There is not a lot of activity in BOOT contracts these days, as they are somewhat bespoke and complex. But, do not let that deter your in your research. There are a lot of parallels between BOOT contracts and Public-Private Partnership (PPP) agreements. Perhaps review some of the research and articles on PPP's.
When it comes to BOOT contracts, you might find value in the following comments from Santender Sharma - one of our leading members in the Oil and Gas Community of Interest.
BOOT (build, own, operate, transfer) is a generally a partnership project model between the Government Agency / Operator (hereafter referred as Company) & Private Company (generally a large EPC contractor. Hereafter referred as Contractor), in which a Contractor undertakes a large Project under contract to a Company. A BOOT project is often seen as a way to develop a large public project with private funding.
Under BOOT model, the Company contracts with a Contractor with specific expertise - to design and implement a large project. Company may provide limited funding or some other benefit (such as tax exempt status, custom duty waiver, etc) but the Contractor assumes the risks associated with planning, constructing, operating and maintaining the project for a specified time period. During that time, the Company charges its customers to realize a profit. At the end of the specified period, the Contractor transfers ownership to the Company, either freely or for an amount stipulated in the original contract. Such contracts are typically long-term and may extend to 20 or more years.
Some advantages of BOOT projects are to encourage private investment, bring in new foreign capital to the country, completing project within time frame and planned budget without much risk to Company.
• Parker Hannifin Corporation, Aerospace Group
It's complicated, and it depends. First, the bankruptcy filing would most likely be a Chapter 7 - disolusion or Chapter 11 - re-organization filed with a Bankruptcy Court having jurisdiction.
If this is a "winding up" of operations (chapter 7), the company is planning on closing the doors to the business. All of the assets are controlled by a Court appointed trustee to sell for satisfaction of the outstanding debts. If it is simply a debt restructuring filing (Chapter 11) and the company plans to continue operations, the Court still appoints a Trustee to oversee all financial transactions during the restructuring period. The company obligations fall into two categories under a Chapter 11 filing: 1. Pre-petition debt, which often times becomes "forgiven" and uncollectable, and post petition debt, which is guaranteed for payment by the Court appointed Trustee. Bottom line, depending on your Contract or Agreement terms, you may, or, may not, be able to terminate the contract for convenience.
A company could be found insolvent without actually filing a petition in a US bankruptcy court. A company could be staying above water cash-wise by moving money like deck chairs on the Titanic and drawing on existing credit lines, but overall ceasing to pay a good portion of its debts when due and being insolvent from a balance sheet perspective. At this point, the company should be considering its right to seek relief, but nothing requires the company to seek protection under the Bankruptcy Code immediately or at all. Filing a voluntary petition is optional; it is not always the case that creditors are willing to join in filing an involuntary petition.
Note: The foregoing is not offered as legal advice. Please consult legal counsel for questions related to rights under the Bankruptcy Code.
Vail Resorts Management Company
Yes, I am based in Canada and am the head of contract formation and administration for an Alberta based Power Generation company.
I'm sure I can help.
I am working in contract administration in Canada. Let us know you question.
I do European sales contracts, and feel more comfortable using Canadian law rather than US law.
But you need to qualify your question a bit more.
I'm not sure if this is of any use to you, but as a Canadian who has worked with all types of contracts and various lawyers in Canada and the US, when developing a contact with a US vendor, if the laws that govern the contract have to be American (upon the vendor's requirements because of course we would prefer Canadian law :) ), then we have insisted that the governing laws be that of either the State of New York or the State of Delaware as they closely resemble the Province of Ontario (Canada). As for the Province of Alberta, the person who commented below may be able the shed some light as there are a few difference amongst the provinces relating to governing law. For example, there is a federal privacy act however, for the provinces of BC, Alberta and Quebec they all have their own privacy acts which supersedes the federal act or PIPEDA (Personal Information Protection Electronic Documents Act). The other point to note is that Quebec law is based on civil law while the rest of the provinces and federal law is based on common law. Hope that helps!
