One of the key purposes of a written contract is to manage, control and limit the liability and risk that the parties will have in connection with the transaction. This purpose can be achieved, but only if the contract is effective in dealing with each and every actual and potential risk that exists, or that will come to exist, in the course of the contract’s performance. This “total management” concept can be characterized as a “scheme of liability”.
Inherent in the idea of a scheme of liability is transparency and openness. That might seem alien to many contract negotiators because it is common for negotiating parties to “duck and weave” around difficult issues such as risk and liability in an attempt to obtain some advantage. However, in the end, if the contract does not cover the total realm of actual and potential liability, the parties will be left with “open” exposure – an exposure to risk and liability that has no, or at least no adequate, cap or exclusion. In those cases, the contract becomes a time bomb. One, or both, parties will have to proceed through performance hoping that the relevant trigger will not be pulled.
This course is presented by an in-house lawyer with many years of experience in negotiating and working with commercial contracts. It will explain and demonstrate how to successfully implement schemes of liability in your day to day contract negotiations and will be particularly valuable for in-house lawyers.
- Overview and background concepts behind the idea of a “Scheme of Liability”.
- The range of liabilities that must be addressed.
- Cross-border issues
- The tools that can be used to manage and control the potential liabilities.
- Repair, re-perform or replace
- Remedies as false friends
- What if the liability cannot be met?
- Packaging the remedies and responses to control liability – creating the scheme of liability
- Complete agreements clauses
- Total liability clauses