Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Basic Contract Law
for Project Managers
Webinar 2 of 3:
Building a contract
by Sarah Schütte
of Schutte Consulting Limited...
Webinar 2 topics
— Components of a contract;
— Types of terms
— Sources of terms
— ‘Boiler plate’
— Standard forms
— Negot...
Background
to the webinar series
SCL’s mission: “make law work for the construction and engineering industry”
Common press...
Background
to this webinar
— Webinar 1 (catch up): how to make a binding contract
— Webinar 2: key terms to look out for i...
Components of a contract
Date: This contract/deed is made on XXXXXXXXX
Parties: Between (1) AAAAA and (2) BBBBBBBB
Recital...
Spotlight: types of terms
SIMPLIFIED
VERSION
Conditions Warranties Innominate
(ordinary)
Importance 1st class 2nd class 3r...
Types of terms
— Take advice on drafting of content and categorisation
— Does the term have the effect you want
Ø Legal te...
Sources of terms:
“Boilerplate”
= Terms commonly found in a contract
— Subject matter and content
— Avoid a cursory glance...
Sources of terms:
“Boilerplate”
—
Ø If a boilerplate is missing, use the opportunity to suggest
your organisation’s standa...
Sources of terms:
Standard forms
— “Starter for 10” + boilerplate
— Save negotiation time and ‘blank sheet’
— = market acc...
Sources of terms:
Negotiated terms
How to approach negotiation?
— Organisation’s standard term/ policy = starting point
— ...
Risk and (un)certainty
— Webinar 1: Contract = agreement to share risks in ventures
— Terms agreed should be clear and cer...
Risk and (un)certainty
Drafting terms to address and allocate risk
© 2021 Schutte Consulting Limited
13
Term/ Example
Sits...
Team effort:
Getting over the line
— Contract value ≠ indicator of risk or of potential liability
— Try to avoid a last mi...
Project managing a
contract’s development
— Pre-contract phase as a “project”
— Temporary: contract will be signed or not
...
Summary of this webinar
• Take care when building a contract, or reviewing a proposed contract
• Terms relate to risk and ...
Contact:
T: +44(0)7970101188
E: sarah@schutteconsulting.co.uk
W: www.schutteconsulting.co.uk
Sarah Schutte and Schutte Con...
You’ve finished this document.
Upcoming SlideShare
What to Upload to SlideShare
Next
Upcoming SlideShare
What to Upload to SlideShare
Next

0

Share

Basic Contract Law for project managers webinar series, Part 2: Building a contract, 14 September 2021

Basic Contract Law for project managers webinar series
Part 2: Building a contract

Tuesday 14 September 2021
APM Contracts and Procurement Specific Interest Group (SIG)

presented by Sarah Schütte, Schutte Consulting Limited

The link to the write up page and resources of this webinar:
https://www.apm.org.uk/news/basic-contract-law-for-project-managers-part-2-webinar/

Content description:
Most projects involve contracts with external providers or suppliers of good and services. Those taking on the role of project managers therefore need to know and understand the basics of contract law in order to be effective and avoid risks being ‘gotchas’!

Most projects involve buying something from an external provider. This can range from ‘off the shelf’ widgets to complex contracts for multi-million packages.

Regardless, if you don’t know the basics of contract law, both in the procurement and ‘in-contract’ management phase, you can inadvertently put your organisation at significant commercial risk. On the other hand, if both parties clearly articulate and understand their legal and contractual obligations, then the project is far more likely to be a success.

What does this mean? Having a basic knowledge of contract law is an essential pre-requisite for an effective project manager!


This second webinar deals with the issue of building a contract.
It covers the components of a contract; ‘boiler plate’ & negotiated clauses; risk allocation; who should be involved and project managing a contract’s development.

