Enhancement of Skills on Contractual Risk, Insurance and Indemnities for Public Sector Projects

Course Coverage:

In every organization, care is taken to manage risks, by seeking to eliminate those that can be removed, and reducing and managing the remainder. Part of this process involves developing robust contracts, which apportion risk equitably and include a structure of indemnities with contractors, supported by a comprehensive insurance regime. It is important that contract personnel understand contractual risks and what insurance can (and cannot) do to remove the financial consequences of such risk; remembering always that insurance only mitigates the effect of risk, it does not make the risk itself go away

Course Objectives:

At the end of this course, the participants will be able to:

Provide an understanding of contract structures, and how and why contracts are drafted in particular ways
Enhance understanding of the legal principles behind contracts
Provide an understanding of some of the main clauses in different types of agreements
Explain the commercial impact of particular provisions
Explore the usual models for indemnity regimes in international contracts
Enable participants to understand the significance, and limitations of such regimes
Help participants to understand the meaning of insurance arrangements, and the terminology used
Ensure participants appreciate the effect of insurance and its limitations in the management of risk
Explain how to use contract provisions to reduce the risk of disputes
Understand where disputes do arise, show how the contract can be used to minimize these disputes, and some of the methods by which disputes are resolved in international contracting (including non-traditional approaches, such as mediation)
Link indemnity and insurance arrangements
Recognize types of insurance are available in a contracting context
Maximize the latest thinking in dispute-resolution techniques

Course Coverage:

Topic 1: Commercial Risk and Mitigation through the Contract:

The need for contracts
Identifying risk
Risk mitigation or impact mitigation?
Title
Incoterms
Intellectual property
Types and Nature of Contracts
Definition of terminology i.e. Conditions of contract & terms of contract etc.
Different legal systems - how to look for common practices but understand the differences

Topic 2: How and Why Contracts are Drafted:

Why do we use contracts
Formation of a Contract
Oral or written?
The key elements of a contract
Terms and Conditions of the contract
Liquidated damages/penalties
Limits of liability
Suspension and termination
Acceptance and Certificates
Guarantee/Warranty/Maintenance
Agency issues
The basic structure of a contract
Incorporating documents by reference
Standard Forms
Incorporating tender documents
Letters of Intent or Award
Letters of Comfort or Awareness
Side Letters
Bank bonds and Guarantees
Parent Company Guarantees

Topic 3: Insurance:

The purpose of insurance
What insurance covers, and what it does not
Limits on cover
Duty to disclose information
Meaning of “All Risks”
Relationship with risk management
Types of insurance used in contract clauses
Workmen’s compensation/employers’ liability
Third-party/liability insurance
Property damage
Professional indemnity/errors and omissions
Construction All Risks
Motor and aviation
Marine insurance
Hull and machinery
Protection and indemnity (“P&I Clubs”)
Pollution
Goods in transit
Business interruption
Unfair calling cover (bonds and guarantees)
Export credit insurance
Who arranges?
For whose benefit?
Extension to subcontractors (National Oilwell case)
Terms - involving contractors
Other relevant insurances
Insurance for projects

Topic 4: Indemnities:

Meaning of indemnities
Making indemnities work - irrespective of negligence or breach of duty (the Piper Alpha litigation)
Link with insurance
Cross indemnities
Personnel
Property
Catastrophe risks
Value of covenant
Issues with indemnities under the Civil Law system
Third parties
Liability in negligence - relationship with contract conditions
Claims handling
Managing claims under project policies
Making timely claims
Information
Involving insurers
Resolving disputes
Self-insurance

Topic 5: Resolving Disputes:

Negotiation
Staged Dispute Resolution clauses
Litigation
Arbitration
Enforcement of Judgments and Awards
New best practices in dispute resolution
Mediation
Conciliation
Early Neutral Evaluation
Expert determination
Pendulum Arbitration

Targeted Participants:

Contracts, Tendering, Purchasing, Procurement, and Project Professionals
Contract Administration, Engineering, Operational and Maintenance Professionals
Risk, Claims, Financial, and Audit Professionals
Project Management Professionals
And all others who are involved in the planning, evaluation, preparation and management of tenders, specifications, awards, and contracts that cover the acquisition of materials, equipment, and services and who are in organizations whose leadership want high levels of competency in those involved in these activities