{"id":3378,"date":"2014-12-16T17:04:05","date_gmt":"2014-12-16T17:04:05","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/2014\/12\/16\/how-to-review-a-contract\/"},"modified":"2021-07-19T08:08:21","modified_gmt":"2021-07-19T12:08:21","slug":"review-contract","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/review-contract\/","title":{"rendered":"How to Review a Contract"},"content":{"rendered":"

I hope that you have enjoyed the article A Buyer\u2019s 11-Point Contract Review Checklist.<\/p>\n

Personally, I recommend that you never review a contract without a checklist like this.<\/p>\n

Why?<\/p>\n

Well, some terms of a contract can look harmless.\u00a0 And the terms that you are reading on the 20th, 30th, and later pages seem to look even more harmless as your eyes grow weary from reading all of those cryptic phrases like \u201cnotwithstanding the foregoing\u201d and \u201chereinafter referred to as.\u201d<\/p>\n

But in those pages lurks risk.<\/p>\n

For example, think about the 4th point in the checklist:\u00a0 \u201cMake sure that the warranty clause specifies the applicable remedy or remedies for failure and includes the time frame in which each remedy is required.\u201d<\/p>\n

Let\u2019s say that you are contracting for certain batches of items.\u00a0 These items are critical to your organization\u2019s continuing operations for one reason or another.\u00a0 The warranty clause says that the remedy for shipping a defective batch of items is a replacement of the items.<\/p>\n

Sounds fair enough, right?<\/p>\n

If you\u2019ve been in procurement long enough, you\u2019ve probably authorized many purchases where this type of clause applied during your career.<\/p>\n

But, later, a defective batch of items arrives from the supplier.\u00a0 You know you have a warranty in your contract and there is a remedy for receiving defective items.\u00a0 You call the supplier.\u00a0 The supplier tells you that the next batch of items is currently in production.\u00a0 They will ship you a replacement batch when production is complete in about three months.\u00a0 You hang up.<\/p>\n

Wait, what???<\/p>\n

Three months?\u00a0 That\u2019s too long!<\/p>\n

You call the supplier back, demanding that they replace the batch immediately!\u00a0 But those items can\u2019t be made with magic.\u00a0 They have to be manufactured and that takes time.<\/p>\n

What good is that warranty clause going to do for you?<\/p>\n

Possibly nothing.<\/p>\n

Your recourse for this supplier screw-up will depend on what the rest of your contract says.\u00a0 But it is possible that you will really have no recourse other than waiting for the replacement batch.\u00a0 No liquidated damages.\u00a0 No cover damages.\u00a0 No nothing.<\/p>\n

Sure, you could have caught that weakness in the contract yourself without a checklist.\u00a0 But there\u2019s a good chance you may not have.\u00a0 So, now that you have a checklist, you should use it every time you review a contract.<\/p>\n

There\u2019s too much risk not to.<\/p>\n

Become a member<\/a><\/span>\u00a0of one of the world\u2019s largest procurement associations today.<\/span><\/p>\n

Recommended Reading<\/b><\/span><\/p>\n