Based on IACCM´s contracting body of knowledge, we have conducted several ATEs and webinars stating the key steps for optimizing claim management transparent process.
Please refer to our IACCM library: www.iaccm.com/resources/contract-management-resources/ And in particular, in this topic: www.iaccm.com/resources/;
We will always recommend a constructive and non-hostile approach which will ensure we are improving quality and reducing the causes of counterproductive events.
However, if first level management cannot resolve the issue within a specified timeframe, it should be escalated to senior management. Only as a last resort should the agreement instruct the parties to resolve the claim by involving a third party. This could be either a court, an arbitrator or alternative dispute resolution, e.g. mediation.
In the absence of regulations in the agreement, most countries will have laws that similarly protect the injured party by third-party resolution. Both by law and under the terms of the agreement, therefore, claim management is not a voluntary process.
Let´s see if other members contribute with resposes in this forum, but I´d also recommend you, Julia, to join and connect with our IACCM community of interest created for this specific purpose: Dispute, Claim and Conflict Management: www.iaccm.com/gp/dispute
There are a lot of aspects to consider here, for example:
are you buying a replacement service from another vendor? if so, do you need the current vendor to support transition to the new vendor?
does the current vendor need to return any confidential documents?
are all payments up to date?
are any contract penalties (service credits, LDs) outstanding?
Irrespective of the above, you need to formally terminate the contract, confirming that neither party has any liability to the other following termination, except, perhaps, confidentiality provisions and, potentially, any latent defect/warranty claims. Simply 'allowing' the vendor to walk away seems odd: you spent time (and therefore money) on-boarding them and agreeing a contract, it seems strange to end the relationship in this way.
• Neptune Marine Service Pty Ltd
What contract states with regards to email communication and authorized representative. If the contract only states that communications shall be in writing to the authorized representative. The next question that will arise is Governing Law of the contract. As some countries have adopted the United Nations Commission on International Trade Law (UNCITL) published its Model Law on Electronic Commerce in 1996 which states that actions will not be invalidated or discriminated against merely because they were conducted electronically and emails are considered as a message in "Writing"
So, make sure the message in "Writing" based on the governing law is communicated to the Authorised Representative.
For the balance checks, I agree with Steve Grange and that shall suffice.
• Yorkshire Water Services Limited,
I agree with Steve Grange. Create a formal Exit plan with the company to close off any outstanding liabilities to both parties. Regardless of each others 'mutual consent' to this. At the end of the that process formally close it off with a document. This will prevent anything coming back to bite you in the future.
• SIEMENS PTE LTD
I agree with Steve, Gaurav and Phil, They have covered multiple aspects which we have to look at before letting the vendor walk off as I believe in this case Vendor has no financial impact on them so easy for them to walk off without formal termination/closure of the contract. But from the moment you accept or let Vendor walk out all the responsibilities more of liabilities fall on your company.
• Resolute Corporate Services Pty Ltd As Agent for Société Des Mines de Syama S.A (SOMISY S.A)
I think you should prepare an official document signed by both parties to legally and lawfully end this contract by a mutual agreement by both parties.
• Resolute Corporate Services Pty Ltd As Agent for Société Des Mines de Syama S.A (SOMISY S.A)
I think you should prepare an official document signed by both parties to legally and lawfully end this contract by a mutual agreement by both parties. your message
• Virgin Money
• Jagged Peak, Inc.
The first item to consider is to ensure to review the Services Agreement and review the Termination and Notices Section and any others that may come in to play when terminating an agreement. Are there a certain number of days after written notification that the services agreement will terminate? Are you terminating a master agreement and any ordering documents or SOWs or either or both? Do you need to provide notice to the contractor via email, mail, certified mail, overnight delivery? Does your agreement allow for electronic transmission communication as an acceptable method of communicating to make it legally binding in a notices provision?
I then also check to see if there are provisions such as Confidential Information/Materials or any other security items that need to be returned to your company that would need to be mentioned in a termination agreement or letter. Is there any confidential information, materials, laptop/pc, security badges and property that need to be returned and when, how and to whom? These are a few of a number of items may need to be addressed in a termination agreement along with ramp down services and whether there are any fees apart from standard fees that would need to be paid to considered. I have seen termination agreements be very simple with little to no instruction since the Services Agreement was simple straightforward agreement with little to be exchanged by way of CI, materials, goods, security, property and others that can run a few pages of negotiated ramp down services, transfer of services to another contractor or training and payment of ramp down costs at stake.
The answer depends on the exact wordings of the variation order. Does it explicitly provides that principal can take over that portion of work not done / delayed by contractor, at the cost and risk of contractor? It also depends upon the nature of work. Generally contracts provide for such an eventuality by giving notice (30 days or so) to contractor.
Well, WILLFUL MISCONDUCT is clearly a breach of the agreement. Almost all of the contracts includes "The Contractor shall discharge its obligations in accordance with good industry practice" clause..
Willful misconduct clearly violates that, and i believe unless the Contract has such provision, the party cannot levy any kind of damages on the defaulting party.
Though the affected party by notice may ask for the substantial explanation of the defaulting party in this regard.
In case the affected party is the Authority, He may always holds the right to terminate the default party at any phase of the project.
Hope this helps.
• Bell Gully
Hi there, it depends on what legal jurisdiction you are operating in. In some jurisdictions "wilful misconduct" will have an established legal meaning. In others where it doesn't (including mine) it is actually sensible to flesh out the concept in your contract in order to (attempt to) mitigate any future uncertainty. These formulations will usually reference the party's intention, i.e., the party in question intended to commit the act or omission in question and knew/should have known that it was going to cause the other party to incur the loss. This is different from negligence (obviously) where you only have to show a duty of care. Whether your claim is for wilful misconduct or negligence, you will have still have to take the concept/test and "fit" it to the facts. Unfortunately it's never a binary kind of test.
As with any claim in tort you will then have to show causation i.e., (the wilful misconduct caused your loss) and that the loss wasn't too remote/excluded, e.g., if the other party excluded its liability for loss of revenue/profits and your loss = loss of revenue then you won't be able to claim damages. (Although it is actually pretty common for suppliers to agree that any liability caps/exclusions won't apply in the case of wilful misconduct).
It's a very interesting - and of course not uncommon - situation. I'll offer a few immediate thoughts and hope others add to them. I'll also be pleased to have a direct discussion to gather more details.
First, think about your customer's perspective. The situation you outline is unlikely to be unusual (though see what data you can find on whether your situation is typical in their other software relationships). Also explore their past experiences with your company and whether they have had problems or positive experiences in the past. Naturally they want to contain costs and most customers have experienced 'opportunistic' suppliers who try to push up prices post-award. So you need to build their confidence that you are operating with integrity and that any increases are fair and reasonable.
1) in doing your analysis, make sure you look for areas where changes may have occurred that actually benefit the customer. When scope changes, it is rarely all one way. By having a few trades that benefit your customer, you show your objectivity.
2) is the customer's problem that they want no increase, a smaller increase or (perhaps) a short term budget issue? For example, might additional charges be more acceptable if they can be slipped into the next budget year?
3) do you have a record of 'goodwill' examples - past situations where you have given concessions and value-add to the customer?
4) what mechanisms or measures can you offer to show the customer that proposed additional charges are reasonable and in line with market norms?
5) might there be an opportunity to change the way services are defined or delivered? Very often, SoWs and SLAs are created in ways that reduce supplier flexibility in HOW they are delivered, thus pushing up costs. Could you identify cheaper, better ways to deliver the services? Do they actually need current service levels? Are the KPIs the right ones?
As a negotiating strategy, I would be approaching this in a conciliatory fashion, highlighting how the speed of change in markets make it very difficult to establish precise requirements and therefore periodic renegotiation is normal. Hopefully, the ideas above then give you a context for how the customer is felling and some items of value that you can offer, such that they feel you are a fair and reasonable partner.
Thank you Tim. Your response is helpful. I have taken note of your suggestions. I may further approach for discussion.
I think I would try to focus on increased value rather that what the price per man day or intervention should be. The customer is asking for extra efforts, but the objective must be to achieve extra benefit for customer, not extra suffering on your side. Steering the discussion towards his benefit and a reasonable price versus the benefit he perceives may unlock a stalemate
Your question is not clear. First of all, did the client place an order on service provider for developing an estimation specifying certain amount as a fee for the services? If so, irrespective of client disapproving the project, service provider is entitled to receive the fee.
There could be another scenario wherein the payment of fee may be dependent on client approving the project. If that is the case, service provider will not be entitled to claim the fee.
Besides, in case of continuing relationship between clients and service providers, many a times, clients ask service providers to develop an estimate for new projects. Service providers carry out such estimation as a good will gesture. So there in no question of any payment arising out of such good will gestures.
So it all depends upon the specific case.
