Effective Contract Management

Course overview

This interactive two-day programme examines the contract after it has been signed, when it cannot be revised and has to be implemented as written. It focuses on giving participants the necessary knowledge, tools and processes to be able to read and review contracts, which they were not involved in writing and therefore may be unclear as to what the intended interpretation was of each clause.
You will learn how to apply a logical, systematic and comprehensive approach to reading, managing and implementing a contract so that you are confident you fully appreciate what is required of you, your team, and the other contracting party(ies), to satisfy the legal obligations laid out in the contract.

What benefits will be gained from attending this seminar?
This seminar will help you to:

• Understand the ''offer and acceptance'' process of reaching agreement on the contract terms
• Be confident that you are operating under a legally binding contract
• Appreciate fully what has been agreed between the contracting parties and what the legal obligations and responsibilities of each are
• Recognise the allocation of risk between the contracting parties
• Realise what the consequences will be if either party do not comply with the contract and fail to satisfy their legal obligations
• Grasp the importance of being proactive in: establishing a project plan; monitoring work and progress; and managing risk
• Value the benefits of undertaking re-cap at the ending of a contract, so as not to repeat mistakes made, or not gain from the learning curve of ''what went well''
• Master new skills through the use of practical exercises and cases

Who should attend this seminar?
Every member of the project and contract delivery team should attend, especially those:

• Involved in the execution of commercial contracts
• Accountable and/or responsible for the successful completion of the contract
• Involved in the drafting and negotiation of the final contract documents
• Unclear of the obligations the contract places legally, on them and their organisation
• Needing refreshing on the risks associated with the project

This seminar has been designed for non-lawyers.

Programme

Is your contract legally binding, will it stand up in a court of law?

• LILAC - Legality, Intent, Legal capacity, Agreement, Consideration
• Invitation to treat
  • rough order of magnitude prices
  • incomplete terms and conditions

• Offer and acceptance
• Letter of Intent v Authority to Proceed v Contract
• Battle of the forms
  • unconditional acceptance/agreement

• Authority to commit. Legal status of a verbal v a written contract

Contract reading: Understanding what has been agreed in the contract-Part 1

• Being fully aware of what is required of each of the contracting parties
• Ensuring all goes to plan, and everything is:
  • completed to the satisfaction of all
  • the buyer gets what they have ordered
  • the supplier is paid in full

Implied terms - default position in statute

• English law - criminal, contract and tort
• Major condition v minor term of the contract. Right to compensation only or right to terminate also for breach
• Compensation only
  • unlimited consequential damages
  • burden to prove losses. Reasonable rule

Pub quiz game on default position in English law

Express terms - main express terms which deviate obligations and consequences from default position

• The ''What''
  • description/scope of supply
  • acceptance criteria and measurement mechanism
  • ''satisfactory/merchantable quality'' - ''fit for purpose'', ''durability'', ''defect free''

• The ''When''
  • timing of delivery
  • time is of the essence
  • contract effectivity
  • Force Majeure
  • dependencies - obligations and responsibilities on client which would halt progress if not completed on time

• Liabilities
  • consequences if failed to satisfy contractual obligations
  • exclusion clauses, indemnity clauses, limitation clauses (warranty, liquidated damages, limit of liability etc.)
  • Unfair Contract Terms Act
  • ''cake and eat it'' clauses applying default position in addition to an express remedy

Other key express terms

• Rights of 3rd parties
• Payment terms - late payment of Commercial Debts Act
• Termination for convenience
• Intellectual property
  • foreground and background
  • ownership and protection
  • confidentiality
  • freedom of Information Act
  • data protection

• Passing of risk and title
• Limitation Act
• Law and jurisdiction v arbitration etc

Contract review exercise

What risk exists within your contract?

• Risk management: 5 stages - identification, evaluation, litigation/contingency planning, monitoring, lessons learnt
• Risk pendulum - who holds which risks?
• Attitude to risk - risk takers or risk adverse?

Contract reading: Knowing what has been agreed in the contract and delivering on contractual obligations-Part 2

• Storyboarding
  • identifying what is required and what can potentially go wrong
  • the pessimistic approach
  • being proactive in anticipating, managing and monitoring problems
  • issues log (supplier''s contractual, legal obligations)
  • dependency log (customer''s obligations which supplier is dependent on)
  • risk register (what could go wrong and each party''s liability if it does)
  • traffic light analysis. Probability and impact of risk

• Monitoring and managing subcontractors effectively. Sharing risk with subcontractors

When is post-contract negotiation required?

• Is there an opportunity to clarify definitions in the contract which are vague or incomplete?
• Have circumstances changed since the initial agreement on contract terms?
• Is there the requirement for a contract amendment or variation?

Procedural clauses

• Order of precedence and the ''priority of documents'' clause
• Authority
• Change control
• Notices

Negotiation styles - acceptance, compromise, bargaining, logic, threat, emotion

• Matching negotiation style to bargaining position
• Preparing potential settlement zones
• Summarising and clarity on what has been agreed
• Counter-claims. Applying Force Majeure clause, dependence clause etc. Proof/collecting evidence

Negotiation style questionnaire

Ensuring as the supplier you keep to budget whilst satisfying all you contractual obligations

• Aim to ''Maximise profit/minimise risk''
• Apply ''No More, No Less'' Rule

''No More''

• protecting budget. Avoiding gross margin erosion caused by:
• poor estimating at pre-contract stage or;
• creeping scope/informal variations. Doing more than required
• reporting and formalising changes

''No Less''

• doing everything that you have agreed to do in the legal contract
• avoid being in breach of contract and exposed to paying compensation/terminated

Contract completion

• Checking mechanism to ensure all contractual obligations completed and all benefits (ie, payments) received
• Residual/post delivery contractual obligations/risks:
  • ''durability'' - warranty obligations
  • future support, supply, maintenance etc
  • waiver clause
  • confidentiality clause

• Identification of follow-on opportunities
• Lessons learnt