Most contracts last for a defined period of time. But what the commercial world considers a reasonable period can seem perilously long in Internet time. The contract's escalating price structure may have been based on the same rosy optimism that everyone shared in those heady days. But as it stands now, the volume you expected for 2001 may not hit the levels you once envisioned. During an economic slowdown, decreased sales coupled with an onerous contract can seriously burden a company.
Increased competition can also change market prices.
You may have a contract that was priced when there was only one source of goods and services, and the current market price may be vastly below what you're paying now. The economic downturn may have forced layoffs and staffing changes, or placed other unforeseen pressures on you that are spilling over into your relationships with business partners and vendors. Whatever the problem, in the current economy, renegotiating contracts is an important tool to keep your business running strong. If you want to find a graceful exit from a contract, determine whether you're really locked in for a long period of time. There may be provisions in the contract that specifically allow termination if notice is given to the other party, if certain conditions are met, or if the other party has breached the contract.