• World Commerce & Contracting
Yes, there is!
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.
• World Commerce & Contracting
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!
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.
• Schneider Electric
Good question. I am currently in this situation whereby I am negotiating another new similar project with the same customer. Sue to the similarities, we are merely updating the T&Cs from the older (now almost complete contract). They are permitting us to make some minor adjustments to the terms of this new contract. I see the potential re-occurrence of Covid-19 in the fall as no longer being 'unforeseen' so may be an issue relying on FM if required eg. if we are delayed as a result, for this reason, I am asking for 'Covid-19' to be named as one of the causes under the Contract ie. added to the list of FM events named in the contract. My colleague in legal is helping me to pull the wording together atm. This is my proposal for dealing with this potential risk.
• World Commerce & Contracting
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.
• World Commerce & Contracting
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.
We have also launched a survey today which has already generated hundreds of responses and we will be putting out a report on the results early next week so please watch out for that.
I hope this helps and please do let us know if you have further specific questions.
• Cadent Gas Ltd
There are multiple ways to be honest, including Force Majeure clauses and Business Continuity obligations on the supplier which are regularly tested.
• Vaisala Inc.
We have recently added a statement to all quotes to customers with regard to COVID19, namely that it is now a 'known' event and given that the environment is ever-changing that status of your order may change, including for example the time from submission of order to delivery/performance. We will use all commercially reasonable efforts to notify you as soon as possible of any change. So perhaps something along those lines? Our sales and executive teams seem pleased that we are addressing it directly.
erdemir engineering management and co...
Depending on the clauses/articles in the Contract. From my experiences in managing the contract, endemic or pandemic is considered as one of the causes for Force Majeure. However, from what I see so far in my project, there is common grounds to avoid for activating FM. Collaboration between parties is essential on how we deal with this unprecedented situation since declaring force majeure only bring lose-lose situation while each party involved in the contract knew that resilience is the most important to keep their business going.
• Parker Hannifin Corporation, Aerospace Group
I would say yes. This 'Act of God' is causing many companies to shut-down temporarily.
• Martin Baker
Yes - in most cases it will be ( unless of course the contract excludes medical issues or similar)
• Norfolk County Council
Might be worth considering what your response was to previous pandemic flu etc and treating similarly
yes, I considered a supervening fact, would be impossible to predict the existence and its effects when signing a Contract...
for me it depends, if the party is from Wuhan, China where the local authorities have declared shutdown or curfew then it may be considered. however if the party is from somewhere not directly impacted with the virus then No. They need to show evidences of the impact which is hindering their obligation to perform the work.
• Pacific Gas and Electric Company
I would describe COVID-19 as an unforeseeable event. It would depend on the nature of a unique good or service to determine if a force majeure clause would apply.
All depends on how your Force Majeure paragraph is drafted. Is your company qualified as "essential?" That could also come into play as well.
I note your profile refers to "Moreland City Council", I assume Melbourne (Australia).
Note - this response references 'UK' practice and legislation, different rules may well apply in your jurisdiction.
In the UK consideration would need to be given as to whether the contract was let under a government framework (or similar 'public procurement rules'), if so there may well be restrictions in place as to whether you could extend further.
If it is under a Framework, in the UK you would need to offer a 'Direct Award' extension (if permitted). If it is 'non-framework' then you would almost certainly be able to extend subject to agreement with the supplier.
Assuming you can extend, doing so after the previous contract has expired is generally permissible as long as both parties agree; for 'neatness' I would suggest that the extension applies with 'retroactive effect' from the day the previous contract expired, so there aren't any 'uncovered periods'.
Hope this helps
NOTE: you need to be wary of anti-bribery and corruption laws - extending 'expired' contracts rather than running a competitive procurement process often leads to concerns being raised - you may well need to demonstrate that this is very much an 'interim and last resort' measure as a precursor to a full competitive procurement process.
• Victorian Council - Australia
Thank you, Steve
Thank you for the prompt reply!
I agree with your comments
Victoria's IBAC (anti-Corruption body) highlighted that as one of the red flags for corruption
Generally speaking, we do not extend contracts beyond their expiry dates, especially if all extensions have been exhausted.
I am coming to these special and few cases that we have to manage. I am trying to balance commercial needs and legal exposure if any.
Of course it depends on the legislation of each country.
In my case we have gone from avoiding having extensions or addenda to contracts to try as a first option to extend the contract through an addendum since there are many associated advantages such as having a long-term collaborative relationship with the contractor. Manjeand the risk of corruption we have achieved very good agreements to extend contracts.