Question

Define and describe the key process flow and actions in place for an agreement to be converted into contract especially in terms of its scope of legality, competency and consequences of breaching. Explain and illustrate the legal terms “Assent” and “Acquiescence” in a common legal contract.

Answer 1

The terms “contract management” and “contract administration” are often used synonymously. However, “contract management” is commonly understood as a broader and more strategic concept that covers the whole procurement cycle including planning, formation, execution, administration and close out of a contract and goes beyond the day to day “administrative” activities in the procurement cycle. Because it is difficult to draw the line between the two terms and because the majority of the UN organizations commonly use “contract management” when describing the contract administration phase, “contract management” will be used in this Unit.

The purpose of contract management is to ensure that all parties to the contract fully meet their respective obligations as efficiently and effectively as possible, delivering the business and operational outputs required from the contract and providing value for money. It also protects the rights of the parties and ensures required performance when circumstances change.

Contract management is similar to project management. Each contract is a mini-project. It has a unique goal, consumes resources, has a beginning and end date, and requires coordination and planning of relevant activities, as well as documentation in a contract file throughout the process.

Contract management includes monitoring and documenting performance. Depending on the organization and goods or services procured, daily/regular monitoring of the contract may be primarily the responsibility of the requisitioner.

In all situations, the procurement officer is responsible for following up and ensuring that the actions of the supplier and the UN organization are in line with the contractual responsibilities, that the contract is amended to reflect agreed changes in circumstances, and that any claim or dispute is resolved amicably according to the terms of the contract.

Payment for the goods or services should be handled independently from the procurement function, while contract close out again is the responsibility of the procurement officer.

The stages of contract management are intended to ensure that the parties work together to achieve the objectives of the contract. Contract management is based on the idea that the contract is an agreement, a partnership with rights and obligations that must be met by both sides to achieve the goal. Contract management is aimed not at finding fault, but rather at identifying problems and finding solutions together with all contracting parties involved.

The flowchart below shows each of the stages in the contract management process.

When one of the parties fails to perform its contractual obligations, such party is in breach of contract and the other party has a right to demand the fulfillment of the agreement and to demand performance of those obligations with the help of the authorities. However, it is not always possible or even viable from the point of view of the damaged party to demand that the other party perform the original contract. It may be better to demand other consequences.

The consequences of a breach of contract vary and are dependent on which party is in breach of its obligations. Naturally, the seriousness of the breach also affects the consequences. The common consequence is reduction of the contract price, remedy of the defect, compensation for damage and interest for delay. It is only possible to rescind the contract when the breach is fundamental.

The parties may also agree on the consequences of the breach of agreement when making a contract or separately. It might be reasonable to agree on liquidated damages for delay for example.

Assent: An intentional approval of known facts that are offered by another for acceptance; agreement; consent.

In law, acquiescence occurs when a person knowingly stands by without raising any objection to the infringement of his or her rights, while someone else unknowingly and without malice aforethought acts in a manner inconsistent with their rights.^[1] As a result of acquiescence, the person whose rights are infringed may lose the ability to make a legal claim against the infringer, or may be unable to obtain an injunction against continued infringement. The doctrine infers a form of "permission" that results from silence or passiveness over an extended period of time.