Specifics of Contract Management - Literature review Example

Contract Management EXECUTIVE SUMMARY This report intends to make an effective planning for a specific IT related project contract by a public sector organisation. In order to make this project valid and successful contract agreement, various aspects relating to contract management have been taken into concern. These aspects comprise ‘Offer’, ‘Acceptance’ and ‘Settlement of Contracts’ along with ‘Letters of Intent’, ‘Health and Safety Issues’, ‘Areas of Potential Disputes’ and ‘Title to Property and Tort Law.’ By taking into concern these particular aspects along with considering relevant case laws along with legislative sections, an effective business planning has been performed in order to execute the contract effectively. INTRODUCTION Contract management, is theoretically defined, as a procedure based on which, the parties involved in a contractual agreement conduct their obligations with the intention of accomplishing the desired objectives as specified in a contract in compensation to each other’s services. From a social perspective, contract managers perform the responsibility of developing an effective relationship among service providers and customers. However, a business view to the subject emphasises the main objective of contract management is to ensure that parties successfully obtain services as agreed in the contract so that the contractual agreements are accomplished with better money value to the investment made. While strategists argues that contract management is recognised as a procedure in accordance with which, the parties associated are able to maintain costs along with risks associated in order to accomplish the objectives of the contact (Rendon 2009). In precise, a contract manager principally performs tasks to ensure that the implementation of business operations is in accordance with the desired terms along with conditions. The contract manager is also liable for managing the tendering process, negotiations along with post negotiation activities involved in the formation and execution of contracts concerning all the necessary legal obligations. The contract manager is further entitled with the responsibilities of seeking that the operations specified under the contractual agreement are conducted in a systematically well-structured manner. There are different aspects considerable for the contract manager, which primarily include legal issues, financial considerations, health as well as safety consideration along with negotiation process in accordance with which, the agreed terms are performed (Rendon 2009). Applying a similar perspective to the discussion henceforth, this study will emphasise addressing the various legal, social and corporate obligations associated with a contract agreement formulation as relevant for a public sector organisation when aiming at supplying an IT project. Accordingly, consultation will be provided to the organisation to gain utmost benefits from the contract, managed in a transparent manner. OFFER, ACCEPTANCE AND SETTLEMENT OF CONTRACTS AND LETTER OF INTENT Contract management is an important procedure of managing contractual agreements signed amid two parties. The agreement comprises various legal provisions along with specification of services agreed under contractual terms in order to accomplish the contract in an appropriate manner (Krappe and Kallayil 2003). As applicable in the public sector organisation, the contract agreement of supplying IT products within European Union (EU) and other countries will be ascertained based on an appropriate and unambiguous letter of intention, offer as well as acceptance. To be noted, the parties to be included in a contractual agreement are required to provide expressed intention in order to ensure that the agreement is considered under legal obligations. Contextually, contractual agreements, having legal bindings, will ascertain that the objectives of the agreement are successfully accomplished. Subsequently, it is essential to adopt certain measures based on which, the contract will be executed (Krappe and Kallayil 2003). In this respect, the contractual agreement will be developed as valid contract on condition that the contract manager should offer the contract within as well as outside EU stating important terms along with conditions that include price, subject matter, parties and ‘time of performance’ (Helewitz 2010: 32-38). Offer and acceptance are regarded as essential elements for ensuring that a contract is valid legally. The intentions as well as considerations are to be mentioned in the offer and duly accepted to ensure contact validity as identified in the case of ‘Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256’ (Gillies 2004: 143-149). Contextually, the price in the offer will have to be stated, so that the parties are aware of the monetary values when exchanging the IT products. The parties coming to a consideration ensures the values for executing the contractual agreement based on their mutual assent. Accordingly, the subject matter require mentioning in the offer, so that the parties involved are adequately aware of the objectives along with standards inclusive to the