“We do we have a contract, don’t we?” The industry has been so hectic recently some have been overlooking basic document management. Now there is a little belt-tightening going on and contract termination and liability questions are being raised. When all was full speed ahead some didn’t seem to worry about the contract. Friends don’t need contracts do they?
Certainly the motions were started… Now it’s time to know where you stand and the contract cupboard may be looking embarrassingly bare. OK, we don’t have a signed copy but we do have an electronic copy somewhere, don’t we? It’s an all too familiar story. There’s usually a convenient scapegoat. Perhaps a contracts manager who left without, it turns out, a handover (a replacement was hard to find). Or overriding urgency, a “rush job”, where the client relationship (or booking the revenue) apparently took precedence over company policy. Where is that special client relationship now? It transpires the original client-contact has moved employers (twice) since your company commenced work. Now you are faced with a faceless accountant who doesn’t value the “favour” your team thought your organisation was doing them. For those picking up the pieces there is evidence of agreement to be gathered.
This is classic lawyer work. Usually outsourced as it has all the makings of a time consuming, no-win, dead-end project! Strained relationships, tedious analysis of email correspondence, creative interpretation of case law. Expensive QC’s opinions. Worst case? How about a whole bespoke building nearing completion for a single customer project you don’t have a contractual commitment for? The customer now wants a cheaper alternative.
Paperwork yes. Masses of it.
Probably a draft contract, sporadically revised before “more important” operational issues repeatedly pushed it down the priority list. Voluminous e-mails, some paid invoices for related consultancy services, lots of minutes of friendly project meetings with the clients’ team. Lots of client history showing projects having worked out successfully in the past! That was then. This is now.
So “do we have a contract or not?” can be a multi-million dollar question. If you need to ask; I know what experience tells me. Litigation is an expensive gamble. After a long and frustrating journey a simple (and ironically superbly documented) compromise may ultimately be your “best-case” destination. Prevention really is better than cure. Check your contract procedures. Value your contracts people. There is no such thing as half-pregnant. You either have a contract or you don’t. In turbulent times, make sure you do.
Peter Murray is a partner at Scottish law firm Ledingham Chalmers where he specialises in UK corporate law and international projects.
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