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Avoiding disputes through relationship-management contract provisions

The IACCM Web site has a fine article by James P. Groton, "Zero disputes? Collaboration lessons that businesses can learn from the construction industry." It's about how the construction industry, one of the most adversarial in the world, often does projects with zero disputes by using tools "to prevent, control and manage problems before they turn into disputes."

Coincidentally, one of the contract riders I've been developing provides pretty much the same tools as described by Mr. Groton. The rider's provisions are based on my own experience negotiating — and sometimes litigating — technology contracts.

The provisions are:

  • Periodic status-review conferences: Many disputes arise because the parties simply weren't talking to each other enough. This clause requires the parties to talk upon request, and includes an outline of a sample agenda and meeting minutes. The clause will rightly strike many experienced business people as "Management 101," but a surprising number of business people are less effective in running a good meeting than they could be.
  • Party representatives: This clause requires each party, upon request, to appoint a designated representative who has authority to bind the party.
  • Escalation of disagreements: Upon request by either party, disputes get escalated to higher management levels. This gives Party A some ammunition if Party B's 'guy' balks at escalating a disagreement to his or her superior. In that situation, Party A's people can say, "look, are you going to get your boss involved like we've agreed, or does our lawyer need to call your lawyer about breach of contract?"
  • Early neutral evaluation: In lawsuits, some courts use early neutral evaluation (ENE) to try to get parties to settle before they spend a lot of time and money on litigation proceedings. ENE is even more likely to be effective if it's used before litigation begins; hence this clause. See generally the discussion at http://www.pactix.com/notes/ENE.
  • Information exchanges: My experience has been that early information exchanges can be extremely helpful in resolving contract disputes amicably. We might as well face the facts: If a contract dispute were to get into litigation (at least in the U.S.), each party would be able to get pretty much whatever information it wanted from the other side anyway, via the discovery process. So the parties might as well turn over relevant information early, under a confidentiality obligation if necessary, in the hope of avoiding the expense and hassle of a lawsuit in the first place. To that end, this clause requires each party to "endeavor to respond to reasonable requests by the other party for information relevant to the requesting party’s rights or obligations under this Agreement."

I've uploaded an interactive PDF version of the rider, entitled "Relationship management rider," version Adrian (I'm basing the version names on those of hurricanes). Feel free to use this PDF document as follows::

  • open the PDF document in Adobe Acrobat Reader (version 7.0 and up);
  • check the boxes for the provisions you want; uncheck those you don't;
  • print out the form document (the commentary in the right-hand margin can be seen on the screen but won't print);
  • attach the printout to, and incorporate it by reference in, your contract.  (The form document should not be relied on as a substitute for legal advice, of course; ask your lawyer if it's right for you.) 
AttachmentSize
Relationship management rider Adrian.pdf670.91 KB

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