Minerva’s 5 top tips when entering into a contract
So you have gone through your tendering process and have been handed the successful supplier’s terms and conditions – what next? Our five top tips should help you to focus your attentions to make sure you get the most out of any agreement.
What exactly is included?
It is vital that you are as clear and accurate about the scope as possible when negotiating a contract. If something is not specifically included in the contract then it will not be covered, even if it was specifically envisaged and referred to in any tender documents or pre-contractual discussions.
What are the parties’ obligations?
Tied in with the above, it is important to make sure that both parties’ obligations under the contract are clear. Do you have to do something before the other party performs? What exactly does the other party have to do? What happens if they don’t do it or they are late doing it? A good contract should have key performance indicators to ensure any supplier can be held accountable.
How much is to be charged?
Make sure that if you agree a price that you also agree what is included and excluded in that price, and in what circumstances additional sums will be charged. Make sure you are happy with the payment terms because most suppliers will charge interest on any late payments and it may entitle them to terminate any contract early.
Are there any exclusions or limitations?
Make sure you are happy with any exclusion or limitation clauses that try to restrict or limit the liability of the supplier e.g. if a contract restricts the supplier’s liability to the contract price but you suffer a loss far in excess of this as a result of the supplier’s failure you may find yourself out of pocket.
Check whether you are tied into a minimum contract term or continual payment meaning you have to ‘opt out’ of a contract when it comes to an end to stop it being renewed automatically. Make sure you understand what the notice provisions are including how much notice has to be given and when it has to be given. Make sure you diarise any key dates to ensure these are not missed.
Minerva is a SAAF partner and provider of procurement consultancy and support exclusively for schools.