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Home / Procurement / Contract Terms A Quick Re-Cap

Contract Terms A Quick Re-Cap

What is a Contract? A contract is an agreement between 2 or more parties that is legally enforceable.

Every contract must consist of:

1)Offer

2) Acceptance

3)Consideration

4)Intention to create legal relations

When submitting tenders suppliers should be asked to submit a certificate that they accept unqualified acceptance. If they don’t they should include clauses that they would like to negotiate as a qualified acceptance.

Contracts can be made in writing, and they can be done orally through the actions of the parties. In most organisations, a formal contract will be created to formally document the agreement.

What is included?

1.Parties- The name and address of all contracting parties

2.Definitions and Interpretations- It’s useful too have defined terms to give clear and specific definitions

3.Payment- contract price to be paid, frequency, interest, consequences for failure to pay on time.

4.Description of the Goods and Services

5. Term of Contract/duration

6.Timescale- Project specific timescales to be met, damages payable if timeline is not met and time is of the essence

7. Limitation of Liability– Cap the liability (one way or both parties)

8. Termination clause for convenience, for material breach, notice period required

9.Change of ownership If the supplier changes ownership you may wish to terminate the contract or novate

10. Dispute resolution What happens if there is a dispute, what process should be followed?

11. Confidentiality- Expressly state if the information is commercially sensitive. circumstances in which it can be used or disclosed

12. IPR- state who owns what

13. Warranties- a written guarantee, issued to the purchaser of an article by its manufacturer, promising to repair or replace it if necessary within a specified period of time or if buying software a licence that the supplier has the necessary rights to grant the licence

14. Indemnity – Express clause that states for defined loss or damage. An immediate right of compensation without the need for a lengthy dispute.

15. Force Majeure- Performance of the contract is impossible

What does the supplier mean by an implied term?

Legal terms might be the Sale of Goods and Services Act or the Unfair Contract Terms Act, this Act seeks to prevent parties limiting or excluding their liability in contracts.

 

 

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