Most of the companies regulalry enter into complex contracts but seldom give due imporantance on effective management of the said contract. Here are some effective tools for the same
Part Ii What Every Executive Should Know About Dispute Resolution
Management Of Contracts The D Os, Donts
1. 'Management of Contracts - The
DO's, Don'ts, Care, Caveats,'
Globalization & Cross Border Risks Exposures,
Insurance Solutions And Claims
August 19th 2010
Utkarsh Jani
Advocate
JANI ADVOCATES
LAWYERS AND CORPORATE
CONSULTANTS
4. Before writing that first word:
Care Before Cure Approach
Term Sheet Preparation
Engage in „What If‟ scenarios
Ask for a similar contract
Check for Contract forms
Signing of the letter of „Intent‟
Don‟t sign it so as to be binding upon
you
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LAWYERS AND CORPORATE
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5. Before writing that first word:
Who produces the first draft?
Depends upon:
Bargaining strength (sometimes no more than
sheer persistence) may gain a party such a right
Generally in sales contracts Purchasing party get
to produce the first draft
To avoid legal costs
To be ignorant or lack of interest which demands
doing a lot of hard work in creating rather than
just reviewing the draft!!
JANI ADVOCATES
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6. First Draft:
NO MATTER WHICH PARTY THE LAWYER
REPRESENTS HE SHOULD CEASE EVERY
OPPORTUNITY TO PRODUCE THE FIRST
DRAFT
He who produces the first draft has the upper
hand in the negotiations. It defines the issues,
provides the framework, sets the tone, confines
the process.
Typical response to the first draft seldom
extends beyond the four corners of the
document
Because of the importance, volunteer to produce
it at the earliest feasible opportunity
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7. First Draft:
Dating the Draft
Subsequent Drafts
Redlining Drafts
Saving Drafts
Preliminary Draft Legends
PRELIMINARY DRAFT FOR DISCUSSION PURPOSES ONLY. NOT
INTENDED AS A LEGALLY BINDING DOCUMENT
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8. Writing that First Word:
Rule is “Say what you mean”. If it is a
„Contract‟ then don‟t title it as
„Proposal‟
Writing for the “Knowledgeable
Common Man”
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LAWYERS AND CORPORATE
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9. Writing that first word:
Contract writing is not creative writing and is not
meant to provoke reflective thoughts or controversies
about nuances of meaning. Contract writing is clear,
direct and precise. Therefore, use common words and
common meanings.
Consider including choice of law, venue
selection, and attorneys fee clauses. If your
contract gets litigated, you might as well give yourself
some "ammunition" for the fight.
Explain technical terms and concepts. Remember
that the parties might understand technical jargon,
but the judge who interpret and apply the contract do
not
Follow simple rules of drafting
Print and sign the Draft
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LAWYERS AND CORPORATE
CONSULTANTS
10. Negotiation: The D V/s G way!!
JANI ADVOCATES
LAWYERS AND CORPORATE
CONSULTANTS
11. Negotiation:
HARD KEYS!! SOFT KEYS!!
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12. Negotiation: The Hard Keys
Price Taxes and Duties
Break up Domestic
Terms of Payment International
Price Variation DTAA
Net of Taxes rate in
Bank Guarantee TTAs
Letters of Credit Non-compete Fees
Issued by the Buyers Taxable
bank in favour of the Scheduled Delivery Date
seller
Defaults Liquidated
Confirmed LC preferred
in international trade
Damages and Penalty
Passing of Title & Risk Inspection and
Acceptance
Incoterms
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13. Negotiation: The Hard Keys
Suppliers Warranty Termination
Patent V/s Latent Choice of Laws
defects
Governing Laws
Implied V/s Express
Jurisdiction for the
Options Clause settlement of disputes
IP Rights Governing Language
Currency Fluctuations
Resolution of Disputes
Assignment
Confidentiality
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14. Negotiation: The Soft Keys
Legal V/s Business Playing the supportive
Negotiations role
Team Negotiations Let the Business ppl
Assign Roles decide this one
Negotiate not Litigate Exchange Issues to be
Tele Conference negotiated
Pass Notes Stating Goals
Mutual Understanding Capturing Specifics
Identify Issues capable Volunteer to write notes
of Compromise and share them
Appropriate Attitude Physical Amenities
Exude Cooperation not Where to Negotiate
competitiveness or Establishing relationships
hostility
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15. Negotiation: The Soft Keys
Bargaining Strength: Negotiation Skills
“Never head to a door Dominant or a Quiet
unless you are willing to Listener
walk through it” Total Victories “My way
When is a walk away or No way”
imminent Avoid being the
Identify the issue Contractual Rambo
Warranty Future Imperfect
Tooling Rights A good lawsuit may be a
Intimidation poor alternative to a fair
“Hurry Up” contract
Well prepared Absent Authority
opposition Good Guy Bad Guy
Handling Ploys Buffering the Bottom
Line
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16. Negotiation: The Soft Keys
Utilizing the Time When to Quit
Windows If there is no way
Operating within to win a point,
time constraints don‟t discuss it
Handling two
viewpoints
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17. Negotiation:
Handling Closings:
Mechanics of Closure:
Cooling off period
Review Time
Sign First rule
Cover Letter
Formal Closings
Escrow Mechanism
Complex Transactions involving exchange of
many documents and are dependent upon
other documents. Eg: Title Reports
JANI ADVOCATES
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18. Negotiation:
Handling Closings:
Conditions
Removal of Liens
Title Insurance
