Module 5 - Structure - Student Version.pptx

APPLIED CONTRACT LAW Module 5 Structure  01 TERMS IN A CONTRACT 02 TYPICAL ‘CONTRACT’ DOCUMENTS 03 GENERAL STRUCTURE Module 5 04 STANDARD FORM CONTRACTS LEARNING OUTCOMES 05 BOILERPLATE CLAUSES 06...

APPLIED CONTRACT LAW Module 5 Structure  01 TERMS IN A CONTRACT 02 TYPICAL ‘CONTRACT’ DOCUMENTS 03 GENERAL STRUCTURE Module 5 04 STANDARD FORM CONTRACTS LEARNING OUTCOMES 05 BOILERPLATE CLAUSES 06 OTHER COMMON CLAUSES 07 CONCLUSIONS & FURTHER READING READINGS AND KEY CASES Readings Chapter 4 4-040: Structuring a Commercial Contract 4-250 to 4-410: Common Contractual Clauses Key Cases None 1. TERMS IN A CONTRACT None Most complex contracts are set out in a similar way in terms of the documents So when you get a complex contract, you know what to look for and where (you know how information is organised) Most contracts have some common clauses that are often exactly the same or deal in the same way with the same types of things So when you see them in other contracts, you already know what they mean and its easier to view and understand a contract when you spot these ‘familiar landmarks’ Many industries also have standard or standard form or common contracts / templates they use So you see them a lot and get to know them well. This saves time and negotiations and you know what you’re 01getting into 2. TYPICAL CONTRACT DOCUMENTS None TYPICAL DOCUMENTS Formal Instrument of Agreement For signing and contains key contract-specific information Conditions of Contract Usually General Conditions but may have separate Special Condition s Scope of Work (or Specification) Sets out the work to be done in detail, drawings etc Schedule of rates or bills of quantities Sets out rates for work done or items supplied based Uses measures (or re-measures) rather than a lump sum contract Other documents (including Annexures and Schedules) Anything else to do with the contract e.g. HR and HSE This Photo by Unknown Author is licensed under CC BY 01 CONTRACTS AND COMMON LAW KEY CONCEPTS How does ‘Freedom of Contract’ affect the making and drafting of contract? Parties are generally free to set obligations and make rules for whatever they want Does this mean they can do anything? Generally yes, even if it results in an onerous contract But there are some exceptions: Legality Equitable vitiating factors (later) Legislative vitiating factors (later) Requirements of legislation in some areas e.g. employment, leases, consumers Sometimes these can be contracted out of Common law concepts may apply if the agreement is silent E.g. frustration, classification of breach, waiver, jurisdiction This Photo by Unknown Author is licensed under However, these can often be excluded or dealt with CC BY-NC differently in the contract and this is often the case 3. GENERAL STRUCTURE 4-040 STRUCTURE General Conditions Special Conditions Substantive provisions Impose rights or obligations on the parties Ancillary or machinery provisions Support the exercise of rights and obligations Deal with the ‘administration’ of the contract Often called the ‘boilerplate clauses’ This Photo by Unknown Author is licensed under CC BY-NC-ND 01 02 03 3. GENERAL STRUCTURE 4-040 Structuring a Commercial Contract Cover sheet and identifier Consistent numbering and lettering Date and identity of the parties Recitals / introduction (boilerplate) Definition and interpretation (boilerplate) Substantive provisions Other boilerplate clauses Execution Schedules / annexures (including Special Conditions) This Photo by Unknown Author is licensed under CC BY-NC-ND 01 02 03 3. GENERAL TERMS None Structuring a Commercial Contract Substantive provisions Subject matter Payment obligations Conditions precedent or subsequent Warranties and representations Indemnities Exclusion clauses Time for performance and delays Breach Termination Remedies This Photo by Unknown Author is licensed under This Photo by Unknown Author is licensed under CC BY-NC-ND CC BY-NC-ND 01 02 03 4. STANDARD FORM CONTRACTS None STANDARD FORM CONTRACTS What are they? Why are they used? Are they fair? What about freedom of contract? Legislative protection – Unfair Contract Term legislation (later module) This Photo by Unknown Author is licensed under CC BY-SA-NC 01 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Also called ancillary / machinery clauses Standard clauses contained in most complex contracts The ‘engine’ of the contract Clauses in a contract can roughly be divided into Boilerplate clauses Optional clauses (other common clauses) Of a standard nature but applicable in certain circumstances e.g. Tax What is the difference? 5. BOILERPLATE CLAUSES 4-250 to 4-10 OTHER COMMON CLAUSES Conditions precedent and subsequent [4-260] Conditions precedent E.g. ‘subject to finance’ If the condition is not met, the contract is either Not formed Not enforceable Some conditions precedent may be ‘agreements to agree’ and are not enforceable Conditions Subsequent Conditions as to performance and may give rise to rights to terminate E.g. deadlines This Photo by Unknown Author is licensed under CC BY-ND 5. BOILERPLATE CLAUSES 4-250 to 4-10 OTHER COMMON CLAUSES Exclusion and limitation of liability clauses [4-270] (and M4) Representations and warranties [4-280] Not to be confused with the prior meanings used for these words Statements of fact that the parties agree upon E.g. ‘the seller represents that they have the capacity to enter into the agreement’ Indemnity clauses [4-290] Requires one party to keep the other free from loss under certain circumstances E.g. if seller represents that they have title to goods, the buyerThis may under Photo by Unknown Author is licensed CC BY want to be indemnified against claims by the true owner of the goods if this is not true 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Recitals Statements that ‘set the scene’ or the context Not part of the contract terms per se E.g. ‘the parties have willingly entered into this contract’ This Photo by Unknown Author is licensed under CC BY-SA-NC 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Definitions