• ANJO Global Consulting Ltd
Hi, I am a procurement consultant working in the public and private sectors and based in Ottawa, Canada.
• International Retail & Property company
I can answer your question, since I have more than 10 years experience in IT and IP rights area.
First of all I'd like to pay your attention that IT services differ very much and to get the correct answer I need you to clarify the nature of these mentioned IT services (SAP implementation or some software development or cloud services or some hosting services or probably some support and maintenance services).
By the way, could you specify the governing law under the mentioned contract? Do you know the requirements of governing law to warranty in an IT services contract?
• Barnes & Thornburg LLP
If the documents in the schedule contain required policies and procedures you're supposed to comply with (e.g., info/data security, insurance, etc.), and if those docs are incorporated in the main agreement, you may well be required contractually to comply with them. And, if you don't, you may be liable for breach of contract. Your senior contracting member's comment that you don't have to provide warranties doesn't mean that your failure to abide by required policies/procedures avoids a breach. Stated positively, you'd have to comply with the docs even though you've not made a specific warranty that you will. Most provisions in agreements that require things are not done as representations or warranties. R/W are just certain ones. As an IT service provider, you may find an increasing number of your customers are sending you large sets of addenda or exhibits to the main services agreement. These docs are additional requirements above and beyond what is is in the agreement and you should be going through these docs VERY CAREFULLY as they will often have substantial obligations that you have to comply with. I gave a presentation on this topic last month at a financial forum. Please email me at jason(dot)bernstein(at)btlaw(dot)com if you'd like a copy of my presentation.
1) If the documents are incorporated into the contract by reference, then once the contract is signed, you would have been deemed to have perused and agreed to all its contents. Hence, the due diligence should take place prior to signing of the contract, to ensure that you are able to commit to the accuracy and adequacy. In this case, regardless of whether specific warranties are provided, you would have a legally binding obligation to meet that commitment. Of course, warranties have a bigger impact from legal perspective, as a breach of warranty could mean different consequences (as compared to a 'normal breach of term') depending on the governing law.
2) However, if these documents are only going to be made available to you by the client AFTER conclusion of the contract, then you are right to request an insertion of the language to limit your obligation as such. After all, to commit to the accuracy and adequacy of something that you have had no opportunity to review is simply not a prudent thing to do.
Hope the above helps.
In effect, this is a support agreement based around ITIL Services (eg managing Incidents/ Problems etc with technical elements such as managing parts of the customer's network).
Governing law is England and Wales.
I am unsure of the governing law to warranty in an IT services contract.
Hi EY/ Anon,
Thank you for your response. I think you are getting nearer to the answer that I require. In your point 1) below, you state:
1) "warranties have a bigger impact from legal perspective, as a breach of warranty could mean different consequences (as compared to a 'normal breach of term') depending on the governing law."
If a warranty were to be provided for these what could be the consequences if we were in breach of that warranty given the law is subject to England and Wales.
• Dept of Veterans Affairs
Two issues I can see:
First, The most obvious of your warranty breach possibilities is enforcement of the breach penalties (whatever they happen to be). If by reference or addenda your company accepted various warranty provisions, then failure to uphold those warranties constitutes breach of contract. Additionally, there are usually further penalties (or at least negative incentives) included in the warranty itself. Since these were apparently written by the other side, you're going to want to go over these penalties with your senior contracting member, as failure to provide any required warranty service which was slipped into an addendum or by reference may have additional penalties built in. If your senior contracting member decided the original language was acceptable, then that means they didn't believe (in their professional judgment) that warranties were applicable.
Second issue: Your senior contracting member could have been wrong. If warranties ARE required, mere "breach of contract" alone might not be all the challenge you face. A failure to provide service under a warranty, depending on the jurisdictional law, can mean not only a successful breach of contract claim, but possibly legal claims of a lack of good faith and/or fraudulent business practice claims. One reason the previous anonymous poster was on point: The damages allowed for lack of good faith in business dealings is highly variable depending on jurisdiction, and to make matters worse, the business section of most news publications love making headlines out of this. I recommend you and your contracting staff (potentially assisted by your corporate counsel) go over the addenda and other referenced documents with a microscope to ensure your company does not have to provide warranties. If they do, and fail to do so, the consequences may be more significant than solely a breach of contract claim.
