Have you ever made a promise to your kids that you wish you could have changed? Made a threat in anger that you’ll never carry out? Or made a list of resolutions that you just don’t want to continue with? If that’s what happens in your personal life, what about work? This edition looks at how your contracts can manage change.
Trust Likes Change
In 2011 we took our kids to Paris and promised them a trip up the Eiffel Tower. Our timing could not have been worse… it was mother’s day and it was rammed. As the queues for the lifts were massive, we did a deal – we skip climb the stairs in return for a proper ice-cream. After our descent, we couldn’t find a ‘proper ice-cream’… after haggling over alternatives, we ended up spending a small fortune at a café on the Champs Elysees.
Your contracts need flexibility – for a wide variety of events or triggers (including trade sanctions, pandemic restrictions or material shortages). But your change procedure must be simple and easy to follow – if not, it won’t be used. Ideally you should both agree the impact of changes, on cost or time, before they’re implemented – to avoids nasty surprises later on. It also allows the client to choose between the original plan and the revised proposals.
Grab your current contract and check off these requirements for an effective change process:
- Can both client and supplier propose changes? Although many are driven by client decisions, the current climate means suppliers may need to change the design, timing, specific goods, and prices.
- Does the clause allow you to agree changes for events beyond your control ie the unexpected? This is increasingly important.
- Are changes limited in scope, price, time or quality? Any restrictions should reflect your business strategy. Remember under English law, changes cannot change the nature or character of the contract.
- Do you want to allow the client to remove goods, works or services? If so, ensure the supplier is compensated for omissions eg using pre-agreed damages.
- What process do you need for your governance: who has authority to instruct changes? can it be verbal or must it be in writing? Make it easy to use to avoid ending up in limbo!
