The Procurement and Supply Manager’s Desk Reference Second Edition Chapter 5 Contracts and the Legal Aspects of Procurement

Topics – Chapter 5 Contract Essentials Contract Requirements Contract Types Other Contract Types Methods of Exchange Other Contract Elements Legal Authority and the Buyer’s Responsibilities Reviewing Contracts for Legal Requirements Aligning Contracts and Practices with Policy Maintaining Procurement Documents and Records

Contract Essentials Contracts cover the purchase of goods and services Chapter 5 Contracts cover the purchase of goods and services Can be written or oral…equally enforceable Some require validation in writing Identification of responsible party Signature Clearly defined subject matter Specific terms and conditions Identification of the consideration

Basic Contract Requirements Chapter 5 Offer and Acceptance Mutual agreement Legality Consideration Capacity …legally competent One way to think of consideration is by referring to the Latin term quid pro quo. Translated literally, quid pro quo means “this for that” or “something for something.” While we generally consider this to mean something of equal value, it is also generally considered that value is subjective and must be determined by the parties to the exchange.

Basic Contract Types Purchase Orders Chapter 5 Purchase Orders Indefinite Delivery/Indefinite Quantity Definite Quantity Fixed-Price Contracts Cost Reimbursable Contracts

Fixed-Price Types Chapter 5 Firm Fixed Price Fixed Price with Incentive Fixed Price with Economic Price Adjustment Fixed Price with Price Redetermination Fixed Price, Level of Effort Who is at risk?

Cost-Reimbursable Contracts Chapter 5 Cost Plus Fixed Fee Cost Plus Incentive Fee Cost Plus Award Fee Cost Sharing Cost Only Time and Materials

Other Types Chapter 5 Letter of Intent Consigned Goods Contract Master Purchase Agreement Master Services Agreement Non-disclosure Agreement Commercial Lease

Methods of Exchange Chapter 5 Offer and acceptance Battle of the forms Mirror image rule Acceptance of oral agreement Revocation Change orders Disputes

Legal Authority Agency Authority Apparent authority Ratification Chapter 5 Agency Authority Apparent authority Limited authority Ratification Financial responsibility

Contract Review Legal requirements Intellectual property Legal venue Assignability Insurance Reviews and claims Parol evidence Reservation of rights Liability limitations Liquidated damages Regulated materials Force majeure

Aligning Contracts and Practices with Policy Chapter 5 Conformance to law Ethical principles Conflict of interest Bribery Personal purchases Proprietary information

Procurement Documents and Records Chapter 5 POs and contracts Supplier qualification records and reviews Catalogs Inventory records Project files

Summary