Offer, Acceptance and Settlement of Contracts, Health and Safety Issues, Property and Tort Law - Case Study Example

Contracting Management Executive Summary This report aims at planning for a particular IT project related contract agreement by a public sector organisation. Various facets related to contract management have been discussed in the report, which are essential to make the contract a successful event. Accordingly, relevant legal attributes have also been defined and elaborated in the context of the IT project supply contract to be formulated on behalf of the public sector organisation. Stress have thus been provided on essential facets such as ‘Offer’, ‘Acceptance’ and ‘Settlement of Contracts’, ‘Including Letters Of Intent’, ‘Areas of Potential Disputes’ and ‘Liability of Parties’ as well as ‘Health and Safety Issues’ and ‘Title to Property and Tort Law’. Based on the arguments concentrating on these attributes, with due reference to relevant case laws and legislative sections, a preliminary business planning have been conducted to execute the contract in an efficient way. Accordingly, this report has been focused on describing as well as planning for every facet associated with contract management with regard to the IT project supply by the public sector organisation. Table of Contents Executive Summary 2 Introduction 4 Offer, Acceptance and Settlement of Contracts, Including Letters Of Intent 5 Areas of Potential Disputes and Liability of Parties 7 Health and Safety Issues, Title to Property and Tort Law 9 Business Planning 11 Conclusions and Recommendations 14 14 References 15 Introduction Conceptually, contracts signify the formation of a legally binding and mutually beneficial agreement. The motives for forming these agreements are principally concerned with business transactions like sales, employment or exchange of property ownerships. Arguably, one of the prime intentions of contracts is generating a vehicle for transferring values in the form of products and/or services amid business organisations. Observably, businesses are observed to be extensively depended upon the formation of contracts, as these forms of legally binding relationship aids in building greater association with the customers and in assisting the businesses to attain their predetermined targets (Krappe and Kallayil 2003: 3-8). In business transactions, contract management is typically regarded as the procedure that is commenced with effectually and systematically managing the formation of a contract and further continues to the execution of planned strategies towards attaining the objectives underlying the contractual agreement simultaneously minimising risks and utilising the accessible resources (Gopalakrishnan 2001: 229-232). Identifiably, the notion of contract management has gained massive importance in this present day context, particularly in sales and purchase transactions, as it aids the organisations belonging to public as well as private sectors towards lessening increased level of costs and enhancing monetary along with operational performances (Saxena 2008: 12-15). Subsequently, a contract manager plays a pivotal role in assuring the smooth formation, execution and completion of a particular contract avoiding any chances of legal conflict. A contract manager performs the responsibilities of monitoring the entire contract, solving any sort of dispute, documenting certain significant events, preserving appropriate records and managing the tendering procedure, besides performing negotiation along with post negotiation activities (Hill 2009: 6). To carry out a contract in the most effective manner, a contract manager has to provide due significance to financial considerations, legal issues influencing the agreement, negotiation procedures and health along with safety concerns of the parties involved in the entire transaction process. Most importantly, for smooth conduct of a particular project, a contract manager ought to pay much attention upon the worthiness and accuracy of the tendering procedure, besides the negotiation along with post negotiation activities (Hill 2009: 6). The above-mentioned considerations will also be essential in the case of supplying IT products for a public sector organisation. With this concern, the report intends to analyse various social, legal and corporate obligations linked with the formulation of a contract agreement as appropriate for a public sector organisation based on the supply of IT products. Consequently, the discussion, portraying the contract management procedure applicable in the IT sales project in the public sector organisation, will deliver due emphasis to assure significant benefits to the organisation likely to be gained through the smooth completion of the contract maintaining transparency throughout. Offer, Acceptance and Settlement of Contracts, Including Letters Of Intent As mentioned earlier, a contract manager had to consider and take into concern certain legal obligations with the aim of smoothly conducting, managing and completing a particular contract within a stipulated period. In this similar concern, offer, acceptance along with settlement of contracts through letters of intent is identifiable as specific lawful obligations that demanding considerations during the supply of an IT project for the public sector organisation. Theoretically, an offer is a proposal made by an offeror to a second party, i.e. an offerre, manifesting intent to arrive into a legitimate contract (Helewitz 2010: 28). In relation to the concerned scenario, the offeror is the public sector organisation. Accordingly, the company liable to sale the software and hardware to this public