Contract Administration – a brief orientation

“The future of the (Environmental and Sustainability Management) profession will involve requirements for highly developed professional management capability and technical skills, and these will need to include contracting skills to contract the resources needed to handle the many and varied responsibilities.”
Ross King, p421, ‘The Future of the Profession’, Environmental Management in Organisations, IEMA Handbook 2005

“Oh, for a magic wand…” – English saying

Practicalities of reaching a contract with a supplier

When a contract comes up for agreement, it normally takes someone skilled in contracting/ contract administration at least six weeks to sort out, since each round of work triggers other important thoughts and considerations. This does not mean at all that this work will consume six man-weeks. From an initial draft contract document, it encompasses successive rounds of each Party considering and responding to the other’s drafts and redrafts – and coming to a competent and amicable agreement.

With the way their businesses are organised these days, Environmental and Sustainability Managers and professionals will probably not have a Contract Administration professional on tap, from whom they will have help in contract negotiation and agreement. So they will have to do it themselves. This work can actually be done quite well with a few guidelines, some common sense, diligence, verbal logic and real patience.

The prime aim is to get a working document in plain, simple, English that, by an act of imagination, a judge would say is fair and reasonable – the test in court. This document is to be useful for daily guidance of the work – and should include aims, objectives and outcomes, values to steer by, principles of work and so on.

The aim also includes catching those informal, perhaps unspoken, operating assumptions, principles and agreements that may have developed between parties in earlier discussions. Where they have worked together more informally over a period of time, perhaps on smaller pieces of work, these tend to be at the back of the mind – the furniture – about which they have not needed to be conscious.

Getting all this into consciousness, in agreed, right words is the work – and it usually takes a while. And it usually involves successive drafts, explanations, clarifications – and some sudden ‘wakings up’ to something vital being missing!

The aim is also to legislate for the future – when either party writing the agreement may fallen under a bus – the work needs to go on – and others with no prior knowledge may have to come in and pick up the pieces.

Any initial draft contract, particularly a pro forma contract, needs always to be amended to fit the realities of a situation, since it merely provides a general list of headings and related ‘cock-shy’ clauses.

Depending on where an initial or pro forma contract originates from, the clauses will tend to reflect, more or less, the interests of the originator – or the originator’s expensive solicitors’ ideas about her client’s interests. Solicitors notoriously will tend to stack every clause excessively in their client’s favour – fully expecting that the other party’s solicitor or contract administrator will expect this – and act to rebalance things. For solicitors, this may be “part of the game”. They write a document that is so extremely unreasonable that they hope that, even after negotiation, their client will have something still weighted to their advantage.

Frequently such a starting document, if provided by a corporate organisation, is so heavily biased in favour of the corporation that, if used un-amended, it would – if applied – cause gross un-workability between the Parties. It will often not stand up in court, involving unfair and unreasonable terms.

Almost invariably, the initial bias of the clauses will need to be balanced in negotiation.

This is the worthwhile work that allows the parties to eventually shake hands without concerns or reservations – and contributes to the best possible beginning to successful ventures.

Ross King, Co-Founder & Co-Director of CSEM-BMP, September 2008

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