ABSTRACT
A carefully drafted legally binding contract is essential to the satisfactory implementation of a sound outsourcing agreement. Drafting the contract is a protracted endeavour and cannot start too early, but it is also an iterative process because the content is likely to evolve in line with the progress of the procurement project, influenced by informal meetings with potential suppliers and changes to the envisaged solution. In any event, a comprehensive, coherent and professionally structured version needs to be available in support of the ‘expressions of interest’ phase of the project, in order that an outline can be provided to interested suppliers, while a fully matured version needs to be available as the basis for contract negotiations. It is worth noting here that an experienced supplier will perhaps offer to provide a standard draft contract as an expression of good will and co-operation. It is recommended that the offer be politely rejected. The supplier’s version will be biased in favour of the supplier. It is much better that a home-grown version be developed that more properly reflects the customer’s perspective and is biased in that direction, leaving the supplier to negotiate out any bias that they may perceive. All of this is, of course, the natural territory of the company’s con-
tract manager and lawyers, but the content of the contract cannot be left exclusively to this particular body of expertise or there will be danger that the emphasis of important points of detail may be lost in legal language. In order to avoid this situation, it is recommended that the main body of the contract be limited to defining the rights, obligations and duties of each party to the agreement, with the detail of the
various services, costs, charging formulae, specific user and so on set out in supporting schedules. This sort of approach ease the drafting burden as it is the schedules, rather than the of the document, that are likely to change as the project a minimum, the main body of the contract should include:
The Terms and Conditions of the agreement. The Preamble: identifying the parties to the agreement and some
form of statement setting the context for the contract. An outline description of the services to be delivered, along with any
exclusions or qualifications to the supplier’s obligation. A requirement upon the supplier to deliver their proposed
implementation plan. The term of the contract. An explanation of the change control process. A statement on title and risk: a declaration to the effect that title to
any resource and assets, including the stored records and associated transaction records, remains with the company.
