Contract nuggets from the information badger

“It is a very sobering feeling to be up in space and realize that one’s safety factor was determined by the lowest bidder on a government contract.”
Alan Shepard

  • To avoid common pitfalls ensure the drafting of contracts and subcontracts is done by contract/commercial or legal professionals.
  • Always have a definitive written contract which is signed by properly authorised signatories from your organisation and your client’s. 
  • Have a contract/legal adviser review a contract before you sign it, and ensure deviations from your organisations normal terms of business are formally approved.
  • Scope, deliverables, timelines, standards, and payments must be set out clearly to ensure both parties have the same understanding of their obligations.
  • Consult specialist experts for advice on the approach, and contractual implications thereof, to take for work that has special safety, privacy, health, data protection or security dimensions – do this before, not after, a contract is signed.
  • Avoid implicit or explicit  ‘time is of the essence’, ‘fitness for purpose’, ‘best endeavours’, ‘unlimited liability’ and ‘consequential damage’ obligations.   
  • Never just file and forget a contract once signed; if you do then you will encounter difficulty and fail to meet the expected objectives of the parties involved.
  • A contract is not an irrelevant formality; read it, understand it, and use its mechanisms
  • Always manage changes to contracted obligations using a change control process that has ben formally agreed with the client.
  • Ensure key staff delivering the contract’s obligations read it after it’s signed  to ensure perceptions of what it says are aligned with what it actually says.
  • A proposed contract change is not an obligation until due process is fully complete and approved by both parties; never commence work ahead of formal process completion without written cover.
  • When impact assessing a proposed contract change, always look at the impact on  finance, resourcing, technology, subcontractors, delivery schedules and terms as a minimum.
  • Always ensure that any milestone claimed as achieved is supported by formal documented evidence that it has met the contract’s requirements of the milestone in full; significant delay in receiving payments may occur if you don’t do this.
  • Correspondence with the client on all contract matters should be formal, unambiguous, between authorised representatives, and retained in an accessible modern filing system. 
  • Keep structured and accessible records that prove you have met the contract in full; keep detailed records of delays or extra costs caused by your client in case you need to formally claim compensation.
  • Should a dispute arise seek legal guidance and advice at the earliest opportunity; use and comply with the mechanisms in the contract to resolve the dispute.
  • Always use litigation as a last resort – it’s expensive and can be reputationally  damaging.
  • Manage against the contract proactively not reactively; manage the client against it before the client manages you.