A short guide to contract risk - A short guide to contract risk -

WHY THIS BOOK AND THIS TOPIC?WHO "OWNS" CONTRACT RISKS?A FRESH PERSPECTIVE: A PROACTIVE APPROACH HOW THIS BOOK IS ORGANIZED Contracts and Risk—the Big Picture WHY DO COMPANIES MAKE CONTRACTS?WHAT EXACTLY DO WE MEAN BY "CONTRACT" AND "CONTRACTING?"WHAT EXACTLY DO WE MEAN BY "RISK?"CONTRACT RISK: UNCERTAINTY THREATENING THE ACHIEVEMENT OF OBJECTIVES CONTRACT OPPORTUNITIES: FAVORABLE OUTCOMES, BENEFITS AND PREDICTABILITY THE PROMOTIVE, PREVENTIVE AND BALANCING POWER OF CONTRACTS CONTRACT LITERACY: THE FOUNDATION FOR IDENTIFYING AND MANAGING CONTRACT RISK SUMMARY Sources of Contract Risk LANGUAGE RISKS, CONTRACT WORDING, AND BEYOND PERCEPTIONS, GROWING COMPLEXITY, AND COMMUNICATION FAILURES GAPS IN THE CONTRACTING PROCESS— LACK OF CONTRACT MANAGEMENT CONTRACTUAL RISK ALLOCATION LEADING TO THE ILLUSION OF CONTROL WHERE NONE EXISTS CURRENT CONTRACT PRACTICES—FOCUS ON WRONG ISSUES AND TERMS SUMMARY Risks in Negotiating a Business Contract LEGAL RISKS IN CONTRACT FORMATION THE SOURCE OF CONTRACT LAW THE KEY LEGAL ELEMENTS IN CONTRACT FORMATION RISKS RELATING TO NEGOTIATION STRATEGY AND CONTRACT IMPLEMENTATION MISSING VALUE-CREATING OPPORTUNITIES DURING THE NEGOTIATION PROCESS DISTINCTION BETWEEN DEAL-MAKING AND DEAL- IMPLEMENTATION MINDSETS RISKS RESULTING FROM ATTEMPTING TO CREATE A LEGALLY PERFECT CONTRACT A DECISION-MAKING TOOL FOR ADDRESSING RISK DURING THE CONTRACTING PROCESS SUMMARY Risky Terms and Issues in Contracts WHICH CONTRACT TERMS DEAL WITH RISK?MOST FREQUENT SOURCES OF CLAIMS AND DISPUTES ACTIVE CLAUSES VS. PASSIVE CLAUSES— PERFORMANCE CONCERNS VS. LEGAL CONCERNS HIGH-RISK ISSUES IN CONTRACTS SCOPE AND PERFORMANCE: WHAT THE CONTRACT IS ABOUT AND WHAT IS IN AND OUT OF SCOPE WHO IS RESPONSIBLE FOR OUTCOMES? RESULTS OR RESOURCES?GAPS IN CONTRACTS—ROOM FOR MISUNDERSTANDINGS AND UNINTENDED LIABILITIES?UNSPECIFIED REQUIREMENTS—WHO NEEDS TO WORRY?IS A CONTRACT OR CLAUSE LEGALLY BINDING AND ENFORCEABLE?CLAUSES THAT MAY BE RISKY—OR OFFER PROTECTION AGAINST RISKS UNLIMITED LIABILITY (THROUGH VISIBLE OR INVISIBLE TERMS)CLAUSES EXCLUDING OR LIMITING LIABILITY CLAUSES DEALING WITH CONSEQUENTIAL LOSS LIQUIDATED DAMAGES AND OTHER AGREED REMEDIES CLAUSES INDEMNITIES OR HOLD HARMLESS CLAUSES FURTHER EXAMPLES OF RISKY CLAUSES SUMMARY Contract Risk Recognition and Response: Processes and Tools IMPLEMENTING CONTRACT RISK MANAGEMENT: NEITHER EXPENSIVE NOR COMPLICATED USING QUALITY PRINCIPLES TO IMPLEMENT CONTRACT RISK MANAGEMENT: A CASE STUDY TOWARDS SYSTEMATIC CONTRACT RISK MANAGEMENT THE CONTRACT RISK MANAGEMENT PROCESS: RECOGNITION—REVIEW—RESPONSE THE BASIC PRINCIPLES OF RISK MANAGEMENT THE CONTRACT RISK AND OPPORTUNITY MANAGEMENT PLAN WHY DO YOU NEED A PLAN?APPLYING THE FOUR STEPS OF THE PLAN STEP ONE: BECOME CONTRACTUALLY LITERATE STEP TWO: RECOGNIZE CONTRACT RISKS AND OPPORTuNITIES STEP THREE: REVIEW CONTRACT RISKS AND OPPORTUNITIES STEP FOUR: RESPOND TO CONTRACT RISKS AND OPPORTUNITIES CONTRACT MANAGEMENT: OWNERSHIP, ACCOUNTABILITY, AND BEYOND MANAGING RISKS JOINTLY: FROM RISK ALLOCATION TO TRUE RISK MANAGEMENT EARLY WARNING SYSTEM AND JOINT RISK MANAGEMENT BUILT INTO THE CONTRACT THE CHALLENGE: ENGAGING PEOPLE AND COMMUNICATING CONTRACTS A WAY TO MEET THE CHALLENGE: VISUALIZATION THE CONTRACT ELEPHANT: DIFFERENT VIEWERS HAVE DIFFERENT LENSES AND BLIND SPOTS THE HAND TOOL: A SIMPLE TOOL FOR BETTER CONTRACT REVIEW AND RISK CONTROL THE BOW-TIE DIAGRAM: A WAY TO VISUALIZE RISKS AND WAYS To CoNTRoL Them THE TIMELINES THAT COULD HAVE PREVENTED A MULTIMILLION DOLLAR DISPUTE A NEW MINDSET ENABLES BETTER DECISIONS AND RESULTS CONTRACT RISK RECOGNITION AND RESPONSE (б)THE LEAN AND VISUAL (IKEA) APPROACH TO CONTRACT RISK MANAGEMENT SUMMARY