Five signs your contract is out of date—and what to do about it
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When was the last time you reviewed a contract with your key supplier or client?
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Did you know that the legislation that was in effect when you signed your contract may have changed, and some of its provisions may now work against you?
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What specific changes in Latvian legislation in 2024–2025 make old contracts vulnerable right now?
There’s a telling case in the Riga Arbitration Court’s practice. A creditor filed a claim against a guarantor—the debtor had already been declared insolvent, with no remaining assets. The agreement was signed. There was a surety. But the agreement had been drawn up more than 10 years earlier.
An analysis of the documentation revealed that the terms and conditions set forth therein regarding dispute resolution and suretyship were inconsistent with both current legislation and established legal interpretation. The surety filed objections, and the court was forced to deny the creditor’s claim, both in arbitration and in state court.
There was a contract. There was a guarantee. The creditor did not receive the money.
Five signs that your contract needs to be updated
The first sign: the agreement was concluded more than three years ago and is actively used. During this time, tax or commercial law may have changed, new liability requirements may have emerged, or judicial practice regarding the interpretation of specific provisions may have shifted.
The second sign: the contract lacks an arbitration clause, or it is worded vaguely. Following the July 2024 amendments, the requirements for the wording of the clause became clearer. A vague clause risks challenging the court’s jurisdiction.
The third sign: penalty rates and late payment interest have not been updated. The base interest rate under the Civil Code changes every six months. A fixed-rate contract from 2018 may be significantly less favorable than the current legal rate.
The fourth sign: the contract lacks a force majeure clause, or it is formulated without taking into account modern realities. Practice from 2020 to 2024 has demonstrated the importance of clearly defining what constitutes force majeure and what does not.
The fifth sign: the contract does not contain a clause on the applicable law if the partner is foreign. Following the 2023–2024 EU regulatory amendments, this is increasingly important for cross-border transactions.
What exactly changed in 2024–2025
Law on Arbitration Courts (July 2024): new requirements for the form of arbitration agreements, the admissibility of correspondence as an agreement, new options for witnesses and security. Old clauses remain in effect, but may be less than optimal.
Civil Procedure Code (April 2025): reform of state duties, changes to the procedure for forced deductions from wages. Contracts with deduction provisions must be checked for compliance.
Residential Tenancy Law: Critical deadline of December 31, 2026 for existing lease agreements. Tenants must either renew the agreement or file a lawsuit to amend it by the end of 2026.
How to update a contract
Step one: audit. Make a list of all active contracts with their dates of execution. Identify those that are more than three years old or where the relationship is active.
Step two: legal review. For each contract, assess its compliance with current legislation. Pay particular attention to the sanctions clause, arbitration clause, surety, and termination provisions.
Step three: Negotiate with your partner. If the agreement needs updating, initiate negotiations. Prepare a new version or supplemental agreement. Sign it with qualified electronic signatures from both parties.
Step four: archiving. Don’t destroy the old version of the agreement—it may be needed to resolve a dispute about its validity period.
Three steps to take now
First: Open the list of active contracts and mark those that are more than three years old. Start with those with the highest financial turnover.
Second: check whether each of them contains a current arbitration clause. This is a quick check that takes just a minute per contract.
Third: If you have any lease agreements signed before May 1, 2021, update them immediately. The deadline of December 31, 2026, is seven months away.
A contract isn’t a document you sign and forget about. It’s a living instrument. If it’s outdated, it works against you.
This article is for informational purposes only and does not constitute legal advice.