BRR: We are joined today by Grant Follett. He is a Senior Lawyer in the Commercial group at AGS and he joins us from Canberra. Grant, a warm welcome to BRR.
GF: Thanks, Kate. Good to be with you.
BRR: Now Grant, obviously when someone enters into a contract they're hoping that there won't be a dispute. What are your key tips, I guess, which agencies can use to avoid disputes when they are setting up their contacts?
GF: Yeah, thanks Kate. I think that's right and I think the key tip is to ensure your contract is clear and comprehensive and again this is something that is easier to look at and say, 'Oh, we could have drafted that better.' But there is a couple of questions you can ask when you are setting up your contract so that you can just see if you have covered off all the bases. Firstly, you need to consider whether the contract clearly describes what you expect to give and what you expect to get. Whether it captures the representations the contractor made to get the contact, so if you are particularly impressed with a certain promise, make sure that's in the contract. If you are particularly impressed with some of the personnel the contractor has, make sure that there is a clause obliging them to use those personnel. Then just check that your obligations are not worded too loosely. And, really, the key question is to consider what could happen over the life of the contract and is that covered?
BRR: And Grant, what about in terms of planning? What should agencies be doing, both at the drafting stage and also once the contract has been signed?
GF: Yeah, well I think, in terms of drafting, it's considering whether your contract covers all the issues you need to. But there is some sort of specific clauses you can look at and to think about how they will operate if things do go wrong. A crucial one is the payment clause. If you're only paying in arrears and only paying upon satisfactory performance of say the services or delivery of the goods, then you are going to be in a box seat if something goes wrong because you will be holding the money – and, 9 times out of 10, the person holding the money has a better bargaining position, in a commercial sense, even if not necessarily in the strict legal sense – so that is important. Other things like key performance integrators or service levels can be important in telling both parties when someone isn't performing.
BRR: And Grant if parties want to avoid dispute how important is contract management throughout the life of the contract?
GF: Look, Kate, I think that's probably the most crucial thing – because there's 2 reasons how contract management can be effective. One is a proactive way of avoiding disputes so that when the situation changes which things do over contracts, over the life of a contract the parties might need to amend the contract. Proactive contract management can make sure that the parties are ahead of any changes and that everyone knows exactly what is happening. But it can also be good in a reactive sense – because bad contract management can lead to disputes. Parties can find that their conduct has waived certain rights they thought they had – or has amended certain obligations that they thought the other party had. So making sure that you correctly manage your contract is very important for making sure that the deal that you thought you struck is the one that continues through the life of the contract.
BRR: Well, Grant, some really practical tips there. Thank you once again for joining us.
GF: Thanks, Kate.
BRR: That was Grant Follett. He is a Senior Lawyer in the Commercial group at AGS in Canberra.