How to Dispose of Contracts
Contracts are some of the most sensitive documents that exist in the business world. They often outline financial and legal information that could easily damage any related parties if they fell into the wrong hands.
Close protection of existing contracts is recommended, and complete destruction of cancelled or fulfilled contracts is suggested following seven years after their final expiration.
Destruction of Paper Documents
All paper contracts and document materials must be shredded according to best security practices. Standard shredding creates paper strips roughly 3” x 5/8” in diameter. Some companies like PROSHRED® Northern New Jersey have specialized equipment that goes above-and-beyond these standards to ensure complete impossibility of reassembly.
Fine or microfine shreds are recommended to fully protect the information held within the contract or document. These shreds correspond to 1” x 3/8” or 1/2” x 1/8”, respectively. This level of shredding is only achievable using industrial single-shaft rotary grinder systems equipped with the proper screen.
Remaining paper shreds also commingle with other documents until they are deposited and permanently destroyed at a recycling facility.
Transparency is crucial during this process to prove chain of custody for each document. Employees can deposit sensitive materials in securely disposed material boxes that are only accessible by document security personnel. This personnel can empty the contents of the secure bins, boxes or consoles into a locked roll cart.
The roll carts are brought to a shredding truck where they are remotely dumped by a lifting arm into the shredding compartment. Available video feeds allow clients to witness the final descent of the documents into the shredding mechanism.
A certificate of destruction is provided to ensure transparency and placate any concerns regarding liability for the security of the materials.
Digital files must be completely destroyed. Merely deleting them often leaves traces that can be retrieved, allowing hackers and data thieves to recover the information.
All sensitive digital information, including contracts, should be stored on encrypted hard drives or servers. Removable media like a USB thumb drive is not recommended. Transfer across email or storage on publicly-accessible domains is also not recommended unless there are specific security measures in place to ensure that only the necessary parties have access.
When it comes time to remove the sensitive data or files, many security experts recommend more than just “wiping” the memory. Destruction using powerful magnets, pierce and tear machines or punching machines is the only way to be confident about the data destruction.
Companies like PROSHRED® perform hard drive destruction services that work almost identically to the paper shredding process described above. All destruction is done on-site, with a transparent chain of custody and certified documentation of the destroyed data.
Consult the similar tables provided in the corresponding sections to learn more about suggested retention periods for other types of documents:
- Corporate Records
- Financial Records
- Business Taxes Records
- Personnel Records
- Management Plans and Procedures
- Donor Records
Important note: These lists were written to serve as a general guideline. Consult your CPA or a Northern New Jersey business attorney for specific advice on best practices and legal compliance requirements.