Obtaining Finance
Statutory Filings
Vietnam “Decree No 35”
Advanced Preparation by the legal team
Agendas, Documents and Receipts
The basic Agreement
Guarantees, Notes, Estoppel Letters,
Security Agreements, Insurance Contracts
Logistics Agreements, Side Letters, Documents of title
Legal Opinions etc…
Press Releases and Announcements
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19. Contract Management:
A letter of intent, Acceptance of bid/
tender, MOU should be converted into a
formal contract as soon as possible
A sequence of events must be calked out
and if need be prepare a master schedule
and a subsidiary schedule in order to
monitor them effectively
To keep a tab on the effective dates like the
date of scheduled delivery, payments,
notices
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LAWYERS AND CORPORATE
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20. Contract Management:
Strict enforcement of terms and conditions
Issuance of notices
Reminders for defaults
Extensions of delivery dates, and bank
guarantees
Invocation of Bank Guarantees on time
Writing to the bank to either extend or invoke
the guarantee instead writing to the supplier
who may delay taking the action till the
limitation expires or the document expires
JANI ADVOCATES
LAWYERS AND CORPORATE
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21. Contract Management:
Proper procedure to be put in place for the safe
custody and of the maintenance of a record of all the
bank guarantees and insurance policies in the order of
their expiry dates
Regular audits and reviews of the said records
Creation of an in-house software tool for the Contract
Life Cycle Management
Timely initiation of the invoking the Arbitration or
initiation of the judicial process considering the
limitation period for the enforcement of the rights
flowing under the Contract
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LAWYERS AND CORPORATE
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22. Key Recent Issues: Best
Reasonable Endeavors
“Best”, “Reasonable” or “All
reasonable” endeavors?
Do you have to extend yourself
beyond your own commercial
Interests?
Avoid Uncertainty
Whether absolute Obligation is
required?
Avoid Mix endeavors clauses
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23. Key Recent Issues: Implications of
using Standard Terms
Reasonable Exclusion of Liability
Need to be reasonable and covered with an
Insurance clause
Actual, Proven and Direct liability clause
Limitation to Liability:
Insurance companies love it and Buyers hate it!!
How far Enforceable qua third party damages
and Tortuous Liabilities
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24. Key Recent Issues: Breach and
termination:
Is a minor breach enough to trigger a
default clause and can you terminate for
any breach?
“If you draft your Remedy Triggers clearly
and precisely enough, this will be upheld by
the courts because they will not need to
refer to rules of interpretation”
Payment Defaults: De-Minimis V/s Major
Johstone V/s Johnstone
Fundamental and Material Breach
Change of Control, Insolvency, Death
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25. Key Recent Issues: Entire
Agreement clauses
Importance of telling the whole story
They make it clear that an agreement constitutes the whole
agreement between the parties (along with the documents
They also serve to exclude pre-contractual statements from
a contract, the customer agreeing that it is relying only on
the express terms set out in the agreement and not on any
statement made prior to it being signed.
When drafting entire agreement clause:
Add caveat for fraud
Consider adding caveat for misrepresentation as to
fundamental matters
Take care when including acknowledging of non-reliance
Be Honest in your contracts
JANI ADVOCATES
LAWYERS AND CORPORATE
CONSULTANTS
26. Key Recent Issues: Indemnities
They are en vogue!
The Commercial lawyers are seeking indemnities
to cover all of the liabilities under an agreement
and warranties and representations are not
enough
Test of Remoteness
Seeking a wide ranging Indemnity V/s
Being asked to give a wide ranging one
VDA Terms in Germany
Include a claims handling procedure
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27. Key Recent Issues:Guarantees
Protection at a price!!
While the boilerplate wording at the end of
a contract may have little direct relevance
in a number of agreements, in the case of a
guarantee, every word is vital.
Assignment
Inspection
Novation
Change Management
Notices
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28. Key Recent Issues: Invocation of
Arbitration
The provisions of Part-I of the Arbitration
and Conciliation Act, 1996, would be
equally applicable to International
Commercial arbitrations held outside India,
unless any of the said provisions are
excluded by agreement between the parties
expressly or by implication.” as held by the
Supreme court (AIR 2009 SC 1132) in
INDTEL Technical Services Pvt. Ltd.
Vs. Respondent: W.S. Atkins PLC.
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29. Sources of law relating to
International Sale of Goods
Civil Law V/s Common Law System
United Nations Commission on International
Trade Law (UNCITRAL)
Convention on Contracts for the International
Sale of Goods (CISG)
The New York Convention – Recognition and
Enforcement of Foreign Arbitral Awards
International Chamber of Commerce (ICC)
International Court of Arbitration (ICA)
Uniform Practice of Documentary Credits (UCP)
International Commercial Terms (INCOTERMS)
Uniform Commercial Code (UCC)
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30. Thanks!!
UTKARSH JANI
JANI ADVOCATES
Add: 7, VASANT VIHAR BUNG,
VASTRAPUR, AHMEDABAD – 380015
PH: 09825555612
079-26751466
EMAIL: utkarsh@janiadvocates.com
info@janiadvocates.com
utkarsh.jani78@gmail.com
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