Preparing the Contracts-lecture 1

8/17/2019 Preparing the Contracts-lecture 1

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1

PREPARING THECONTRACTS

SCM LEC NO. 1

(Slides 20)


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Understand the buyer’s & seller’s main obligations under a

contract.

Know when to use what type of contract

Be aware of key terms & conditions

Prepare your own contract

Identify what makes a good contrcat.

escribe the ma!or issues relating to preparing a contract inthe area of international purchasing and supply.

"utline some problems fre#uently encountered in such contracts.

$ontd%..

AIM


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escribe the main features of the world ’s three principal legal

systems.

Identify the speci'c points to take into account with regard to

international contracting.

"utline the main links between the nature of the contract and the

type of supplier(buyer relationship to be de)eloped.

escribe the main issues to consider regarding contracting in the

digital age.

AIM


4/21

What is aCot!a"t

*o be )alid a contract must ful'l the following re#uirements+,n o-er

,n acceptance

*he contractual capacity of the parties

, consideration on something of )alue

, legally binding relationship


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eli)er the goods

eli)er the related documents

*ransfer the title of ownership

,ssure conformity

,ct in good faith & fairly

"-er ci)il liability/

Selle!#s o$li%atios


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,ccept the goods or ser)ices

Pay the agreed price

,ct in good faith & fairly

,ccept ci)il liability

&'e!#s o$li%atios


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*he $onte0t for Preparing the $ontract pot and 2egular *rading $ontracts

$all("- and 3i0ed $ontracts

Partnership & 4oint 5entures $ontracts

*ransfer of 2isk and Incoterms

6ethods of Payment

$ontract efault & 7ow to ,)oid it

,pplicable 8aw & ettlement of isputes

This le"t'!e ill "o*e!


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Ma+o! iss'es i ,!e,a!i% the"ot!a"t !elate to-

9hat you want to obtain

9hat you want to a)oid

*he options you ha)e to protect yourself ithings go wrong

9hat you want to include or e0clude in thcontract

9hich clauses to use


9/21ITC

9hat you want to obtain

type of purchase :recurring needs ornot; number of suppliers%<

9hat you want to a)oid

in)entory le)els; stockouts; changes of suppliers%

*he options you ha)e to protect

yourself if things go wrongshort contracts; performance and completion bonds; dispute resolutionclauses...


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9hat to include or e0clude in the

contract *rends towards outsourcing and new types of relationships will

in=uence the type of contract

In a global en)ironment not all terms ha)e the same meaning...

Increased use of the Internet

9hich clauses to use e)elop your own $lause Book

ITC


11/21ITC

!e/'et ,!o$les

,pplicable law Bidding strategy

$hange of ownership>management

$hanged circumstances

$urrency =uctuations & foreign e0change

elays eli)ery

i-erent business cultures

ominance

8ack of speci'city

8anguages


12/21ITC

ie!et le%al sstes

*he $ommon 8aw countries+Cooealth "o't!ies i the Ca!i$$ea3A4!i"a3 Asia ad the Pa"i5"

No!th Ae!i"a (e6"e,t 7'e$e" i Caada adthe state o4 Lo'isiaa i the 8SA)

A'st!alia3 Ne 9ealad3 Is!ael

*he wording of the contract determines+

♦ the "ot!a"t'al o$li%atios♦ hethe! the!e as a $!ea"h o! ot♦ ho is lia$le♦ the !elie4 to $e %!ated


13/21ITC

ie!et le%al sstes

*he $i)il 8aw countries+♦ E'!o,e e6"e,t 8ited :i%do ;;.

♦ !a"o,hoe ad l'so,hoe A4!i"a

♦ Lati Ae!i"a3 7'e$e" ad State o4 Lo'isiaa

♦ No!the! A4!i"a3 Middle East3 T'!


14/21ITC

ie!et le%al sstes

*he 6uslim 8aw countries+♦ Nothe! A4!i"a3 Middle East3 I!a3A4%haista...

*he role of haria and non haria law )aries from country tocountry

In many cases; $i)il or $ommon law traditions ha)e an in=uence aswell


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Cose/'e"es o4 die!et

sstes *he parties ha)e to consciously selectwhich law should apply ( if not%

?either party may ha)e a fullunderstanding of what is intended in thecontract

2isk for misinterpretations


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What a:o hat o' at3 hat o' at to a*oid ?o'! o,tios i4 thi%s %o !o%:o o'! s',,lie!

Ai at @iiB

o#t a""e,t '!ealisti" ,!oises

A*oid a$i%'o's d!a4ti%

:ee, te"holo% i id

:ee, itelle"t'al ? id'st!ial ,!o,e!t i idHa*e a "lea! dis,'te !esol'tio "la'se

Ha*e a "lea! te!iatio "la'se

:ee, "'lt'!e i id


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S',,l st!ate% ad the"ot!a"t

S,ot,'!"hase

Re%'la!t!adi%

Callo"ot!a"ts

i6ed"ot!a"ts

Pa!te!shi,

=oit*et'!es

Ite!al,!o*isio

The s',,lie!$'e! !elatioshi, "oti''

♦

Trust based only on thecontract

♦ No personal relationship

Price orientated

♦

Short term

♦ Supplier performancemeasured on the basis of non-compliance

♦

Trust based on the contractand on supplier’scompetence

♦ Limited personalrelationship

♦

Price and service orientated

♦ Medium term

♦ Supplier performancemeasured on the basis of

non-compliance andthrough supplier evaluation

♦

Trust based on goodwilland co-operation

♦ Strong personalrelationship

♦ Total cost of ownership

orientated

♦ Long term

♦ Buyers and suppliersmeasure each other’sperformance

and ointly developremedial actions

♦


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Soe


19/21ITC

Cot!a"ti% i a olie

e*i!oet-Prepare a draft online but store apaper )ersion

ignatures+ print and sign ordigital signature%

7a)e a general frameworkagreement on paper on how to

contract online


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$ontract :3ish<

A Pri)ate 8aw :9ater<

C *he total ,greement

The "ot!a"t ad the P!i*ate

La


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*7,?K D"U

Preparing the Contracts-lecture 1

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