contract. In this respect, the parties complying with the subject matters mentioned in the contract will be able to build their confidence about the certainty of the contractual agreement (Helewitz 2010: 32-38). Correspondingly, the offer made should specifically state the names of the parties to be included in the contract. In this regard, the parties will be able to recognise the offeror and the offeree (Helewitz 2010: 32-38). Concerning the given situation, the offeror is identifiable as the public sector organisation engaged with the task of supplying IT products, which include computer software, hardware along with accessories. On the other hand, the offeree shall be the individuals who are to be served with the supplies of the IT products. Consequently, the identity of the parties should be clearly specified in the offer agreement in order to ensure the validity of the offer. Additionally, the offer agreement should include the clauses of ‘time of performance’, stating the time-period of conducting the operations for the accomplishments of the determined objectives as specified in the contract. It will also be necessary to state the time-period to complete the contract (Helewitz 2010: 32-38). Respectively, to ensure that the offer concerning the supply of IT products is completed successfully as desired, the agreement must include the essential terms of the intended offer in a clear, definite as well as specific manner with the aim of ascertaining that the contract is valid. It should also be ensured that the necessary elements are included in the offer agreement in order to ascertain the validity of the offer (Helewitz 2010: 32-38). Subsequently, the sale of IT products will be made according to Section 64(2) of the Sale of Goods Act 1979, so that the contractual obligations are accomplished successfully (Crown n.d.). Contextually, the agreement and provisions that are mentioned in the offer needs to be legally binding for both the parties (i.e. the offeror and the offeree). In this respect, the offeree, having mutual assent on the terms, objectives along with conditions mentioned in the contract provided by the offereor, will ensure that the contact is accepted, which is identified as acceptance under contract law. Acceptance signifies that offeree accepts the requests on the basis of common contract law made by the offeror. Accordingly, the contract related to trading of IT products must be ensured to be accepted and affirmed by the offeree through deed or written consent (Small Business Development Corporation 2013; Helewitz 2010: 32-38). In this regard, it can be comprehended that the offer will be regarded as accepted on the ground that all the terms along with conditions, as specified, are accepted through ‘free consent’ by the offeree. Accordingly, the contract should be formed in accordance with the Section 3.1 of the UK Contract Law and must be accepted by the offeree, based on the rules along with regulations mentioned in the Section 4 of the law (MacMillan & Stone 2012). It must also be sought that the offer made is accepted based on terms along with conditions mentioned in the contract. In this respect, the contractual agreement will be under legal provisions and accordingly, will be regarded as valid contact. Subsequently, the successful accomplishment of objectives determined in the contract, needs to be assured within specified date, which is also identified contact settlement and a major facet of contract management. Moreover, the contracts must be settled in the clearing house in the public sector organisation. Accordingly, the clearing house will be held liable for settling all the claims agreed within the parties entering into contractual agreement (Eales and Choudry, 2003: 69). A ‘letter of intent’ implies the terms along with the conditions based on which a sales agreement is developed (Attorney 2012: 224-228). In this respect, developing the ‘letter of intent’ will also be crucial with the aim of prescribing the particulars in relation to transaction description proposed, terms as well as conditions, important ancillary agreements along with purchase price. Hence, when working with the public sector organisation, it should be ensured that the ‘letter of intent’ is formulated on the basis of provisions intended, which should not be legally binding with the intention of minimising risks that might upraise in future due to the imposition of complex legal obligations. Thus, the ‘letter of intent’ needs specifying the different provisions along with important aspects associated with the contract deal when involving the public sector organisation and the supply end customers to the IT project (Attorney 2012: 228). The importance of ‘letter of intent’ can be recognized with reference to the case of ‘Ampleforth Abbey Trust v Turner & Townsend Project Management’ (Designing Buildings Ltd 2014). AREAS OF POTENTIAL DISPUTES AND LIABILITY OF PARTIES The task of ensuring that all the operations in relation to the contractual agreements, based on which the IT products from the public sector organisation will be supplied in the EU and other international markets in an appropriate manner, in indeed a versatile and challenging task. It will be important