Many project participants would happily use a recognised standard form substantially as published. Yet they are often presented with either a heavily amended version or a law firm’s bespoke contract, without a clear explanation of why each departure is necessary.
The consequences are familiar: longer negotiations, higher tender prices, fewer tenderers and contracts that are harder to understand and administer.
How does this happen?
Quite understandably, law firms develop house contracts, standard amendments and precedent libraries that capture the accumulated experience of their project lawyers. Those precedents tend to reflect positions that have previously been negotiated to protect the firm’s client.
However, there is a danger in treating that accumulated knowledge as a drafting instruction.
A lawyer working through a precedent database can readily find a client-protective amendment to almost every provision of a standard form. Apply enough of them and what began as a recognised industry standard may retain the familiar numbering and headings while bearing little resemblance to the published allocation of risk.
There is another, more human tendency. Most project lawyers become particularly familiar with one or two contract families and naturally gravitate towards them. But the better question is not “Which contract do we usually use?” It is “Which contract best suits this project?”
And there is an even earlier question.
What commercial relationship do you want?
Before choosing the contract form, clients should make some conscious choices about the commercial relationship they want with their contractor.
Is price certainty paramount, or would greater risk and opportunity sharing produce better value? Do we need a single point of accountability, or would multiple contract packages serve us better? Who should develop or finalise the design? Who is best placed to manage particular risks? How should we handle scope changes? How important are early warning and joint problem-solving? Is the project sufficiently defined for a conventional fixed-price, fixed-time allocation of risk to make sense?
Too often those choices are never really made. The procurement defaults to a familiar delivery model (such as lump sum D&C wrap), and the lawyers are then asked to produce the contract that goes with it.
The better sequence is:
Choose the delivery model first, the form second, and the amendments third.
Once the commercial objectives and desired allocation of risk are understood, the parties can select a standard form that best supports them and use the options already available within that form. Only then is it necessary to ask what genuinely needs to be changed or added.
How do you know whether you really need a bespoke solution?
Before embarking on extensive amendments, ask:
What commercial relationship and delivery model do we actually want?
What risks do we genuinely want the contractor to price and accept, and which are better retained or shared?
Which standard form best supports those choices?
Can the project-specific requirements and objectives be addressed using that form’s existing options and variables?
If not, what project-specific risk, requirement or commercial objective requires the amendment?
Why is the published position unsuitable?
What will the departure do to tender participation, pricing, negotiations and contract administration?
Has the reason for the departure been consciously considered and accepted by the client, rather than simply inherited from a precedent?
There will often be good answers to many of these questions. Complex projects inevitably require project-specific content and sometimes significant changes to the standard risk allocation.
The point is not to avoid bespoke drafting. It is to earn it.
The discipline is to start with the client’s project rather than a preferred contract form or house position. Identify the delivery model and commercial relationship the client wants, select the standard form that best supports those choices, configure its available options, and only then make the departures the particular project requires.
That approach will not eliminate bespoke drafting. Nor should it.
But it might save a few perfectly innocent lambs from being led, expensively and unnecessarily, to the contractual slaughter.
