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What is an Unmanaged Contract? Definition

What is an Unmanaged Contract? Definition

An unmanaged contract is a contract that is not monitored or reviewed by a third party. This type of contract is often used in business-to-business transactions, as well as between individuals. Unmanaged contracts can be beneficial because they are often less expensive and quicker to establish than managed contracts. However, unmanaged contracts can also be riskier because there is no third-party oversight.

What is an Unmanaged Contract?

An unmanaged contract is a contract where the service provider has no direct involvement in the management or governance of the service. The customer is responsible for all aspects of the service, including performance, availability, and security. Unmanaged contracts are often used for simple services, such as website hosting or email providers.

The Different Types of Unmanaged Contracts

There are three types of unmanaged contracts:

1. Service Level Agreement (SLA): This type of agreement outlines the minimum level of service that a provider will offer, and what happens if that service isn’t met.

2. Memorandum of Understanding (MOU): This type of agreement is more general in nature and often used between two organizations that are working together on a project. It outlines the roles and responsibilities of each organization, as well as the expectations for the project.

3. Letter of Intent (LOI): This type of agreement is similar to an MOU, but is usually used when two organizations are planning to enter into a more formal contract at a later date. It outlines the intention of both parties to enter into a contract, and can include some basic terms and conditions.

Pros and Cons of an Unmanaged Contract

There are both pros and cons to having an unmanaged contract. On the plus side, an unmanaged contract can save the company money since there is no need to pay a third-party to manage the agreement. Additionally, the company has more control over the agreement and can make changes as needed without having to go through a third-party. On the downside, an unmanaged contract requires more work on the part of the company and there is more risk involved since the company is solely responsible for ensuring that all terms of the agreement are met.

What to Consider When Choosing an Unmanaged Contract

There are a few key things to consider when choosing an unmanaged contract:

-First and foremost, you need to make sure that the service you’re contracting for can be delivered without management. This means that the service should be simple and well-defined, and that you have a clear understanding of what is expected.

-Secondly, you need to be sure that you’re comfortable with the level of risk involved in an unmanaged contract. This type of agreement leaves a lot of room for error, and things can often go wrong without anyone being held accountable. Make sure you’re prepared to deal with the consequences if something does go wrong.

-Finally, you need to make sure that you’re getting a fair price for the services you’re contracting for. Unmanaged contracts often come with lower prices, but you still need to make sure that you’re getting value for your money.

How to Manage an Unmanaged Contract

When it comes to managing an unmanaged contract, the key is to establish clear expectations upfront and then regularly communicate with all parties involved. Below are some tips on how to best manage an unmanaged contract:

1. Define the scope of work and deliverables in detail. Be sure to include timelines, budget, and any other relevant information.

2. Assign a project manager who will be responsible for overseeing the entire project.

3. Communicate regularly with all parties involved in the project. This includes the client, vendors, and any other contractors working on the project.

4. Keep track of all milestones and deliverables throughout the duration of the project. This will help ensure that everyone is on track and that the project is progressing as planned.

5. Make sure to document everything throughout the course of the project. This includes email correspondence, meeting notes, invoices, etc. This will serve as a valuable reference if any issues arise down the road.


An unmanaged contract is a legally binding agreement between two parties that does not involve any form of management or control by a third party. The term “unmanaged” simply means that the contract does not have to be monitored or overseen by anyone other than the two parties who are involved in it. This type of arrangement can be beneficial for both parties because it allows them to have full control over the terms of the agreement and how it is carried out. However, it is important to note that an unmanaged contract can also be more risky because there is no one else to help resolve any disputes that may arise.

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