Why is it crucial to manage "conflict of interest" in contracts?

Managing "conflict of interest" in contracts is crucial because it promotes fairness and impartial decision-making. When conflicts of interest are evident and properly managed, it ensures that decisions made during the contract process are based on objective criteria rather than personal interests or relationships. This fosters a level playing field for all parties involved, which is essential for maintaining trust and ensuring that the contractual obligations are fulfilled in accordance with the intended purpose of the agreement.

This principle is important in contract management as it helps to avoid situations where personal interests might influence business decisions, leading to biased outcomes. A transparent approach to managing conflicts of interest fortifies the integrity of the contracting process, enhancing stakeholder confidence and compliance with ethical standards. By ensuring that decisions are made fairly, the potential for disputes is reduced, fostering a more collaborative and effective working environment.