Management of Contracts & Contract Claims

Course Overview:

While the object of international contracting is to write and manage contracts to minimize disputes, some disagreements are inevitable. These can arise from failures by one of the parties, but also often arise from misunderstandings as to obligations under the contract.

This program will look at how claims (and counterclaims) arise; how they can be reduced or avoided by good contracts management; how they should be evaluated when received, or prepared when being delivered and how to resolve disputes arising from such claims. It will also, and most importantly, look at ways of avoiding disputed claims in the first place.

Once a dispute starts, can usually be solved most effectively by negotiation between the parties. However, if this does not prove effective, some sort of third-party intervention is required.

Traditionally, this has tended to focus on either involving state courts (litigation) or the equivalent private method of getting a third party to make a decision (arbitration). There are many more techniques available in the international market; including expert determination, mini-arbitration, pendulum arbitration, adjudication, and other techniques whereby a third party decides the matter for the parties. There are mediation, conciliation, and hybrid solutions such as Arb/Med, where a third party facilitates the settlement by the parties themselves, rather than imposing a decision. Many of these techniques rely on looking at the parties’ interests, rather than their strict legal rights.

All of these processes, and indeed, claims and counterclaims generally, become more complicated when placed in an international context. This is particularly the case where a foreign law and/or legal system is involved, with which you may not be familiar, and which may include rules which conflict with those of your own country.

Course Objectives:

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

Understand how and why claims and counterclaims arise
Explain the differences between claims and counterclaims
Identify common causes of claims and disputes, and how to avoid them
Discuss how to develop contracts management procedures to avoid disputes over claims and counterclaims, while resisting unjustified claims
Enhance understanding of basic negotiation techniques to be used when resolving disputes
Provide an understanding of some of the main methods of dispute resolution involving third parties
Develop an understanding of Traditional and Alternative Dispute Resolution techniques, including different ways of resolving disputes without recourse to courts or arbitration
Provide strategies and tactics for negotiating during disputes
Explain how to use contract provisions to reduce the risk of claims and disputes
Develop negotiation skills, which will be useful tools in all types of negotiating
Increase working knowledge of legal implications and potential problems with foreign legal systems
Improve the ability to reduce the risk of claims and disputes

Course Coverage:

Topic 1: How Claims and Counter Claims Arise:

Causes of typical claims
Poor drafting of requirements
Lack of clarity in the Scope of Work/Services
Misunderstanding of legal or technical obligations
By Client
By Contractor/Supplier
Deliberate “misunderstanding”
Counterclaims - how they differ from claims
Rights of set-off
Obligation to perform work
Standards
Program
Acceleration
Variations
Extension of time
Force majeure
Overview of main contractual provisions relevant to claims and counterclaims

Topic 2: Types of Claims and Counter Claims:

Types of claims, in construction and other areas - and their distinctive features
Re-measure disputes
Variations - disputes on valuation
Variations - disputes as to whether there is a change
Breaches of contract
Quality of workmanship
Re-work
Rejection of goods
Full rejection
Partial rejection
Liquidated damages and penalties
Warranty claims
Interface problems - are these always the Contractor’s responsibility?
Tracking change where client involvement is limited
Special issues with documentation in EPC and turnkey contracts
Special issues with EPC/Turnkey contracts

Topic 3: Presenting and Evaluating Claims and Counter Claims:

Requirements for claim presentation
Notices
Timing, and time limits
Are time limits binding?
Format
Information
Supporting documents
Defining features of claims evaluation and management
Recognizing the causes of claims
Warning signs of disputes
Recording claims
Reviewing claims
Requesting further information
Realistic appraisal
When to make admissions - and denials
Offers of settlement
Independent review
Cumulative effects
Managing claims quickly and effectively to avoid disputes
Managing claims and disputes
Involving lawyers
Managing the legal process
Setting goals
Decision trees
Controlling costs - and including them in your thinking

Topic 4: Dispute Resolution:

What is a dispute?
Introduction to dispute resolution methods and techniques
Stage negotiation - setting up internal dispute resolution within the contract
Measures of success - win-win negotiation
Understanding what constitutes a “win” for you
What will be a “win” for the other party?
Mirror negotiation/red teams
Negotiating “without prejudice”
Making offers
Compromise
Bargaining
Interest-based negotiations
Moving away from rights-based thinking
Making the cake bigger - settling other issues
Non-financial solutions
Long-term business relationships
Defusing conflict
Personality clashes and how to avoid them
Dealing with disputes as they arise - not letting them fester
Traditional dispute resolution
Litigation
Use of foreign courts
Enforcement
Arbitration
Single or panel

Topic 5: Issues with evidence and production of documents

Mediation
Med/Arb and Arb/Med
Adjudication
Expert determination
Early Neutral Evaluation
Mini-Arbitration
Dispute Review Boards
Pendulum arbitration
Conflict and its Resolution
Differences between alternative dispute resolution methods
Ethical concerns
Audit trails
Avoiding the suspicion of unethical behaviour
Problems with settlements based on interests, not rights
Applying the same anti-corruption systems to claims as to tendering
Avoidance is better than resolution
Avoiding claims and counterclaims
Avoiding disputes
Avoiding litigation and arbitration

Targeted Participants:

Contracts and Contract Administration Professionals
Tendering and Purchasing Professionals
Engineering, Operational and Maintenance Professionals
Project Managers
Finance Personnel