Contract Risk Management (NEW)

Introduction

The key functions of contracting is to ensure that risks to owners and contractors are identified and managed in a way that both parties are satisfied with the project or sales and purchase outcome. While a contract cannot, of itself, make risk “disappear”, it can, and should, identify the risks, determine who is responsible for managing each individual risk, and for the consequences should the risk occur.

The following are the highlights of this workshop:

Understand the requirements of the Contracts Act 1950
Understanding of Contractual and Commercial Lawsn
Understand Non-Disclosure Agreements & when to use them
Understand the requirements of the Competition Act 2010
Ability to understand contract drafting principles
Critical understandings of the risk mitigation process
Knowledge to move contracts from the tactical to a more important strategic focus
Ability to identify risks that can arise
Skills in allocating contract and procurement risk
Examples of Contract Terms and Conditions which allocate risk
Differentiate Contract Risk and Commercial Risk

Course Objective

Upon completion of this programme, participants will be able to

Understand of how contract risk arises
Compare different methods of identifying and assessing risk
Learn negotiation methods and weed out non-competitive obligations
Review the impacts of different approaches to risk allocation
Explore different Contract types to transfer risks
Consider the contractual techniques to ensure effective risk allocation
Review risk management techniques during the life of a contract
Develop risk identification and assessment skills
Heighten understanding of the alternative methods of allocating risk
Improve understanding of different approaches to managing risk during a contract
Improve the ability to reduce the negative impact of poorly-managed risk on a project or a company

Training Methodology

Highly Interactive Session, with a bilateral approach to the subject matter allowing participants to share incidences at respective work locations.
Mind Mapping and Recap Sessions
Case Studies on various reported Cases
Ice Breaking / Monotony Breaking Sessions – Purpose of rejuvenating the mind
Group Activity and Presentation

Target Group

Head of Contract & Risk Dept
Managers
General Manager

Course Outline

Compliance Platform

Legal – Contracts Act 1950 – Competition Act 2010 – Malaysian Anti-Corruption Commission Act 2009 – Sales of Goods Act 1957 – Unfair Contract Terms Act 1977
Standard – ISO 20400:2017 (Sustainable Procurement)
Best Practise

Types and Management of Risk

The Need for Contractual Relationships
Defining Risk
Categories of Risk for Both Sides of a Contract
Risk Assessment Process
Managing Risk
Qualifying Suppliers
Defining Internal Control
Proportionality of Control

Minimizing and Transferring Risk

Transferring Risk through Contract Types
Firm Fixed Price or Lump Sum Contracts
Cost Reimbursable Contracts
Incentive Contracts
Award-Fee Pricing Arrangements
Indemnities
Cross Indemnities
Insurance
Non Disclosures – Basics of Non-Disclosure Agreements (NDA) /Non-Disclosure Clause (NDC)
The importance of NDA / NDC in any business
The impact of non-compliance to NDA / NDC
Effect

Risk Related Contractual Terms & Conditions

External Events
Strikes and Other Labour Disputes
Risk and Title
Use of ICC Incoterms
Assignment and Novation
Other Clauses that Need to Flow Down to Sub-contractors
Risks Associated with Sub- Contractors

Forming a Contract

Creating a binding and enforceable agreement
Offer
Acceptance
Consideration
Intention to create legal relations
Certainty
Capacity

Dealing with Commercial Risks

Commercial Law and requirements
Controlling Risk Associated with Payments
Currency Risk
Economic Risk
Fraud and Corruption
Limiting or Excluding Liability
Distinctions between Liability in Contract, and the General Law
“Gross Negligence”
A Review of Some Sample Clauses from Standard Contracts, and other Real Documents

Terms – Introduction and Background

Interpreting contract terms
Common law and civil law – differences – impact on drafting
The authority of case-law
Certainty and clarity
Context of a contract
Rules of interpretation
Common terms and phrases
Special and technical meanings
Mapping the commercial deal for the contract – examples
Tailor made contract
Standard forms
Formalities
Deeds

The terms of the contract

- Express Terms
- Oral Statements
- Written Terms
- Parol Evidence Rule
- Commercial Law and related terms
- Implied Terms

By law
By custom and usage
By Statute – Sale of Goods Act, Unfair Contract Terms Act

The Drafting Process

6 W’s list
Key stages of the drafting process
Figures and formulae
Execution formalities
Key issues to check for execution – checklist

Limitation and Exclusion of Damages

Indirect and consequential loss
Loss of profit
Excluding and limiting claims
Caps on liability
Positioning of clause
The special test for exclusion clauses
Checklist for Limitation and Exclusion clauses

Drafting Warranties and Indemnities – Sample and Checklist

Warranty
Guarantees
Indemnities
Trigger event
Losses covered by indemnity
Limitations
Conduct of third party claims
Representations
Best endeavours
Reasonable endeavours

Termination, Force Majeure

Triggers
Process
Consequences
Effect on other rights
Breach of contract
Force Majeure
Drafting a termination clause – checklist
Drafting a Force Majeure clause – checklist

Boilerplate Clauses

Why you should not “cut and paste”
Agency/Partnership
Assignment and sub-contracting
Conflicts of language
Costs
Counterparts
Entire agreement
Insolvency and bankruptcy
Communication notices
Publicity
Set off
Severance clause
Time of the essence
Waiver

Remedies for Breach or Non- Compliance

Mistakes and Misrepresentations
Impracticability of Performance
Remedies Generally
Types of Remedies
Liquated Damages
Warranties

Group Activity :- Contract Risk Assessment, Case Studies, Contract Drafting Skills