A Buyer's 11-Point Contract Review Checklist
PurchTips edition #317
By Charles Dominick, SPSM, SPSM2, SPSM3
Are You Using A Checklist To Review Your Contracts?
Every contract seems to provide adequate protection when it is negotiated and signed. However, during contract performance, disputes often arise between buying organizations and their suppliers. This checklist is designed to help you review your contracts before signature so that you avoid some of the most common procurement contract pitfalls.
- Make sure all prices include a unit of measure.
- Make sure that pricing is either expressed as fixed or that the circumstances and methods for pricing changes are specified.
- Make sure that the Force Majeure clause does not contain any unreasonable excuses for the supplier's failure to perform.
- Make sure that the warranty clause specifies the applicable remedy or remedies for failure and includes the time frame in which each remedy is required.
- Make sure that the time that the warranty begins is adequately specified as there are many options.
- Make sure that the limit of liability provision applies to your organization, not just the supplier.
- Make sure that the confidentiality provision protects your organization's intellectual property, not just the supplier's.
- Make sure that the indemnity provision protects your organization, not just the supplier.
- If the time frame for payment and/or delivery is specified in days, ensure that it is clear when the counting of days begins as there are many options.
- Make sure that how the word "days" is to be used is adequately defined as there are many options.
- Make sure that you follow your organization's policies for having contracts reviewed by an attorney.
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