January 08, 2016

When Standard Form Contracts are Non-Standard

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The world of the contract lawyer should never be immune from the press for efficiency; the reliable, predictable and confidently reproducible contract in standard form is the one-size solution to fit most client needs.  After all, there is no need to re-invent the wheel when it rolls smoothly … just be certain that you are working with the standard form, and not the customized version.

We generally recommend that our clients employ standard forms of agreement, either bespoke documents crafted for their specific needs or industry-generated documents that are recognized to be balanced in their obligations and used widely enough to be consistently interpreted.  That said, we are frequently engaged to tailor even these off-the-rack terms and conditions, normally to better fit the work but sometimes just to suit the client.  The impact can be negligible or can turn the agreement on its head.  In either case, recognizing what has changed is critical.

Whether invited or not, exceptions and requested deviations from proposed contracts normally accompany RFP submissions but, often as not, the amendments may be front-end loaded in the RFP itself and not apparent at first glance.  Popular contract options like those produced by the Canadian Construction Documents Committee (“CCDC”) are obvious in their use of a fixed-form (look for the appropriate copyright seal) and provide clear warning that alterations, additions or modifications are in the Supplementary Conditions.  The Supplementary Conditions then refine or re-write the terms and conditions of the agreement. Other iterations may be less obvious.  For example, the standard form that we have crafted for one multinational has evolved to vary significantly from its original form of just a couple of years ago.  While not identical, the versions are easily mistaken for each other – the devil is in the details when changes are intended to be seamless.  As a result, those courting business in 2016 face a significantly different set of expectations and obligations than when they were vying for the same work in 2012. Especially if there is a perceived opportunity to negotiate, the challenge of avoiding a burden that has been committed by contract is formidable.

In all cases, there is no substitution for reviewing the documents.  Technology can assist as familiar software often includes functions to compare documents and highlight deviations.  This is especially useful in maintaining focus and avoiding unintended modifications when negotiating lengthy documents, but it is only viable if you are sufficiently familiar with the entire document to appreciate the nuances that the changes spawn.  Contracts are intended to operate as comprehensive documents; each clause is interpreted in the context of the contract as a whole.  Modification of one term can have unintended implications in that even if it does not directly contradict, it can modify another clause so that both have meaning. 

Given the presumption that parties intended what their contract says, knowing what it is that you are committing to, and whether or not you are amending it, obliges you to understand the documents.  If they do not reflect your intended agreement, you need to speak up before signing.  If they do not make sense, you need to take steps to have them clarified, either through explanation or amendment.  Starting from a standard form should give you a leg-up but, when all is said and done, your agreement has to be your own.

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When Standard Form Contracts are Non-Standard

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Cox & Palmer publications are intended to provide information of a general nature only and not legal advice. The information presented is current to the date of publication and may be subject to change following the publication date.