Tuesday, 8 February 2011

Reflections of a Contracts Lawyer: Part 4

Reflection Number 4: They're alive!

Image is of a Tasmanian Devil.  In common with contracts, Tasmanian Devils give a nasty bite if not treated correctly.  Unlike Tasmanian Devils, contracts are not best kept locked away in drawers in the furthest flung corners of the earth.

In my younger days, I would often encounter a Project or Contracts Manager who would sigh heavily at the time which it had taken to review a contract, negotiate the detail and baton down a signature, and then triumphantly observe that there was another pile of paperwork which, with a bit of luck and a following wind, wouldn't need to see the light of day again. Instantly belittling the need for the amount of (my hard) work which had just gone into that paperwork.

I've heard it from well-meaning and less-arrogant colleagues before as well, pleased with the work which has been achieved in the contract negotiation "Good job" they say as they file it away the copy document in their bottom drawer (never give away the original document when in-house), along with the contract guide I'd crafted for them to make their life easier and the contract user-friendly , "now we can let that gather some dust while we get on with the proper job".  As though the job done (by me) is not proper.

I've never subscribed to that theory.  The best Projects and Contracts Managers which I've worked with keep their contracts close at hand and use them as a daily weapon against their suppliers to ensure deliveries are made on time, service levels are met, software performs as it should and (you'll be surprised how much this next one is overlooked)  invoices are accurate, so that we're not charged a penny too much for the privilege.

And, as the project which it manages evolves, so the contract should evolve too.  A contract is a living thing. And indeed, the Project or Contracts Manager managing that project is best served by keeping up to speed with this evolution.

A case in point:

A perplexed manager once came to visit me, in one hand a hat and in the other a material sample.  Let's call the sample, Material A, and lets call the material which the hat is made out of, Material B. Let's call this whole event, The Hat Saga*.

The Hat Saga essentially involved the following (albeit in a much longer, more drawn-out, microscopic and draining way over the course of about 6 months):

 "Melanie, the hats delivered are made out of Material B. I wanted them to be made out of Material A."
"Oh no. Do you have a copy of the Contract with you please?"
"Er, no, (for I am only the person responsible for it) have you got a copy?"
I dip into my Contracts Register.
"Yes I have. Lets see, oh yes Schedule 2, "The Matrerial". It says "TBC". What did you eventually agree was the correct material?"
"Material A"
"OK, well lets put a call into the  supplier then."
Call to the supplier revealed that, unsurprisingly, they were under the impression that they agreed it was Material B.

The following discussion was had every which way possible consistently over many days and weeks. Me: "Are you absolutely 100% certain you've never agreed Material B?"
"Absolutely. Never"
"Any documents say otherwise?
"None"
"Are you sure?
"Absolutely. Yes"
"Absolutely?  Our hats are very precious to us, they are very expensive. I'm about to commence proceedings as we have spent so much money on these entirely incorrect hats.  That's serious and expensive stuff. It will be embarrasing if we're wrong."
"Absolutely. Yes."

Some cost, time, effort and energy later:

 Manager approaches my desk "Erm, Melanie,  could this be relevant?"
"I don't know, let me see. Oh look its a document with Material B attached to a letter from the supplier asking if Material B would be a suitable alternative and which you've counter-signed.  Yes. I'd say that's relevant."

The error in this particular instance was that this correspondence which changed the contract was never logged and associated with the contract by the manager. Ironically, clearly the hat supplier hadn't saved  a copy of the relevant correspondence either.  Frustrating to say the least (I do remember collapsing on my desk with my head in my hands for quite some time afterwards).

So, what was the point of this post? Oh yes, contracts are alive, please check in on them once in a while.

*subject matter altered to protect the innocent.

For more of my reflections check out Reflections of a Contracts Lawyer: Part 1  Reflections of a Contracts Lawyer: Part 2 and Reflections of a Contracts lawyer: Part3

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