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Contract Review

Development – To define detail, scope and purpose.

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Training participants will gain a basic understanding of Contract Review and its applications within food safety and quality systems. Basic knowledge competency will be verified through successful completion of the accompanying Contract Review assessment activity. Basic skill competency can be verified through the Contract Review competency checklist available as a resource for this training activity.

Key Definitions For Contract Review
- Contract Review: Contract review is the structured system through which supply contracts are assessed and confirmed with relevant parties.
- Customer Focus: Customer focus is a term used to describe the structured systems through which a food business reviews, trends and analyses customer expectations and requirements. This may also include customer contact and communication requirements.
- Tender: Commonly also known as a bid. A formal proposal to sell or buy a commodity or service at a specified price.

Contract Review Development
When considering the development, documentation and implementation of Contract Review within food safety and quality management systems, the following information should be considered to ensure effective outcomes:

About Contract Review
Contract review is a systemic requirement which promotes and nurtures supplier and customer relationships. For legal reasons, and for the transparency of customer expectations, contracts should be developed, documented, implemented and reviewed on an ongoing basis between suppliers and customers. Contract review processes are often closely linked to customer focus related systemic elements.

It is also important to consider that Contract Review requirements may not just be applicable to customers; they can be reversed and applied with similar methods for suppliers of materials or services.

Contract Review Process
The following process outlines a common logical sequence of steps within a Contract Review Process based upon a scenario in which a new or pre-existing customer relationship includes Contract Review elements:

Understanding Customer Requirements and Expectations
It is important within any Customer Review activity to ensure the requirements and expectations of any prospective or existing customer are fully understood. This element of the Contract Review process requires clear and open communication channels between the food business and their customer.

Customer requirements and expectations commonly include provisions for:
- Quality;
- Safety;
- Timeframes;
- Cost;
- Delivery;
- Volumes;
- Identity Preservation;
- Use of Trademarks and Claims;
- Verification and Validation;
- Emergency Provisions;
- Sub-contracting of Products or Services;
- Regulatory compliance;
- Ethical Sourcing standards;
- Industry Acceptance.

Definition and Documentation of Customer Requirements
Once your food business clearly and fully understands customer requirements and expectations, a defined and documented contract for current or proposed product or service will generally be formatted. It is important that this format is inclusive of “understood” customer requirements and expectations, which are presented in alignment with the services or products to be supplied through the contract. It is important to consider that and documented contract format is legally binding, so it is not uncommon for qualified legal representatives to be involved within the process.

Contract Review
Once the documented contract is available for review, it is generally reviewed by all associated parties. This review is conducted to ensure both the customer requirements and expectations are declared, and that your business is capable of supplying the proposed products or services to the required standards.

It is important at this step to ensure that differences between the customer requirements and expectations are resolved with a mutually agreeable acknowledgement from all involved parties. Where issues are identified, the contract format should be re-worked and re-validated to ensure appropriate outcomes.

Contract Agreement
Once the Contract Review step is completed and all parties are comfortable with the content and implementation of the “contract”, it is commonly signed by an authorised representative of all involved parties. It is once again important to consider that and documented contract format is legally binding, so it is not uncommon for qualified legal representatives to be involved within the process.

It is generally accepted that the full content of “contracts” are confidential, so they are commonly retained in a secure manner for legal compliance. In this context, it is always important to ensure that relevant team members have access to “contract” information relevant to their positional roles. The management review process is commonly used as a tool to ensure key team members are aware of relevant ‘contract’ content

Contract Review Frequency
The frequency at which a Contract Review activity is scheduled and conducted is commonly dictated by the timeframes nominated within the contract itself. Food businesses commonly have contracts linked to the supply of products which may be seasonal or through a “tender” arrangement.

In most cases, it is recommended that contracts are reviewed at a schedule which allows for a new or renewal contract to be signed prior to any supply of products or services included in such contracts, unless such arrangements are within a defined and agreed “trial” period. This provides the strongest legal protection for all parties involved with the supply of products or services.

If your food business supplies foodstuffs manufactured to a customer’s specifications, it is important to consider any specific Contract Review Development requirements in relation to their items.


The "General Content" pages within foodindustrycompliance.com include current and relevant information broken into the following elements: Develop, Document, Implement, Monitor, Corrective Action, Verify, Validate and Skills and Knowledge.

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