Contractual amendment (often referred to as repapering) is a common practice to deal with evolving laws, entity restructuring and periodic contract renewal.
The process is invariably painful, costly and time consuming - particularly for larger firms with considerable volumes of agreements in place. The exercise also introduces additional risks such as compliance risk (due to missing compliance deadlines) and contract risk (due to opening the door for renegotiation on terms not necessarily related to the amendment itself).
Many firms have been looking at better ways to manage the repapering process, such as the ISDA protocol, to manage multilateral contractual amendments for example. However, these usually only apply to specific amendment requirements (ISDA related repapering in this example), and often end up in bilateral negotiations if any part of the proposed terms is rejected.
Promisingly, some leading tech firms have found a solution. It involves moving certain contractual terms online, to avoid the need to amend physical contracts at all. So far, the solution seems to have received positive feedback and increased in popularity. Firms such as Meta and Twitter have implemented online Data Processing Addendum (DPA) and started to roll out to various legal teams.
But will your firm benefit from it? The answer depends on the type of firm and the volume of contracts it has. Below we explain how the solution works, its benefits, and key considerations before adoption.
How does it work?
Essentially, the approach will store contractual terms under a global URL and incorporate the URL into various relevant physical contracts. In this way, content hosted in the URL can be amended by the hosting party when needed, without having to modify the physical contracts. The more agreements adopting the URL, the less physical contractual amendment required in the future.
Below is a simple example of how the approach may look: