Both parties should have an interest in ensuring that change requests are handled in a timely manner. Sometimes customers try to leave this unspecified because that way they can ignore any change which may cause an increase in time or cost.
Being too specific on a number of days can also be problematic because the nature of the change may vary in its complexity. There are several ways you might approach this:
1. Specify a number of days within which the change must be acknowledged and a date for resolution agreed, with a proviso that the resolution must be within a period no longer than x days or the change will be deemed effective.
2. Specify that all changes take effect 7 days from notification unless the other party makes a counter-proposal within that period.
3. Categorise changes into, say, three different classes, probably based on the nature and complexity of the change. Class one might have a requirement to resolve within 7 days, class 2 within 30 days and class 3 to be agreed case by case between the parties.
You may also want to consider a provision related to the consequences of failing to agree a change in a reasonable or specified period. For example, does the change simply become effective? Or does failure to agree result in permissible delay or suspension of work / service? Perhaps you want a clearly defined escalation process to support resolution; this could include referral to an independent expert to resolve disagreement.
I hope these ideas help!
• TRADING AND AGENCY LTD
The Standard language in Oil & Gas Contracts is that no Change shall be performed unless executed through a Change Order (CO). However, in order to allow for events where Parties are unable to agree on a Change, Clients include a provision in the Contract to issue either an Instruction to Proceed (ITP) or a Disputed Change/Variation Order which obligates the Contractor to perform first and negotiate later. Still, it is worthwhile to include a maximum response time which obligates the Client to acknowledge Contractor's Change Request either by issuing a CO or ITP within the agreed timeframe.
I think perhaps part of your question is missing, but let me try to answer what I think you are asking!
Most contracts will have a provision relating to the right and the process for making revisions. How this works will usually depend on the nature of the agreement. For example, if it is a Master or Frame agreement under which there may be multiple individual transactions, it is common for the change provision to state that a change can be made simply by giving notice and that it will apply to all future orders or supply (i.e. there is no need for acceptance by the counter-party).
If the change affects an existing order, organizations sometimes try to specify that they will give notice and the change is effective unless rejected by the counter-party. However, this is of questionable enforcability. Therefore it is more normal to issue a formal notification of change and for this to be effective only when accepted by the counter-party. IN terms of administration, the biggest factor here may be what the contract then deems 'acceptance' - for example, is an email or a text sufficient, or does it require an authorized signature? In making this decision, you also need to consider the jurisdictional laws regarding acceptance.
Finally, if the contract does not include a provision relating to changes, you may want to insert one as part of the change you are now planning to make!
Hi Matthew, Have you looked at the IACCM Contract Design Pattern Library: contract-design.iaccm.com/?
Have you looked at the examples and guidance provided in the Contract Design Library on this website (look under the Resources tab). This offers examples, ideas and guidance. IACCM works with a growing number of member companies on simplification and design projects so we also have specialists on our team who can offer further advice or examples you can use.
Hello, we are being asked similar questions by a number of members. All FM clauses in new contracts should include a reference to the ongoing pandemic. As you point out there is a risk still that there will be continued fallout from this both on the buy and sell sides. We are advising members to be as prescriptive as possible in thinking about and addressing in their FM clause any future risks that could put the services or goods to be delivered at risk. Think beyond the usual FM remedies of suspension or termination. You may need alterntive remedies which could include a reduction in scope of what is being deliverd together with any associated pricing. You may also wish to consider a phased approach to ramping up obligations after a reduction period due to ongoing uncertainty. It is difficult to cater for all future uncertainties. Thus, we advise that you also build into the contract further agility to cater for complete unknowns that still might arise. IACCM has developed a framework called the VCU to help our members to map out uncertainty within their contracts and ensure that appropriate terms and conditions are used for each contractual relationship. Please contact us if your organisation is interested in participating one of our workshops around this.
I think also important to make the point that when an event is known and on-going, in itself it cannot really be a Force Majeure event! So I'm not sure that either party could invoke coronavirus in a contract being agreed now.
What do you think, Paula?
• TRG Law Limited
At least under English law, what qualifies as FM depends only upon the wording of the relevant contract clause. Just because a situation such as Covid is known at the time of contracting does not I believe, of itself, prevent a party relying on an appropriate clause providing you can bring yourself within the wording. Of course, if the relevant clause limits FM to matters 'not reasonably foreseeable' then that would be another matter but many clauses do not do so.
Thanks so much for your message and yes we are gathering lots of "good news" stories and as you say, examples of how organisations are demonstrating their agility and adaptability in times like this. Thank you for sharing the story of Meex - I will personally look this up and add it to the output that we are generating. We are indeed focusing on how IACCM supports small businesses more and more and I like your idea about a blueprint for agility. Thank you again and please do keep your ideas coming - they are much appreciated! Sally
Hi - at my workplace we are mainly dealing with FX related claims that are being submitted as force majeure. In these cases, they are (b) - in that did the party have an opportunity prior to the FM event occurring to reasonably speaking, manage and treat the risk.
! disclaimer - I don't know anything about Australian law !
but I don't see how option a) can be reasonable.
Risks can appear as time goes by due to changing circumstances and something that is not reasonably foreseeable at one point in time could well be later on.
My apologies for the delayed reply to your question.
In general, the clause is referring to an issue that you could reasonably have anticipated and therefore could have prepared for it in some way. That means not only before inception of the contract, but also during its performance.
Even in a case where Force Majeure applies, there is a duty to take reasonable measures to mitigate its effects.
In the case of the pandemic, there are many debates over whether and in what circumstances it represents a Force Majeure event. However, even when disallowed, there may be grounds for claiming frustration of contract or impossibility of performance due to related events.