Contracts

Once you get to the delivery stage of your project, you will need to ensure that you have entered into appropriate and risk-free contracts, both with your sponsors and with any sub-contractors to be engaged for its delivery.

Joule strongly recommends getting qualified legal advice before providing or signing any contract with any party involved in your project.

All projects have different requirements and relationships, but here are some general factors to consider:

Contract Contents

Contracts are written with precise and careful wording. Sometimes this can be in specialist legal language. Lawyers are trained and qualified to read, interpret and write this for you. Although consulting a lawyer may cost you money, it will be a worthwhile investment especially if anything goes wrong later in your project.

Contracts usually have a first section covering general/standard issues for all relationships, followed by schedules identifying the particular detail and terms of the current project. Standard wording usually covers: the parties involved in the relationship; the date signed with witnesses; obligations of all parties; force majeure; copyright; insurance; confidentiality; brand usage; disputes & arbitration; termination.

Schedules get attached to the first section and usually cover: extent of works; scope of services; timeline & milestones; payment schedule and reporting. It takes time to negotiate contracts and this should not be rushed; asking questions at this stage about anything you are not sure of is essential. When signing a contract, always initial every page as well as signing on the line provided and always keep a signed copy of the contract in your files.

Sponsor Contracts

If you have attracted a government sponsor (public funding), the funder will expect to provide you with the contract; this will outline all the terms that you have to meet. If you have attracted a commercial sponsor (private/corporate funding), the funder will usually provide the contract, particularly if they are a large organisation.

Small companies are sometimes happy with a letter of agreement that you develop and provide in draft. They will sometimes send this to be checked by their lawyers. In general, it is important to have a written summary of exactly what has been agreed, even if one party is saying it does not require a contract. A letter of agreement signed, witnessed and dated by both parties is a contract.

Sub-contractor Contracts

These generally follow the same structure as sponsorship contracts, with the schedule defining what specific work is to be undertaken, time line and agreed cost. In addition a job description, or outline of work required, is essential with performance targets often identified and coinciding with milestone payments.

Some subcontractors may however prefer to provide you with a quote or an estimate for the work. It is important that you know what each of these mean. A full legal description of the difference can be found on the Consumer Affairs website. Unless specifically excluded in an agreed contract, rights under the Consumer Guarantee Act apply.

When quotes/estimates are received and before formally accepting them, check for accuracy of work requested and for any terms the contractor may have. These are usually printed on the back of quotes or provided as an additional sheet.

Be aware of when and how the contractor wants paying. In many projects with milestone payments, ensure your final payment is scheduled at a date following the completion of the work. Look also for any implications to your projects cash flow of any payments. Most quotes/estimates exclude GST: remember to check this and adjust your budgets accordingly.

If there are any special conditions from your end, eg on-site security, advise the contractor preferably in writing, so that any adjustments can be made before you agree the work. Check that any compliance certificates, eg electrical work, will be included as part of any agreed work, and ensure that you are covered for any ACC issues.

It is also wise to include a confidentiality clause in any agreement, ensuring the contractor will not leak any sensitive information. Some organisations also include a clause which ensures that any blue skies project development remain their intellectual property, not the contractors. Be pro-active with any engaged contractor, checking for any changes in work or unforeseen problems which may ultimately result in different outcomes and/or price.

If things are not going as you expected, talk with the contractor and follow this up with a written statement which may ultimately be the basis of an agreed variation or a formally recorded point of difference that could be used in a dispute process.