CIPS L4M3 Chapter 3 (3.1) Flashcards
1
Q
What are Express terms?
A
- Contractual terms which are specifically stated in contract
- Anything set out in a schedule to a contract
2
Q
What are Implied terms?
A
- Contractual terms that exist but are not written within the contractual documentation, i.e. the law of the land
3
Q
What will and an express term in a contract override?
A
- an implied term, unless the implied term is created by statute and the law states that it cannot be overridden
4
Q
Why should express terms be clear and what should they do in the contract?
A
- Set out the obligations of the purchaser
- Set out the obligations of the supplier
- Set out the rights of the purchaser if the supplier defaults
- Set out the rights of the supplier if the purchaser defaults
- State how the parties will deal with circumstances beyond the control of either party
- Where possible, either confirm or override any potentially implied terms
5
Q
What are Schedules?
A
- Appendices to the contract which provide more detail - often technical detail - on the requirements
6
Q
What is a contract clause?
A
- precise wording in the main document, which will have its own reference number
7
Q
What is a contract term?
A
- the totality of that part of the agreement and so includes the clause wording and any schedule which it refers
8
Q
What are Standard terms and conditions?
A
- They are basic terms and conditions of business governing transactions that do not have a definitive contract, usually designed to be included in form documents such as orders
9
Q
When are Standard terms used?
A
- repetitive transactions, particularly those that are of low value and low risk
10
Q
What are the advantages of using standard terms and conditions?
A
- Time saved in negotiating individually with suppliers
- Reduced admin costs
- Consistency of approach
11
Q
What are the disadvantages of standard terms and conditions?
A
- Risk that they do not become effectively incorporated into the contract - legal uncertainty and potential ‘battle of the forms’
- Do not allow for contract-specific risks
- Can become out of date
- Can create conflicts if attached to purchase orders that are also used as call-off orders under term contracts
12
Q
What is an Ineffective contract term?
A
- A term in a contract which cannot be legally enforced
13
Q
What are some examples that an ineffective clause may include?
A
- Exclusion of liability for negligence
- Unusual and unexpected conditions that would not normally apply and to which the other party’s attention was not specifically drawn
- Exclusion of liability for death of an individual
- Lack of warranty of fitness for purpose of the goods
14
Q
What are the key areas that must be covered in standard terms?
A
- Definitions
- Express term to override other standard terms (to avoid battle of the forms)
- Express term to state that in specific framework or term contracts signed by the parties, the express terms take precedence over standard terms
- Formation of the contract
- Order of precedence
- Price
- Invoicing and payment
- Specification
- Obligation to comply with the law
- Delivery and risk
- Warranties and liability
- Intellectual property and similar rights
- Termination
- Confidentiality and use of data
- Ethics and CSR
- Law and Jurisdiction
15
Q
What is the meaning of Precedent?
A
- A court judgement which is binding on future legal decisions
16
Q
What is a Legalese?
A
- A complex vocabulary of the legal profession
17
Q
What does Legal certainty mean?
A
- Knowing what the law says, what it means, and therefore how the courts will decide in the event of a dispute
18
Q
Why should simplifying legal contractual language not be done without seeking legal advice?
A
- because simplifying the language might remove some of the protection intended to be afforded by the wording
19
Q
List the examples of model form contracts
A
- NEC: New Engineering Contract
- JCT: Joint Contracts Tribunal
- AS: Australian Standards contracts
- FIDIC: International Federation of Consulting Engineers
- IMechE/IET: Institution of Mechanical Engineers/Institution of Engineering and Technology
- CIPS: Chartered Institute of Procurement and Supply
- ITC: International Trade Centre
20
Q
What are Model forms of contract and what do they contain?
A
- A model form of contract is a template.
- Model forms contract contain core clauses that are standard, but they are templates designed to be used with supporting documentation that is project-specific
21
Q
What are the key principles that apply across all the model forms?
A
- Contract-specific details: parties to the contract, contract subject matter, dates etc.
- Standard common clauses
- Schedules to cover pricing, specification, and any other contract-specific details
22
Q
When might improvements to model form contracts come about?
A
- Changes in national or international law
- Several legal disputes have highlighted an ambiguity or weakness in the contract
- Technological change in the sector creates new problems, risks or opportunities that need to be catered for within the contract
23
Q
What are the advantages of using model form contracts?
A
- Saves time and resource drafting bespoke contracts
- Both suppliers and purchasers familiar and comfortable with main terms
- Specific to sector or purchase type
- A measure of legal certainty on court’s response to disputes
24
Q
What are the disadvantages of using model form contracts?
A
- Poorly trained staff may use templates incorrectly or choose inappropriate model
- Amendments to published templates can create ambiguity
- May become out of date if not reviewed regularly
- May be biased depending on ownership of the mode
