned vendor should also be listed.
- The chances of risks and hazards, their potential causes and effects and their remedies should be specified.
- This tool should be written in lucid language and verbosity should be avoided as much as possible.
- The contract should mention the legal proceedings to be taken in case of necessity.
Management contracts may differ based on the organizational policies in question. Nevertheless, the basic layout of management contracts should abide by the above listed points for the smooth progress of management activities.