sector organisation is the offeree in accordance with Sale of Goods Act 1979. According to Sec 64(2) of this Act, the company would sale the IT products in order to smoothly conduct the contract (Crown, n.d.). It would be vital to mention in this regard that the contractual agreement linked with the supply of IT products for the public sector organisation would be developed as a valid contract based on certain conditions. One of these conditions would include offering of the contract by the contract manager to the purchasers within and outside EU depicting certain relevant terms and conditions such as parties involved, subject matter, price and performance duration (Helewitz 2010: 32-38). In accordance with Section 3.1 of the UK Contract Law, the offer is mainly formed and the same require to be accepted as depicted in Sec 4 of the law (MacMillan & Stone, 2012). Based on the above terms and conditions, it can be affirmed that the name of the parties engaged in the contract must be mentioned, as they would be capable to recognise themselves as offeree and offeror, ensuring their respective values towards executing the contractual agreements based upon their mutual assent or acceptance. Moreover, the prices must also be stated in the contract, as these would enable both the parties to acquire a brief financial idea while exchanging the IT related products. Specially mentioning, the subject matter ought to be mentioned in the offer so that the involved parties are quite aware about the intended standards as well as the objectives that are inclusive to the contract. Finally, there lays the requirement of depicting the performance duration in the offer, owing to the reason that it would ensure its validity by a considerable extent (Helewitz 2010: 32-38). In legal terms, acceptance refers to the approval of the terms and the conditions mentioned in the offer (Gillies, 1988: 21). In this respect, the contract relating to the trading of IT products would be accepted by the involved parties through a deed or a written consent. Thus, from a broader understanding, it can be affirmed that the acceptance of the offer would become valid only if the above described terms and conditions in the offer are accepted based on free consent by the offeree (Stephenson 2012). Correspondingly, another factor to be considered vital in this context is the legal obligation of the ‘letter of intent’, which is fundamentally described as a document outlining the major points of the deal or the offer prior to finalising the agreement. In relation to the contract regarding supply of an IT project for the public sector organisation, the legal obligation of ‘letter of intent’ would play an imperative role in assisting the involved parties of the contract towards clarifying any sort of doubt, issue or any sort of complexity. Thus, based upon this notion, it can be affirmed that the letter of intent requires to state various sorts of significant aspects linked with the offer while trading IT products with the public sector organisation (Whincup, 2006: 30). This vital aspect is applicable as in the case of ‘Ampleforth Abbey Trust v Turner & Townsend Project Management’ (Designing Buildings Ltd, 2014). Areas of Potential Disputes and Liability of Parties There often lay various areas of potential disputes that can be apparently observed to emerge in a particular contract. Similarly, certain areas of potential disputes can also emerge in the contract of trading IT goods for a public sector organisation. In this regard, the contract will mainly deal with tendering procedure, negotiation as well as post-negotiation activities. Subsequently, the contract would be engaged in the supply of hardware along with software products and related activities in the EU and other overseas business markets. Thus, it would be quite vital to recognise and resolve various potential disputes that might arise due to the factors associated with increased level of expenses, conduct of immoral activities, lawful entanglements and payment terms among others on behalf of the involved parties of the contract. Based upon these vital factors, it can be affirmed that there lays the anticipation of arising latent and emerging disputes amid the involved parties in relation to the above contract that might make it invalid, illegal or ineffective in the long run (NBS 2008). Observably, latent disputes might arise at the beginning of the contract or at any time during its execution. These sorts of disputes generally occur at the time when one of the involved parties of any contract identifies that it possesses certain issues, which may hinder the successful attainment of the predetermined contract objectives. It can further be affirmed that latent disputes might arise in the case of the contract concerning the supply of IT products when the involved parties, i.e. the public sector organisation and the company from which the software and hardware would be purchased, identify certain issues pertaining within the contract in the initial phase of its execution. These issues can be related to the payment terms of supplying the IT products, time duration of contract completion and costs among others. Apart from latent dispute, emerging dispute can also arise within a particular contract. In this regard, it can be apparently noted that an already existing latent dispute eventually becomes an emerging one when a ‘trigger event’ takes place within a contract. In relation to the contract of supply of IT products for the public sector organisation, emerging disputes may arise between the involved parties with respect to the existence of difference in their individual interests and resource problems