to identify the potential areas that might lead to disputes including increased costs, legal entanglements, mismanaged jobs and unethical practices on the part of the parties associated in the contract. Disputes arise owing to the rejection of claims that are made in relation to the inappropriate execution of the contract along with changing conditions affecting the contractual agreement. Additionally, disputes might arise in a contract due to non-compliance of certain provisions, which further determines the legality of the contractual agreement. Disputes might also arise due to the non-completion of the specified contract within the desired time. In this regard, the contract of supplies of IT products might raise various disputes amid the parties, commonly identified in terms of quality concerns about the products, inappropriate timely execution of products and payment services, political conditions along with complex legal considerations in relation to EU provisions and other countries. Elaborately, the contract of supply of IT products in EU along with other international markets might raise different issues amid buyers and contractors in relation to quality variations. A similar instance can be identified with reference to the case of Ericsson Ltd -v- Hutchison 3G UK Ltd. In this case, the dispute was identified to be related with the amendments made in the contractual agreement (Ashurst LLP 2003). Under such circumstances, the buyer might claim that the IT products supplied were not up to the standards as specified in the contract. Moreover, the buyer might claim that the products were not provided in accordance with the specified time-period. On the other hand, the contractor as well as sub-contractor can claim in case of inappropriate payments process. The contractual agreement might also be affected by political conditions and legal conditions, which further makes it essential to forecast the future and analyse the current environmental conditions and its probable implications on the contract at the onset (Levin 1998: 1-3). Contextually, it is required to ascertain through the contract management techniques that disputes as well as claims are mitigated in an appropriate manner, so that the objectives of the contract are accomplished effectively. In this context, the disputes might adversely affect the performance and execution of the project in an appropriate manner. The parties involved with the contract are thus required to be offered with certain legal provisions to settle the claims and the disputes arising or likely to arise. Contextually, the parties associated with valid contractual agreements might take legal actions for the settlements of claims along with disputes. In this regard, managing the contractual agreement among sub-contractors, buyers and contractors based on international transaction of IT products will be important. It should further be ensured that ‘Forum-Selection Clause’ is included in the contract, which indicates the court, tribunal as well as jurisdiction where the claims along with disputes will be settled. Subsequently, the parties affected due to certain disputes are legally liable to present their litigations in specified courts or jurisdictions under the clauses mentioned in the contract (Miller 2012: 221). Additionally, under the law of contract, specified as ‘inter alia’, implies that the parties associated with contract are liable to ensure that the contractual obligations are performed guided with effective measures or remedies are implemented and compensation for the losses incurred in the most transparent manner. Thus, the parties associated with the supply of IT products are provided with the rights of ascertaining that the contract obligations are accomplished within the tentative date along with the accomplishment of the determined objectives (Zhu 2013: 20-21). In this respect, due significance will be rendered on performing the responsibilities of including the ‘Forum-Selection Clause’ and ‘inter alia’ clause of contract law, so that the obligations and objectives of the contract are conducted as well as fulfilled successfully. HEALTH AND SAFETY ISSUES, TITLE TO PROPERTY AND TORT LAW In contact management, health as well as safety measures are adopted with the intention of ascertaining that business operations are conducted in an efficient manner. Health along with safety implications together safeguards the working conditions for employees. Contextually, the individuals associated with the operations of a contract are facilitated with the opportunity of performing their business operations with better healthcare facilities and safety regimes so that they are able to perform their activities with adequate efficiency and moral criticality. In this regard, adopting effective heath along with safety measures will be essential, so that workplace health hazards can be mitigated in an efficient manner and to the utmost extent. Additionally, the health as well as safety measures will facilitate the parties involved in the contract of supply of IT products to have proper assessment of the issues related to workloads, workstations and ergonomic elements. Subsequently, it must also be ensured that better working