Signs You Need to Update Your Business Contract

Business contracts are the backbone of almost all relationships a company has, whether it’s with customers, employees, vendors, or partners. However, many California businesses make the mistake of sticking with outdated agreements long after regulations, business operations, or expectations have changed. Staying with an old contract can put your business at legal and financial risk. As a California business owner, it’s crucial that you review and update your contracts regularly to avoid disputes, non-compliance with state law, and unenforceable terms.

If it has been a while since you looked at your business contracts, here are some key signs that it might be time to update or rewrite them.

1. Your Contract Does Not Reflect Current California Law Changes

California frequently updates the laws governing contract enforcement, employment, and other business-related matters. If your contract is several years old, there is a chance it may contain terms that are outdated or unenforceable. Some examples of current changes to the law include:

• Non-compete clauses in employment contracts are now generally not enforceable in California. California Business and Professions Code Section 16600 renders such terms unenforceable. In California, non-compete clauses are only enforceable in limited situations.
• Automatic renewal terms for consumer contracts now have stricter consent and cancellation requirements under a new law that went into effect at the beginning of July 2025. This law, which is codified in the Business and Professions Code under Sections 17601 and 17602, requires businesses to obtain clear affirmative consent for auto-renewal terms, disclose them clearly, and make it easy for customers to cancel.

The above are only two examples. There are many other changes that have happened over the years.

2. You Are Experiencing Frequent Disputes

While disputes can arise even if you have strong business contracts in place, if you are always experiencing disputes with clients, employees, suppliers, or others, it may be a sign of unclear or ambiguous contract terms. Vague language and unclear contract terms can cause confusion and strain relationships. Precise, clear language in a contract is crucial for reducing confusion and, in turn, disputes.

3. Your Business Has Changed How It Operates

A business contract needs to align with your current business practices. If your company has, for example:

• Expanded product or service lines
• Changed its delivery methods
• Adopted new software
• Moved to remote arrangements

…your old contracts likely do not account for these new realities. Updating contracts is crucial for ensuring expectations are clear and legally enforceable.

4. Your Business Relationships Have Changed

As a company grows, the relationships you have with clients, vendors, partners, and others often evolve. A contract that made sense at the start of the relationship may no longer reflect how the relationship now works. Structures, responsibilities, or expectations may have shifted. You should update your contract to match this. For instance, suppose a vendor who once supplied small monthly shipments is now your primary supplier. In such a case, you may need to update pricing terms and delivery requirements, among other clauses.

5. The Contract Has Not Been Reviewed in Over a Year

It is best practice to review contracts at least once a year. Regular checkups are crucial for ensuring your contracts remain enforceable and protective. If a contract has not been reviewed in over a year, there could be a chance that it needs to be updated or redone.

Contact Us for Legal Help

If you need help reviewing or updating your business contract, our experienced business attorneys at SAC Attorneys LLP are here to help. Contact us today to schedule a consultation.