  • Be the first to like this

Basic Contract Law for project managers webinar series, Part 2: Building a contract, 14 September 2021

  1. 1. Basic Contract Law for Project Managers Webinar 2 of 3: Building a contract by Sarah Schütte of Schutte Consulting Limited For APM September 2021, updated from original series of 2018 © 2021 Schutte Consulting Limited 1
  2. 2. Webinar 2 topics — Components of a contract; — Types of terms — Sources of terms — ‘Boiler plate’ — Standard forms — Negotiated terms — Risk and (un)certainty — The team: getting a contract over the line — Project managing a contract’s development Ø 1-hour CPD © 2021 Schutte Consulting Limited 2
  3. 3. Background to the webinar series SCL’s mission: “make law work for the construction and engineering industry” Common pressures for PMs: — Centrality to project — Need for broad skillset — Dependency by others Why should PMs learn about contracts? — 2 main risks: — To the project “success” — To yourself and your organisation Ø Get the basics, but know your limitations and seek legal advice © 2021 Schutte Consulting Limited 3
  4. 4. Background to this webinar — Webinar 1 (catch up): how to make a binding contract — Webinar 2: key terms to look out for in 2 situations: — Drafting a contract; or — Reviewing a proposed contract from your client or supplier — Are the terms…? — Desirable (and avoid the risk of implied terms (Webinar 1)) — More risky, but commercially acceptable (how to manage the risk becomes the important thing) — Unacceptable to your organisation as a matter of policy (so you have to walk away from the deal) Ø Awareness enables the PM to do their job better © 2021 Schutte Consulting Limited 4
  5. 5. Components of a contract Date: This contract/deed is made on XXXXXXXXX Parties: Between (1) AAAAA and (2) BBBBBBBB Recitals: A description of the background and why the parties are making the contract Consideration: value of the contract works or services. If nil value (e.g. framework or collateral warranty) insert “in consideration of £1 being paid by A to B” (Webinar 1) Terms: conditions, conditions precedent, warranties, undertakings, indemnities, ordinary terms Authorised persons: Signature / execution blocks © 2021 Schutte Consulting Limited 5
  6. 6. Spotlight: types of terms SIMPLIFIED VERSION Conditions Warranties Innominate (ordinary) Importance 1st class 2nd class 3rd class Breach =? Repudiatory* Not repudiatory Not repudiatory Remedy Right to terminate + claim damages Damages; or Losses on indemnity basis Damages Example/ Look for: “Condition precedent” “Subject to ” Promises “Undertaking” “Warrant” “Indemnify” Other obligations (verbs), breached or unfulfilled Repudiatory = entitling other party to avail of ultimate remedy © 2021 Schutte Consulting Limited 6
  7. 7. Types of terms — Take advice on drafting of content and categorisation — Does the term have the effect you want Ø Legal tests, so take advice — Court is ultimate arbiter of categorisation upon evidence — The “face” of the term — Intended purpose — Centrality to the contract and links to other terms — Workability in practice © 2021 Schutte Consulting Limited 7
  8. 8. Sources of terms: “Boilerplate” = Terms commonly found in a contract — Subject matter and content — Avoid a cursory glance: they may look familiar but everyone drafts them slightly differently! — They could change the underlying (default) legal position (i.e. implied term – Webinar 1) Ø Use the sample SCL Boilerplate Bingo © as a checklist © 2021 Schutte Consulting Limited 8
  9. 9. Sources of terms: “Boilerplate” — Ø If a boilerplate is missing, use the opportunity to suggest your organisation’s standard term (and check it fits) © 2021 Schutte Consulting Limited 9 SCL Boilerplate bingo © Law and jurisdiction IP/ Title Dispute resolution Confidentiality Insurance Definitions Entire agreement / Representations Force majeure Construction/ order of precedence Termination Notices 3rd party rights Assignment Severability Others…
  10. 10. Sources of terms: Standard forms — “Starter for 10” + boilerplate — Save negotiation time and ‘blank sheet’ — = market acceptability of certain terms (or do they?) — Watch out for addition of bespoke clauses — Altering ‘set’ words, therefore inherent risk balance — OK = specific industry codes of practice etc — What is the other party trying to achieve? — Voluminous / significant? Do you really want this contract?! © 2021 Schutte Consulting Limited 10 Why?
  11. 11. Sources of terms: Negotiated terms How to approach negotiation? — Organisation’s standard term/ policy = starting point — Authority to negotiate +/ or to bind? Check protocol/ thresholds — Skill in negotiation to get to (truly) “workable” — Translation of agreed commercial position into suitable words — Drafting: contra proferentum “against the proposer” Ø PM confidence to deliver derives from certainty and confidence in contract as underpinning the project © 2021 Schutte Consulting Limited 11
  12. 12. Risk and (un)certainty — Webinar 1: Contract = agreement to share risks in ventures — Terms agreed should be clear and certain — Often, they are fudged in negotiations — Consider early how the risk horizon would look: — What is your exposure if you take on a risk? — How will you avoid, manage (incl. insure) the risk? — Subcontracting may help, or not… Ø Impact on PM and team © 2021 Schutte Consulting Limited 12 What if?
  13. 13. Risk and (un)certainty Drafting terms to address and allocate risk © 2021 Schutte Consulting Limited 13 Term/ Example Sits outright with one party “X shall design and construct the Works” “Y shall not cause or procure its contractors to cause IP infringement” Share in £ outturn NEC “pain-gain” in Options C and D One party holds the risk to a certain level, then the other holds it “C is liable for any Losses up to £1m but above that then E is liable” “E is responsible for ground risk to 2m depth from Ground Level and thereafter C is responsible” Shared Each party bears its own costs if any Shared Risk occurs
  14. 14. Team effort: Getting over the line — Contract value ≠ indicator of risk or of potential liability — Try to avoid a last minute “quick look” request to your go-to lawyer! — Satisfy governance and compliance queries before signing — PM perspective — Need to know what is expected = the obligations (terms) — What’s different from ‘normal WOW’/ prior project — Go Go Go mode: preparation for delivery lacking — How can you “give” a contract to a PM, & expect excellence? Ø Speak up and contribute – you’re managing it! © 2021 Schutte Consulting Limited 14
  15. 15. Project managing a contract’s development — Pre-contract phase as a “project” — Temporary: contract will be signed or not — Purpose: to agree the terms of the ‘deal’ — Strategic plan and timetable gearing up for Day 1 — Agility and change of direction / pace e.g. LoI (Webinar 1) — Intended/ proposed PM should be involved = “face of the project” — Some terms can be agreed quicker than others — Agree the principles first — check back in negotiating each term – and take legal advice — Be careful about “trade-offs” – why is the clause important to you/ them Ø PM should read contract holistically before signing = the jigsaw © 2021 Schutte Consulting Limited 15
  16. 16. Summary of this webinar • Take care when building a contract, or reviewing a proposed contract • Terms relate to risk and (un)certainty • Boilerplate looks familiar, but is not universally the same… • Standard forms give you ahead start • Negotiated clauses are all about which party carries risk of outcome • Take advice on the type of term due to their legal consequences • Get involved pre-contract: PMs run projects whose foundations are contracts! • Next time, Webinar 3: What to do when things go wrong, or the unexpected happens Ø Do join us Ø Please give feedback Ø Any questions? © 2021 Schutte Consulting Limited 16
  17. 17. Contact: T: +44(0)7970101188 E: sarah@schutteconsulting.co.uk W: www.schutteconsulting.co.uk Sarah Schutte and Schutte Consulting Limited @sarahschutte1 and @schutteconsulting schutteconsulting SchutteconsultingSCLGlobal Sarah Schutte Sharp #SCLGlobal #SCLatSW11 © 2021 Schutte Consulting Limited 19

