HOW THIS BOOK IS ORGANIZED
In Chapter 1, we have provided a brief introduction to the topic and have explained the sometimes challenging managerial-legal "dual ownership” of contracting processes and documents. We have also briefly introduced our approach to contracts, risks and opportunities: the proactive approach.
In Chapter 2, we present the big picture by asking why companies make contracts. After defining the core concepts used in this book, such as "contract,” "risk,” and "contract risk,” we discuss the business and legal objectives at risk and the promotive, preventive, and balancing power of contracts. We then introduce what we consider the foundation of identifying and managing contract risk: contract literacy.
Chapter 3 provides an overview of the sources of contract risk. It illustrates how contract wording or legal issues, while they are important when resolving legal disputes, are not the primary sources of contract risk. After introducing what we consider to be the true risk sources, we discuss current contract practices and how these must change.
Chapter 4 focuses on risks in negotiating the business contract, such as legal risks that arise in contract formation, the risk that negotiators will use negotiating strategies that cause them to overlook opportunities to create value that will benefit both sides, and the risks associated with a deal-maker mindset. The chapter also introduces lean contracting as a method that enables the development of contracts that are management as well as legal tools.
In Chapter 5, we cover risks inherent in a contract itself. We address performance concerns and legal concerns, along with the most frequent sources of claims and disputes. We discuss contract clauses and issues that are typically considered to be risky and how to respond to them through the use of exclusion and limitation clauses and other conventional contract risk allocation devices. While contract literacy recognizes the importance of being able to identify devices used to respond to risk, the chapter also illustrates how true risk management needs to go beyond them. Chapter 5 also illustrates, with examples, how what is left out of a contract— knowingly or unknowingly—can be at least as important as what is included.
Chapter 6 provides tools and techniques to secure systematic contract risk recognition and response. The chapter's introduction of the contract risk management process and the contract risk and opportunity management plan is followed with examples of how you can apply them. In addition to the more traditional tools, the chapter introduces visualization as a new approach to simpler contracting and enhanced risk and opportunity management. the lean and visual (iKEA) approach to contracts, risks, and their management illustrates how the parties can manage risks jointly and move from contractual risk allocation to true contractual risk management.
in conclusion, Chapter 7 provides a short summary of key actions that enable you to implement the practices described in this book and to make full use of your contracts to achieve your business objectives while recognizing and managing contract risks and opportunities.