among others (NBS 2008). Similar disputes can be witnessed in the case of Ericsson Ltd -v- Hutchison 3G UK Ltd. This case is mainly related to a network outsourcing based management, wherein disputes mainly took place due to the amendments made upon several major defined terms of the contract such as project completion. In this regard, a notice had been provided by Hutchison 3G UK Ltd to Ericsson Ltd, stating the termination of the agreement. In response, the Court ordered to terminate the contract agreement, paying the required disbursements to the affected party i.e. Hutchison 3G UK Ltd (Ashurst LLP, 2003). After acquiring a brief idea about different areas of potential disputes within a contract, it can be stated that there lay certain liabilities of the involved parties to resolve such chances to the maximum possible extent. In this regard, if a party breaches contractual terms or fails conforming towards contractual compulsions, the other party possesses the right to claim compensation for its suffered losses. Relating to the contract of supplying hardware and software and conducting associated activities for an IT project, if the company from which the software and hardware is be purchased, fails to fulfil the contractual norms or breaches the contractual terms, the public sector organisation can claim for compensation for its losses. In this regard, the party, which breaches contractual norms, would be held accountable for compensation that may also be equivalent to the losses accordingly suffered by the other party. It would be vital to mention that if both the involved parties fail to comply with the contractual obligations or breaches contractual norms, each involved party would bear its respective civil liability as per the relevant legal statute (Zhu 2013: 20). Health and Safety Issues, Title to Property and Tort Law In the context of contract management, health and safety issues typically represent the provision of offering sufficient facilities to the workers for their welfare. Moreover, health and safety issues in the arena of contract management imply the deliverance of primary ‘duty of care’ to the workers form smooth conduct of the contractual work. In this regard, health and safety issues of the workers fundamentally comprise the provisions of forming, developing along with preserving a safe, secured or hazard free work setting, maintenance of available operational systems or plans safely and usage of hazard-free instruments (Safe Work Australia 2012). In this context, relating to the contract of supplying IT products for the public sector organisation, one of the provisions of health and safety issues would mainly encompass providing greater facilities to the personnel who will be held liable for supplying the IT related products, i.e. software and hardware. Moreover, the other provisions might include offering effective training to the personnel when concerning handling ergonomic elements of the above stated products, mitigating certain potential issues such as workloads and facilitating them with required resources to efficiently conduct their respective tasks by introducing and applying various sorts of safety regimes (Safe Work Australia 2012). In legal terms, the notion of ‘title to property’ is exhibited in the procedure of buying along with selling of consumer goods. In this procedure, it can be apparently observed that the seller, buyer along with the third parties, work collaboratively towards inspecting their respective properties, establishing title to their properties and finally seeking for investing towards ending up the selling procedure. In precise, it can be affirmed that the perception of ‘title to property’ is all about concerning the rights of the sellers along with the buyers engaged in conducting business transactions. It would be vital to mention in this similar concern that relating to the contract of supplying hardware and software products for an IT project, a Reservation of Title (ROT) clause can be applied. This ROT clause refers to a contractual agreement in accordance with which a seller retains title to the goods within himself/herself until and unless a buyer pays the price for such goods in full. In relation to the stated contract, a ROT clause would form at the time when the company, from which the IT products (i.e. software and hardware) would be purchased, retains title of the goods until the public sector organisation pays the price for those products in full (Davies 2005: 2). Apart from considering the above-discussed legal obligations, utmost focus would also be laid upon analysing the fundamentals of tort law for managing the contract efficiently. Theoretically, tort law implies “a wrongful act or omission that results in civil (not necessarily criminal) liability to a person injured by the tortious conduct” (Lundmark 1998: 1-2). In general, it can be apparently observed that tort law along with contract law is similar to the case of ‘product liability law’ (Lundmark 1998: 1-2). After acquiring a brief idea about tort law, it would be vital to mention that tort law would be depicted in the contract linked with the supply of IT products concerning the motive of protecting the public sector organisation from losses along with damages arising from the products supplied by the selected company. Besides, in respect to tort law, the public sector organisation should remain much accountable towards its workforce linked with the supply of IT products in the form of paying greatest attention towards defending their individual self-interests of security and welfare (Edwards et al. 2011: 7). Business Planning The scheduling and the project planning relating to the