Introduction

Commercial and business relationships are based on contracts of one type or another. These are becoming increasingly complex, and as trade becomes ever more international, the differences in approach between different legal and contracting systems become a greater issue. All business professionals need to understand what a contract does (and does not) require them and the other party to the contract to do, and the consequences for both parties of any failure. This course is intended to provide an understanding of contracting in the English language but in an international context.

Course Objectives of The 3 Phases of Contract Management in Energy Sector.

To enable delegates to improve their understanding of the role of contracts within a business, and how strategies can be developed to improve the commercial outcomes and the management of contracts. The course will also allow delegates to consider the latest international thinking in dispute resolution, and how this can be used in everyday business life to reduce conflict and the costs and delays associated with more conventional approaches.

Course Benefits of The 3 Phases of Contract Management in Energy Sector.

• Develop an understanding of the role of contracts in the business world

• Explain how contracts are structured

• Examine current thinking on contracting structures in an international context

• Improve understanding of the main terms and conditions of contracts

• Understand the importance of change management and control

• Develop an appreciation of the collateral documents that work alongside contracts; including bonds, guarantees, letters of intent, etc.

• Review the latest international thinking in alternative methods of dispute resolution

Core Competencies

• Strategic planning

• Contract drafting

• Ability to instruct and manage lawyers

• Commercial management

• Risk assessment and management

• Negotiation skills

• Dispute resolution

Course Outlines of 3 Phases of Contract Management in the Energy Sector

Contract Management in the Context of Energy Sales/Supply Agreements

What are contracts and how are they created?

• The need for contractual relationships

• What is needed to create a valid contract? 

1. Intention to create a legal relationship
2. Written or oral?
3. Other legal formalities in different countries
4. Signing and sealing
5. Witnesses
6. Authority to sign
7. How to prove authority

• What happens if there is no contract, but work is carried out anyway?

• Making contracts enforceable – with particular emphasis on the international context

• Online Contracting

• Contract Management Review and Summary

Structure of contracts

• Form of Agreement
• General Terms and Conditions
• Special Terms and Conditions
• Schedules or Appendices
• Title (ownership) and risk of damage

1. When does it transfer?
2. Use of ICC INCOTERMS

• Notices and other formalities

• Which law and which courts?

• Different contractual structures

• Traditional

• New structures used in the Middle East

• New structures not widely used in the Middle East

• Side letters - why they can be dangerous

• When to Obtain Legal Advice

Collateral documents

• Guarantees

1. Advance Payment
2. Parent Company Guarantees

• Retention/Withholding

• Letters of intent

• Letters of comfort or awareness

• Types

• Who should carry the cover?

• How should you manage claims?

• Are banks or insurance companies good enough security?

• Insurance policies

• Assessing the need for financial security in the current economic climate

• Changes to the Contract documents

1. Need for consent
2. Assignment/Novation explained and distinguished
3. Waiver

• Changes to the scope

• Variation clauses

• Notice provisions

• Valuation of variations and changes

• Claims – what they are, and how they arise

• Delay caused by the client

• Delay caused by contractor/supplier

• Force majeure

• Delay and disruption

Resolving Disputes

• Negotiation

• Staged dispute resolution clauses

• Litigation

• Arbitration

• New best practices in dispute resolution

1. Mediation
2. Conciliation
3. Early neutral evaluation
4. Expert determination
5. Mini-arbitration
6. Pendulum arbitration

• Final questions and review of course

Assessment leading to ILM Endorsed Certification:

Learners have to demonstrate in a work-based assignment a clear understanding of the role of contracts within a business by identifying a contractual problem within the workplace and examine ways to process or resolve it. The problem may relate to the inception, negotiation, structure, content, management, breach or termination of the contract or any variety of these. Learners should focus on showing:

• Ability to understand commercial issues relating to the contract

• Choice of potential contracting strategies

• Appropriate engagement of and communication with the legal department

• Understanding where appropriate of using bonds and guarantees as part of contracting strategy

• Control of change

• Use of modern dispute resolution techniques

• Chosen method of improving relationships with suppliers and contractors as a result of reducing conflict