Introduction to Contract Management

Topics: Contract, Common law, Management Pages: 5 (1032 words) Published: July 26, 2013
A contract is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between or among them. The elements of a contract are "offer" and "acceptance" by "competent persons" having legal capacity who exchanges "consideration" to create "mutuality of obligation.


1. Offer and Acceptance

2. Competent Persons

3. Consideration

4. Mutual Obligation

5. Lawful Object

Contract law varies greatly from one jurisdiction to another, including differences in common law compared to civil law, the impact of received law, particularly from England in common law countries, and of law codified in regional legislation. Regarding Australian Contract Law for example, there are 40 relevant acts which impact on the interpretation of contract at the Commonwealth (Federal / national) level, and an additional 26 acts at the level of the state. In addition there are 6 international instruments or conventions which are applicable for international dealings, such as the United Nations Convention on Contracts for the International Sale of Goods (Vienna Sales Convention)

“The process that enables both parties to a contract to meet their obligations in order to deliver the objectives required in the contract. It covers transition and implementation, ongoing day-to-day management, evaluation, and succession planning.”

The procurement life cycle has the following phases:-
1. Planning
2. Requesting and Receiving Offers
3. Evaluation of Offers
4. Contract Award
5. Contract Management

A successful contract management is stated as existing when: • The arrangements for service delivery continue to be satisfactory to both customer and provider • expected business benefits and value for money are being realized • The provider is co-operative and responsive

• The customer knows its obligations under the contract
• Disputes are rare
• There are no surprises for either party

Activities and processes in the contract management phase of the procurement life cycle model has the following activities • Service Delivery Management
Service delivery management is concerned with ensuring the service is being fully delivered as agreed, to the required level of performance and quality.

• Relationship Management
Relationship management is focused on keeping the relationship between the two parties’ open and constructive, resolving or easing tensions and identifying problems early.

a) Traditional arm’s-length arrangement:
The agency orders and the supplier supplies: There is little need for the supplier to understand the agency, its strategic direction and business objectives. There is little opportunity for the supplier to add any value over and above supplying the ordered goods or services in full, on time and to specification. Some software licensing falls into this category. This is sometimes described as a transactional relationship

b) Partnership arrangement
Both parties fully understand each other’s business and communicate openly. There is an absence of “game playing” or “manipulative” behavior. Adding value is an essential element of the relationship. In a true partnership arrangement there is generally shared risk and reward. For a partnership arrangement to work successfully there must be a degree of cultural alignment and some convergence in goals within the context of the relationship. There must also be a commitment to the relationship at all levels within both the buying agency and the supplier’s organisations. Open communication, information sharing and trust are key elements

• Contract Administration
Contract administration covers the formal governance of the contract and changes to the...
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