contract of supplying IT products have been depicted hereunder. Activities Probable Duration Formulating the prime objectives of the contract agreement 1 week Working upon the contractual terms and conditions 2 weeks Designing the letter of intent 10 days Recognising the chief team members of contract management and any sort of limitations 4 days Forming effectual team communication and coordination 1 month Adopting and implementing risk based strategies 3 weeks Monitoring the performance of the team members 1 week Implementing contract change control procedure (if required) 1 week Reviewing the contract 3 weeks The above-discussed factors would certainly be taken into concern for smooth conduct of the contract relating to the trading of IT products for the public sector organisation. In this regard, initially, for better formation along with execution of the contract in a successful manner, the prime objectives of the contract agreement must be formulated. This would certainly form an urge amid the involved contractual parties towards the attainment of their respective desired targets within a stipulated time. Subsequently, after formulating the major contract management activities, working upon the contractual terms and conditions of the contract is required, ensuring that none of the involved parties had to suffer loss due to violation or breach of the contract. It would be vital to mention that the design of ‘letter of intent’ can play an imperative role in the smooth conduct of the contract, as it tends to outline the major points of the offer prior to finalising the agreement. By taking into concern this particular factor, i.e. the design of ‘letter of intent’, it can be affirmed that the involved contractual parties relating to the contract of trading IT products might clear any sort of doubt and agree towards the completion of the contract within a prescribed time period. One of the major facets, which would contribute in proper and effective completion of the aforesaid contract, is the identification of the most efficient team members involved in the contract management procedure. It is expected that this particular factor would certainly help in recognising along with addressing any sort of limitations prevailing within the involved contractual parties (U.S. Department of Energy 2006: 1-11). It has been evident that proper and effective team communication as well as coordination supports in the smooth formation, execution and most vitally, the successful completion of a particular project. Similarly, in relation to the contract of supplying IT products for the public sector organisation, there lays the requisite of forming effectual team communication and coordination for proper conduct of the contract. Nonetheless, the contract would also consider the vital factor of adopting and implementing risk based strategies in order to resolve any sort of latent or emerging disputes in the entire contractual process. It is worth mentioning in this regard that incessant monitoring of the performance of the team members associated with the contract would certainly aid in attaining the prime objectives of the contract agreement. It is thus suggested that the involved contractual parties might adopt and promote the procedure of change control in order to address along with mitigate any sort of disputes or risks and overcoming the limitations persisting within the contract management field. It can further be affirmed that the formation along with the execution of change control procedure would certainly aid in appropriately working upon the contractual terms and conditions towards the successful accomplishment of prime targets as determined in the agreement. Finally, the contract needs to be reviewed after considering the above-discussed factors. This would certainly aid in determining the completion and the effectiveness of the contract by a considerable extent (U.S. Department of Energy 2006: 1-11). Conclusions and Recommendations With regards to conduct the contractual agreement more lawfully and appropriately, the public sector organisation ought to follow Section 64(2) of the Sale of Goods Act 1979. By following this particular Section of the Act, the organisation can supply the IT products, resulting in complying with the contractual terms of the agreement. Specially mentioning, prior to following the aforesaid Act, the public sector organisation also require to follow Section 3.1 of the UK Contract Law for making the contract a valid one in terms of forming and accepting the stated contract. Moreover, formation, execution, development along with maintenance of an effective risk mechanism is required to be taken into concern. This would certainly aid in coping up with the disputes or the claims that might arise between the involved contractual parties while violating or breaching the contractual obligations as well as norms and during the differences prevailing in their self-interests as well. Besides, an effective communication and coordination plan is required to be developed so that the contract relating to the supply of IT products for the public sector organisation might be conducted effectively and is completed within the prescribed time. Apart from this, scrutinising the legal norms of the contract is quite essential with the aim of that suitable measures can be adopted in mitigating any sort of issue and most vitally ensuring effective performance of the stated contract. References Ashurst LLP (2003) Publications [Online] available from [27 February 2014]. Crown (No Date) Sale of Goods Act 1979 [Online] available from [27 February 2014]. Davies, W. 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