Define certain terms used throughout the agreement Not everything needs to be defined! How do you recognise a defined term in a contract? E.g. ‘writing’ includes fax but not email E.g. ‘day’? This Photo by Unknown Author is licensed under CC BY-SA-NC 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Interpretation [4-310] Provides rules and certainty when interpreting a contract Gives a basic idea of the context within which words will be interpreted E.g. singular and plurals, genders etc ‘Headings are for convenience only and do not affect interpretation’ ‘Not to be construed against This Photo by Unknown the under Author is licensed party drafting the CC BY-SA-NC agreement’ 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Entire Agreement [4-320] Prevents the admission of extrinsic evidence to vary or contradict the written agreement Representations made during negotiations Any prior negotiations relied on by the parties should be included as specific provisions in the agreement, otherwise the parol evidence rule will apply Note – does not preclude all statutory obligations e.g. under the ACL (later) E.g. – see example in text This Photo by Unknown Author is licensed under CC BY-ND 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Precedence (priority) and inconsistency If there are multiple contracts or multiple contract documents, this sets out the order of priority E.g. priority is Special Conditions, Purchase Order Terms, General Conditions etc. Timing [4-330] Sets out how time will be calculated for the purposes of the contract E.g. workdays, weekdays, public holidays etc. This Photo by Unknown Author is licensed under This Photo by Unknown Author is licensed under CC BY-NC CC BY-NC 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Notice [4-340] Prescribes the mode of giving valid notices and determines the validity of delivery of those notices Usually deals with the method of giving notices, format and time periods for remedies Beware of differences between e.g. ‘must’ and ‘may’ Some legislation requires particular formalities e.g. corporations law This Photo by Unknown Author is licensed under CC BY 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Governing Law [4-350] Selects or notifies of any applicable law Relevant laws will apply regardless anyway Jurisdiction [4-350] Specifies where a suit may be brought under the contract May be exclusive or non-exclusive May be a jurisdiction other than that of the parties May exclude the common law rule of time and place of contract This Photo by Unknown Author is licensed under CC BY-NC-ND 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Dispute Resolution [4-360] Prescribes a method of resolving disputes prior to litigation (ADR) Sometimes mandatory May preclude litigation until the dispute process is exhausted Can be complex, lengthy and unfair May be abused to delay litigation See example in text This Photo by Unknown Author is licensed under CC BY-NC-ND 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Waiver [4-370] Also called ‘Non-Waiver’ Ensures that a party to the contract will not be deemed to have given up its rights if it waives compliance with the obligation owed to it Must be waived explicitly and does not automatically refer to future obligations, recurring obligations or other obligations E.g. waiving late payment once does not mean that it will be waived in the future See example in text This Photo by Unknown Author is licensed under CC BY-NC-ND 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Severance / Severability [4-380] Attempts to ensure that the contract continues even if it contains some uncertain or incomplete provisions Assignment and novation [4-390] Deals with transferring rights to other parties (e.g. assign a lease) Costs and Stamp Duty May refer to taxes and duties or legal costs Sets out who is liable for what Sometimes prescribed by / dealt with by legislation This Photo by Unknown Author is licensed under CC BY-SA 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Force Majeure [4-400] Used to relieve liability for a failure to perform an obligation under the contract due to an external event beyond the control of the parties Examples War, Act of Terrorism, Earthquake, Flood, Storm, Fire as well as industrial action and labour difficulties and many others Coronavirus? Also may be addressed in time and delay clauses Is related to the concept of frustration (later module) See example in text This Photo by Unknown Author is licensed under CC BY-SA 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Amendment / Variations Usually prescribes that any amendments to the contract be in writing and signed by the parties Contracts required to be in writing by law, must also be varied in writing Survivability Sets out which clauses may survive termination E.g. liability, confidentiality, exclusions 5. BOILERPLATE CLAUSES 4-250 to 4-10 BOILERPLATE CLAUSES Confidentiality [4-410] May be in relation to the contract itself existing Or the terms of the contract Or sensitive information of the parties Usually survives termination May often be set out as a separate Deed See example in text Privacy May be similar to the above Often deals with legislative requirements to protect privacy This Photo by Unknown Author is licensed under CC BY-SA-NC 6. OTHER COMMON CLAUSES None OTHER COMMON CLAUSES Other Clauses Suspension or cancellation Intellectual property Exclusion clauses Restraints Insurance Guaranties Retention of title Insolvency This Photo by Unknown Author is licensed under CC BY-SA  7. CONCLUSIONS & FURTHER READING Well structured contracts make a big difference It is important to be familiar with ’real life’ contracts There are many common conventions and clauses that make this task easier Boilerplate clauses are the engine of the contract They often deal with the same things in the same way and so often could almost be copied and pasted (in practice they often are) These clauses often exclude or modify common law rules that we learn Further Reading None  THANKYOU You have now completed this lecture