Basic Contract Law for project managers webinar series Part 2: Building a contract Tuesday 14 September 2021 APM Contracts and Procurement Specific Interest Group (SIG) presented by Sarah Schütte, Schutte Consulting Limited The link to the write up page and resources of this webinar: https://www.apm.org.uk/news/basic-contract-law-for-project-managers-part-2-webinar/ Content description: Most projects involve contracts with external providers or suppliers of good and services. Those taking on the role of project managers therefore need to know and understand the basics of contract law in order to be effective and avoid risks being ‘gotchas’! Most projects involve buying something from an external provider. This can range from ‘off the shelf’ widgets to complex contracts for multi-million packages. Regardless, if you don’t know the basics of contract law, both in the procurement and ‘in-contract’ management phase, you can inadvertently put your organisation at significant commercial risk. On the other hand, if both parties clearly articulate and understand their legal and contractual obligations, then the project is far more likely to be a success. What does this mean? Having a basic knowledge of contract law is an essential pre-requisite for an effective project manager! This second webinar deals with the issue of building a contract. It covers the components of a contract; ‘boiler plate’ & negotiated clauses; risk allocation; who should be involved and project managing a contract’s development.

Views

Total views

193

On Slideshare

0

From embeds

0

Number of embeds

153

Actions

Downloads

0

Shares

0

Comments

0

Likes

0

×