Winning the Contract Battle

Although we have had enforceable contracts in English law for 150+ years, the process by which they are formed remains something of a mystery. Our contract processes have been called ‘haphazard’, our approach ‘cavalier’, and we get stuck in endless games of email contract tennis.

One way to resolve some of the legal and practical problems is simplify and organise the process of contracting.

The contract process

As a process, contracting covers three ‘ages’:

  1. Planning (inception): from idea to choosing a supplier
  2. Making (creation): from which contract to signing on the dotted line
  3. Use (operation): from first call to happy client (or dispute management).

Do you plan? In UK construction, there more than 100 standard forms from 10 publishers (and counting). In the land of Google there are nearly 1bn pages devoted to terms and conditions. There are hundreds of sites offering downloadable contracts, of often dubious quality.

Each task, purchase, or project requires the paying client (who decides the contract) to balance issues such as payment, responsibilities for selection, potential risks and task management… and then choose the best contract to meet its business’ needs and brief. More often than not, the client chooses the contract it is most familiar with, or the last one it used on a similar project, or recycles something from its computer, rather than one that really meets its strategic objectives.

Do you sign? Please don’t start work until you have signed. Under English law, freedom to contract means you can decide with whom and on what terms you do business. But who has the time to write, negotiate and agree specific terms each time they do business? Standard contracts avoid decision paralysis, but discourage contract analysis.

Things are often worse when faced with T&C from another company: poor processes, bullying and time-pressures may result in you signing catastrophically one-sided contracts just for an easy life, or because you don’t really believe you can change a thing.

Do you use it? As the project proceeds, the contract terms are rarely implemented. Instead we shove our contracts in a drawer despite evidence that the major causes of disputes are failures to read, understand and properly use our contracts.

Once a dispute arises, the culture within an organisation is rarely one of ‘what can we learn from this’ and becomes one of ‘who is to blame’? Businesses need to review complaints, disputes and near-misses to learn from those transactions and decide how to do things better. For example, I worked for a company who had received a bruising multi-million pound law suit (largely paid by their insurers) but who were still using essentially the same processes and contracts that had got them into that mess.

What should you do?

You should have a clear contract strategy to ensure your contracts are effectively drafted, signed before work starts and then used. Then you will win the battle of the forms!

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