conditions are provided to the employees or workers associated with the supply operations of IT products. The terms specified in the contract should also ensure that the operational activities of the organisation are maintained in both national along with international levels. In this context, the contract activities will ascertain that the transaction activities of IT products are conducted in accordance with the effective health as well as safety standards for the development of committees. Moreover, efficient training practices are needed to be implemented with the intention of ensuring the individuals are able to conduct their operations based on health as well as provisions for better performance of the obligations of the contract (Levy et al. 2010: 705). The contract should further possess the provision of ‘Retention of title’ (ROT), which implies that sellers of the products and/or services have the rights to retain the legal ownership of the products and/or services until the legal obligations on the part of the buyers are fulfilled. In this regard, the possession of the IT products must be retained under the contractor, i.e. the public sector organisation, until the buyers make the legal obligations in relation to payments both in national as well as international contexts. Seeking the issues related to ROT, which include legal ownership, title along with passing of ownership rights will also be important when formulating the contract to ensure that it is managed effectively. Respectively, the ROT provision will facilitate the contractor in possessing the ownership of the products until payments and other legal obligations are performed. If need, the right legally rewarded to a contract manager in accordance with ROT provision to repossess of products from the premises of buyers in case of non-adherence with the desired legal obligations as prescribed in the contractual agreement, will be applied to manage the possible issues efficiently. Essentially, the repossession process should be made as simple as possible, so that the contract agreement in managed appropriately (Davies 2005). In accordance with the other obligations of managing the contract in a proficient manner, due consideration also needs to be provided to the fundamentals of tort law. Tort law is applicable to cases arising due to wrongful acts conducted to a person resulting to injury to the either parties involved in contractual terms, which raise civil liability of the offender. The law aims to protect the liabilities of the parties associated with contractual agreement from wrongful act resulting in injury arising from any illegitimate conduct of the either parties on the deliverance of the demanded products. It is worth mentioning in this context that tort law as well as contract law is identical in the case of ‘product liability law’ (Lundmark 1998: 1-2). In this regard, it should be ensured that tort law is mentioned in the contract agreement, so that the buyers are protected from losses along with damages arising from products that are supplied by the public sector organisation. Additionally, the organisation should be liable towards the employees associated the supply of IT products, delivering utmost significance to their human rights and interests of safety as well as well-being (Edwards et al. 2011: 7). BUSINESS PLANNING Tasks Tentative Duration Setting objectives and aims of the contract agreement 1 week Determining the terms and conditions of the contract 1 week Formulating the Letter of Intent 3 days Developing clauses including title to property and tort law and other provisions 10 days Development of risk mechanism 20 days Development of communication plan 2 weeks Due diligence, contract formation and negotiations are made by contract manager 5 weeks Execution of contract with appropriate contents 2 weeks Analysis and documentations of contract agreement 1 week In contract management, formulation of realistic plans is essential along with the execution of contract agreements based on defined and transparent procedures. In the given scenario, due significance will be rendered on devising as well as implementing appropriate planning with the assistance of which, the contract activities might be conducted based on the obligations along with the determined objectives of the same. Following a structure procedure when conducting a particular contract, will certainly facilitate with the opportunity of ascertaining that contract objectives and legal obligations are accomplished successfully. Subsequently, the planning process should include important elements including developing an effective management team, building an effective communication system, assessing risks, identifying supply chain method and cost estimation (Australian National University, 2012). In this respect, the contract operations should be segregated amid teams, based on the competencies and experiences. Respectively, the teams will comprise program staff (entrusted with the responsibility of assisting in the contract management process) and supply chain staff. Further significance will be delivered on assuring that the IT products are supplied in both national as well as international markets to the targeted