14.1 CONTRACT CHECKLIST
14.2 SPECIMEN CONTRACT
Most work is now done by contractors skilled in the operations required. Use of contractors needs a contract to define the work to be done or the payment to be made. Legal definitions and requirements vary from country to country and contracts should always be drawn up either using internationally accepted contracts or local ones.
Some things are standard. A contract is an agreement between parties to do something for a consideration. You cannot have a contract if there is no 'payment'. If the nice lady in the cake shop says 'have this cake as a present' there is no contract. If she says 'have this nice cake if you give me 20c.' and you say 'yes', there is a contract in place. If, however, you were to reply' the cake is only worth 15c.' you have made a counter offer and there is no contract until the lady replies 'done!'.
The purpose of a contract is to get goods or services or, in the area of our forestry contracting concern, work done in return for payment. In negotiating the contract the important thing to remember is the purpose of the contract. If it is to get work done the contract should be made in such a way as to expedite that end. It may be verbal, but increasingly in writing, and as long as there is an offer and an acceptance there is a contract in force. In either case the contract should be made in such manner as will maximise the likelihood of performance, and minimise the possibility of failure.
The form of contract most likely to be seen in the industry is where an owner or agent tenders or is willing to negotiate a contract for performance of some work. In doing so he probably stipulates the conditions of contract that he would wish. The offer comes from the contractor in stating that he is willing to carry out the work in accordance with the conditions laid down (or in accordance with some new conditions that the contractor wishes to place within the contract) and the contractor states the payment he would require. If the owner accepts the 'offer', the contract exists. Any further negotiations are either adjusting terms of the contract, to which both parties agree, or are a new offer and acceptance, i.e. a new contract. The offer must be intended to create legal relations and the acceptance must be of the offer in its terms.
In most contracts there will be a section which deals with the common conditions of contract such as Insurance, Health and Safety and Definitions of the parties to the contract. These common clauses in the contract are usually standard and are used in all of the contracts from the organisation which is placing the contract. The other section will deal with specific matters to do with the site, specification and payment for the particular contract. These clauses are more likely to be prepared by a local manager and could therefore have more need for clarity and agreement of both of the parties.
This checklist provides an indication of the clauses that should be in a full contract. Many of them are related to standard conditions (1-9) and the others are concerned with the specific tasks and arrangements for the particular job to be done. It is sensible to examine any contract and to compare it with this checklist. Variations can then be judged in terms of importance to the parties to the contract. Contracts should not be signed if there is any doubt.
1. Details of parties
Definitions (Employer; Contractor; Merchant; Owner)
2. Date of Agreement
3. Duration of Agreement
This should indicate the length of the contract to enable the contractor to judge the resources required.
4. Health and Safety
5. Liability and Insurance
Types of Insurance
Amount of Insurance
Liabilities (Damage; Pollution; etc)
Reinstatement of Damage
6. Suspension/Termination/Change of Contract
Variation in quantities\species\site
Breaches of Contract
7. Disputes procedure
8. Use of Sub Contractors
9. Terms of Payment
Price (per Unit\Fixed\Day Rates)
Unit of Payment (Cubic Metre\Piece\Hectare\etc)
Measurement of Units
Instigation of Payments (Invoice\Weighbridge Ticket\Time)
Period of Payment (30 days\60 days)
Reconciliation Payments and work quantities
Interim and Final payments
Work ineligible for payment
Payment for additional work
10. Description of Work
Details of Crop\Materials to be used
General Description of operations
Specification of works or products
Method and order of working
Special Constraints (Shooting Period\Times of work)
Standards of Work
11. Site Details
Permissions for use
Contract Law will vary from country to country, but a small contract may look something like this,
This is a contract between___________of___________ (Hereinafter called the Employer) and ___________ of ___________ (Hereinafter called the Contractor). The work involved and the form and rates of payment are written overleaf. The site of the works is ___________ and a site plan is attached.
2. The Contract is for the Contractor to [cut and prepare timber](or such other function) in accordance with the instructions of the Employer and the schedule overleaf. The Employer will have indemnified the Contractor regarding the ownership and licensing of the operations involved. The Employer reserves the right to reject any of the products of the operations where these do not meet the instructed specification.
3. Payment for work will be in accordance with the rates recorded below, and made within ___________ days of receipt of the invoice.
4. The Period of the Contract is ___________ days/weeks/months from__/__/9__. Extensions to this contract period must be agreed in writing.
5. The Employer will advise the Contractor, before the commencement of the work, of the Hazards and constraints associated with the site. The Contractor will ensure that all persons working on the site or engaged by him shall comply with the Statutory Health and Safety Regulations and any other appropriate law.
6. The Contractor will satisfy the Employer that the employees and operatives on site are properly trained for the tasks encompassed by the contract and have such certificates of Competence as are required. He will ensure that all equipment, trailers and the like used on site are safe, legal and insured.
7. The Contractor will maintain Insurance cover as required by the Employer against any liability appropriate for the site and operations.
8. The contract can be cancelled by either party if a breach to the contract occurs, and with __ weeks notice for any other reason. Failure as a result of an Act of God, flood fire or war shall not be regarded as a breach to the contract. If a disagreement occurs the parties will seek the services of a mediator.
DESCRIPTION OF WORKS
Rate for Payment