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IACCM Contract Management Forum

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MAERSK
2018-09-10 08:15:16

Backdating a Contract

We are currently in Contract extension negotiations with our Customer. The existing IT Outsource Contract expires at the end of June 2019, but the Customer wants to extend a Contract "on new service terms and charging model". This we have just commercially agreed and are now in MSA and Schedule drafting and negotiating mode. However, as part of the deal to extend for 3 years the Customer has stipulated that the new contract and charging mechanism is to start from 1st September 2018. It will take 6 weeks to complete the drafting and negotiations to signature stage, so I would like to ask if anyone has experienced "backdating" a contract at signature stage? There are obvious considerations around liabilities and risk of accepting service terms that are better than being delivered at present. What caveats should I add into contract to protect us?
 
 •   2018-12-30 19:21:34
Sounds like your Finance/Audit rep should weigh in - this might be better done just as an amount discounted/due at signing, e.g. as if the new charging model had been in place September1. Applying new service terms and obligations retroactively sounds like a recipe for unintended problems (how could you have performed properly if the amends weren't agreed yet?). To be accurate to the conditions upon signing, you'd have to set up an corrective procedure and/or some no-fault arrangement for the backdated period - risk: it all still looks odd to your auditor...
 
 
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