buyers. In this respect, an effective plan must be developed, based on which the IT products will be supplied in a legal and regulated manner in different countries along with the aim of managing risks. In this context, risks management should comprise planning for identifying risks, analysing risks and mitigating risks. Moreover, planning should be made in order to determine the contents that will be included in the contractual agreement. Communication plan should also be developed in order to ensure that the information in relation to the contract is communicated effectively (Australian National University 2012). CONCLUSIONS AND RECOMMENDATIONS Contract management is indeed an important procedure assisting the parties associated to conduct their obligations in an effective manner, so that the contract’s objectives are accomplished successfully. Contract management ensures that better value for money is obtained from the contractual agreement. In this regard, it is important to seek that the contract operations, including supply of IT products of the public sector organisation, are conducted in a systematic manner along with ensuring that the offer as well as acceptance terms are made in an appropriate and transparent manner, in order to ensure the validity of the contact. Moreover, devising the ‘letter of intent’ will also be crucial, so that the contractual agreement is made in adherence with legal obligations. In contact management, there are various issues, which include legal entanglements, unethical practices along with mismanagement of job responsibilities. In this regard, timely identification of the issues inherent to the contractual terms is crucial in order to further empower managerial efficiency in the contract execution process. Contextually, certain commendations are also needed to be obtained following the free consent of the parties on the mentioned terms and conditions, with the aim of ensuring that the contractual agreement is conducted legally and appropriately. With this concern, a risk mechanism need to be developed, with the intention to manage the claims along with the disputes that might arise in case on non-performance of the contractual obligations and political as well as legal differences (Loots and Charrett 2009: 289-290). Additionally, an effective communication plan needs to be developed with the intention of ensuring that the supply chain operations, both in national as well as international markets are conducted efficiently (Arain and Pheng 2005). Conclusively, scrutinising the norms that are to be included in the norms is essential to undertake considerations in recording the performance of contract so that appropriate measures can be adopted with the aim of mitigating issues and ensuring effective performance of the contract (Taylor Walton LLP 2009). List of References Ashurst LLP (2003) Publications [online] available from [19 February 2014] Australian National University (2012) ‘Contract Management Handbook’. A Guide to Contract Management at the University, 2-38 Arain, F. M. and Pheng, L. S. (2005) ‘Effective Management of Contract Variations using a Knowledge Based Decision Support System’. CEBE Working Paper No. 10, 4-77 Attorney, F. S. S. (2012) The Complete Guide to Selling a Business. United States of America: Nolo Crown (No Date) Sale of Goods Act 1979 [online] available from [19 February 2014] Davies, W. (2005) ‘Romalpa Thirty Years on – Still an Enigma’? Hertfordshire Law Journal 4 (2), 2-23 Designing Buildings Ltd (2014) Letter of Intent [online] available from [19 February 2014] Eales, B. A. and Choudry, M. (2003) Derivative Instruments: A Guide to Theory and Practice. Burlington: Butterworth-Heinemann Edwards, L., Edwards, J. S. and Wells, P. (2011) Tort Law. United States of America: Cengage Learning Gillies, P. (2004) Business Law. Australia: Federation Press Helewitz, J. A. (2010) Basic Contract Law for Paralegals. United States of America: Aspen Publishers Online Krappe, K. and Kallayil, G. (2003) ‘Contract Management is more out of Control than You Think’. Journal of Contract Management, 3-8 Levin, P. (1998) Construction Contract Claims, Changes & Dispute Resolution. United States of America: ASCE Publications Levy, B. S., Wegman, D. H. Baron, S. L. and Sokas, R. K. (2010) Occupational and Environmental Health: Recognizing and Preventing Disease and Injury. United States of America: Oxford University Press Loots, P. and Charrett, D. (2009) Practical Guide to Engineering and Construction Contracts. Australia: CCH Australia Limited Lundmark, T. (1998) Common Law Tort & Contract. Germany: LIT Verlag Munster MacMillan, C., & Stone, R. (2012) Elements of the Law of Contract [online] available from [19 February 2014] Miller, R. (2012) Business Law Today, Standard: Text & Summarized Cases. United States of America: Cengage Learning Rendon, R. G. (2009) ‘Contract Management Process Maturity: Analysis of Recent Organizational Assessments’. Defense Acquisition in Transition 2, 298-306 Small Business Development Corporation (2013) Four Essential Elements of a Contract [online] available from [19 February 2014] Zhu, S. (2013) Securities Dispute Resolution in China. Great Britain: Ashgate Publishing, Ltd Read More