• Atos IT Services UK Ltd
Providing outputs/deliverables are clearly stated that they include a charge for effort undertaken, then I would expect the client to pay for that effort, regardless if the work is subsequently taken forward or rejected.
For example, a level of effort to write proposals for a client may be part of a contract offering however, if a client asks for indicative costs and then subsequently a firmer offer 'capable of acceptance' is requested then you may feel this would entail a level of detail and complexity considered chargeable.. This would then be for client to accept the firm offer or not but the effort to write the proposal would remain chargeable.
You will have to check in the present agreement if this can be charged (for new projects estimation). Most of the times efforts for submitting an estimation is not chargeable and there will be a timeline to submit the same. But if the agreement is silent, you may agree well in advance the charges for estimation. But bear in mind that this may affect business/sales.
• Sunderland City Council
From my own working experience, it tends to be explicitly described that the client doesn't cover those types of cots. However, most of my work relates to functions that are openly tendered, rather than approaching suppliers to develop proposals. If you are approaching suppliers to develop proposals its probably worth stating explicitly whether you will cover costs incurred in developing them.
Ultra Electronics Precision Control S...
Thank you for your post. We have reached out to colleagues in the construction industry and I hope that theresponse below provides you with some interesting insight.
Kind regards, Sally
This is an area of law which is still widely debated by academics and practitioners and the correct approach appears to be currently undecided.
Firstly, the methods for assessing extensions of time and the application of liquidated damages should be sought from the express contractual provisions at first instance. However, if the contractual provisions are silent then below are two alternative viewpoints on relief/damages arising from concurrent delay that may be considered:
Apportionment method - The aggregate position which arises from contractor delay event(s) and relevant event(s) which delay the Contractor would be assessed. The contract completion date would be extended by an Extension of Time and the remaining delay period, if any, liquidated damages would be applied. This approach was proposed in the case of City Inn Ltd v Shepherd Construction Ltd , however, this is not considered to be the current approach by the courts of England & Wales.
Non-apportionment method - The current approach considered to be adopted by the courts in England & Wales, as stated in Henry Boot Construction v Malmaison Hotel (1999) and approved in further caselaw, is that an occurrence of concurrent delay would entitle the contractor to an extension of time i.e. no liquidated damages are applied. A reason for the current approach is the application of the prevention principle whereby a party, usually the Employer, cannot benefit under a contract through delay events it has caused to the contract completion date.
Further recent caselaw regarding Concurrent Delay can be found within the case transcript for Saga Cruises BDF Ltd & Anor v Fincantieri SPA  EWHC 1875 (Comm) (29 July 2016).
As Sally mentioned below, construction industry is still grappling with these questions. However from my own experience in such situations with Indian clients, I have been able to apply the apportionment method. On one side, we had to pay LD for the portion of the delay attributed to us while on the other hand, for the balance duration of delay, client issued extension of time and also compensation for the extension of time.
We cannot really generalize these and will depend upon the facts of individual cases. Moreover the outcome I mentioned above was the result of negotiation between us and client. The outcome would have been different if the matter was escalated to arbitration/court of law.
• New Zealand Defence Industry Association (NZDIA)
If you rate a post and lift off the screen before reaching 5 it is really easy to give an unintended low rating. I did this myself in error when I first joined the IACCM team which felt like a career limiting move! The nice thing about the IACCM community is that no one would be offended.
Reading your query, I understand you are trying to ensure that SLA should not apply if an incident is in a particular state (pending, awaiting further information or dependent on any activity from the Customer etc). The way this can be drafted is:
"The Supplier shall place an incident in a 'Pending' status where further information is required from the Customer (or End user) or if the Supplier is dependent on the Customer for any assistance (or resource) to enable the Supplier to resolve the Incident. For an Incident, the time spent in Pending status shall be not be counted (or added) to the resolution time. For avoidance of doubt the Supplier SLA for resolution time shall not include any time that the incident spends in the 'Pending' status."
I suggest the first thing here is that you need to be a little clearer about what you are trying to draft!
My assumption - perhaps wrong - is that you are trying to exclude certain issues from consideration when assessing service performance - presumably to prevent a known (but as yet unresolved) problem from counting towards service level credits or LDs.
When you say 'dependency', is this a client-related dependency? In other words, are you trying to say something like:
"In situations where performance is impacted by an incident that has a recognised and unresolved dependency, xxxx shall not apply'.
Xxxx in this case would refer to whatever you are trying to exclude