top of page

Common pitfalls in contract negotiation

Below are some common pitfalls that frequently arise during the contract negotiation stage, and some suggestions to address them.

Scenario 1: Incorporating tender documents into the contract

”We have no time to draft the specification and delivery schedules in our contract. Can we just use the responses submitted during the tender stage by including it in those schedules?”

While convenient, this is a risky approach because tender documents:

• Can lack certainty and detail. Ambiguous drafting in a contract is likely to cause disagreement in future. Further, a contract may be found to be unenforceable if its terms are too uncertain.

• May have broad sweeping statements and “sales-type” talk. For example, “we want to be your trusted supplier to help deliver all your business’s needs relating to [project or task] and will do all we can to help you achieve that objective”. When looked at closely, it is difficult to distil what the precise obligations (and deliverables) are.

Suggested approach:

• Avoid copying and pasting wording from tender documents into the final contract. If you do use wording from these documents, speak to your in-house lawyer on how to make the drafting as clear and certain as possible.

• Get input from relevant stakeholders in the business when drafting these schedules. Check that those involved in the actual delivery of the obligations are satisfied that the drafting accurately represents what they need to do, and that it does not create an unreasonably onerous obligation.

Scenario 2: Statements made during the negotiation process, but not written into the contract

”The supplier gave some oral assurances during a meeting about a price discount for the goods / services. Would this be a term of the contract? Can we rely on it?”

In most cases, no, you would not be able to rely on it because:

• Most contracts will have what is known as an “entire agreement” clause which generally provides that all the agreed terms of the contract are to be found in the contract, and nowhere else.

• The effect of this is that, if something is not written in the contract, it is not a term of the contract, so the parties cannot rely on it.

Suggested approach:

• If you want a term to form part of the contract, make sure this is written into the contract.

• Seek clarification from us on what the entire agreement clause in the contract says and whether this needs to be amended.

2 views0 comments


bottom of page