• Carigali Hess Operating Company Sdn. Bhd.
Hi, I do think it is not advisable especially during tender negotiations where references and cross references are essential. A bad habit by some is to overdo numbering which makes the referencing a nightmare.
• Contract Glue Ltd.
I also agree that numbering brings ease of reference / identification and is important for clarity of which element of standard terms are being amended (both the start and end of a term). I expect that all but your most simple customer agreements contain numbering... why should standard terms differ?
• Marsh & McLennan Agency
I have seen some success when trying to prove up a more readable set of terms and conditions - (and I am referencing to terms and conditions that would be posted on a website or printed on a purchase order or receipt) where the original is drafted with numbers, but the final posted product uses titles instead of numbers. As noted below, it is difficult to cross reference without numbers, but I feel that "more readable" might actually eliminate many cross references. Good luck!
I agree with the previous two comments, in addition, numbering ensures that there are no terms and conditions that are inadvertently left off the final negotiated documents. If there are no numbers, it is more difficult to ascertain whether a certain provision is missing.
• Rolls-Royce North America
Hi. Are these intended for B2B transactions or consumer transactions? If the latter, then I think this could work as part of creating a set of terms that are easier to read and understand, and less intimidating for the consumer. However, for B2B, I would recommend keeping the numbering, especially if you anticipate some degree of negotiation on the terms as your note suggests would be the case. That said, improved readability and being more customer friendly would also benefit your B2B contracts.
Do you mean something like this? "Failure to submit the SOV within five days of signature to the Agreement, or an updated SOV with the Pay Application shall be a material breach of this Agreement. EPC Contractor shall be entitled to withhold [mybe insert a percentage you'll withhold here unless you mean the entire payment] payment until the applicable SOV has been received."
• Outotec GmbH
I agree with the below phrase and would recommend to set it also a precondition for the advance payment, if applicable. Being the Client you get to decide on its timing, type, format, etc. which is very important for your cost analysis, internal reporting and further submission of the same to your Client (sorry, little bit deviated).
However my question is for the previous stage as i am also in EPC sector. How do you even execute the agreement before you receive the SOV?
• Forsythe and Long Engineering, Inc.
Thank you both for the responses. I already have similar language in the Subcontract Agreement that is very similar to the suggested language. I was hoping there were some other ways to tie this into a material breach, but after spending more time on this I am not sure it is possible to be a material breach. At worst case it seems be more of a minor breach.
Erman, to answer your question the SOV does not come until the contract is awarded and executed. At this point our contract allows us to tell the subcontractor exactly what format we are looking for and the required breakout. The SOV is not to be submitted until after execution because the contract tells the subcontractor the breakout you are requiring. However, if you are using the SOV detailed breakout for cost comparison, I handle this within my RFP Packet. I call this form the Lump Sum Breakout or Cost Breakout form. I require each subcontractor to submit this form during bid submission. For example, I may require to see labor, material, equipment for Process piping, the same for large equipment install etc. The breakout I require on this form usually mimics the breakout for the SOV, but it does not have all the line items the SOV has such as previous payments, materials stored onsite, etc. I then compare the Lump Sum Breakout to the SOV that is received after contract execution to make sure the subcontractor is not trying to front load the Project with costs on the SOV. I also use the Lump Sum Breakout form or Cost Breakout form to evaluate and determine what areas the subcontractors are high and low with their costs. This allows me to identify potential risks areas where labor or materials where missed. It also helps me identify ambiguities within our design package if pricing in certain have a high spread between subcontractors. So, essentially I am seeing the SOV prior to contract execution it just looks and is labeled different. Does this answer your question? Do you require an SOV prior to contract award?