Contract Formulation - Part A

What are the considerations in preparing and forming a contract? Especially, product type, scope of work and product safety?

Contract formulation

·      Contracting

·         Is the acquisition of goods and services through contract

·      The notion of contracting

·         is a very flexible one

·      A contract can be devised

·         To reflect any number of variables

·         The acquirer's contracting strategy should be designed

·         To optimize the results of the overall project

·         And to reduce the risk on individual contracts

·         Key variables are shown on the next page

Variables to be considered in forming a contract

Examining the variables

The variables listed on the previous page

·         Are the key determinants

·         For selection of contract type

·         And each will be discussed in turn

·      Caveat

Note: We are not lawyers, we cannot provide legal advice

·         Legal texts should be reviewed by legal experts

·         Knowledgeable in the law of the relevant jurisdiction

Product type

Product type can range

·         From standard off-the-shelf products

·         For example, standard equipment components

·         Or off-the-shelf shrink-wrapped software

·         To products requiring some degree of customization

·         I.e. to make them fit

·         To fully-built custom products

·         Such as buildings, facilities, systems

·         And software built to special requirements

·         Or the product may be exploratory

·         Such as in research and development

Scope of work

The product scope of work variable

·         Depends on the extent and reliability

·         Of the requirements definition

·         And hence on the degree of certainty

·         Of the scope of work description

·         and the extent and timing

·         Of the changes that might be expected

Product safety environment

·      The product safety and liability variable

·         Depends on the product's operating environment

·         E.g. whether public safety is involved

·         And the extent of potential liability

·         Should the product fail in use

·      For example

·         A new aircraft design requires more careful construction and testing

·         Than, say, a first-generating computer operating system