Contract Management Body of Knowledge

1. Contract Management Body of Knowledge • Pre-Award Competencies • Section 1.1 Laws and Regulations • Part 1 of 2

2. Laws and Regulations • Contracts are legally binding • Provisions are enforceable by law • Sources • Uniform Commercial Code • Federal Acquisition Regulation • International Contracting law • Case Law

3. Commercial Contracting • States are primary source of law for commercial transactions • Statutory and common law • Private law may establish additional terms and conditions • Statute may require a specific form (written) or procedure for execution

4. Where We Are Going ... • Law of Agency • The Uniform Commercial Code • Warranties • Repudiation • Sarbanes-Oxley Act

5. The Law of Agency • Provides an individual with the power to act for another • Explicit (written) appointment • Implied agency through acts.

6. Types of Agents • Agent - acts on behalf of another for their benefit • Principle - one who appoints agent • Universal agent - broad authority to act • General agent - more limited/defined powers • Special agent - powers are narrowly defined and may NOT enter into contracts on behalf of principal

7. Authority of Agents • Actual - intentionally conferred upon agent by principal to affect legal relations with third party • Express - plainly granted with respect to specific actions • Implied - not expressed but is customary in the industry. • Apparent - The appearance of being an agent without the actual authority.

8. Liability for Agent • Corporations are liable for the acts or promises of an employee if it appears to a third party that the employee has been granted authority to bind the corporation.

9. The Uniform Commercial Code • UCC provides framework of law for commercial transactions • Intent is to provide consistency of law across jurisdictional boundaries • Each state must adopt UCC separately • Created by: • National Conference of Commissioners on Uniform State Laws • American Law Institute

10. The UCC • Enacted in 49 states • Louisiana has enacted much of UCC but some portions conflict with state’s Napoleonic Code • Some states have modified specific articles or sections • When applying UCC the specifics for each state need to be considered

11. The UCC • Consists of nine articles - each with one or more parts • Primary source of agreement and guidance in commercial contracting • Continuously revised • Only applies to sale of Goods • Does not apply to services contracts

12. Philosophy Behind the UCC • Fills in the gaps where the contract may be silent • Merchants are professionals and should be held to higher standards • Contracts impose obligation of “good faith” • What is a reasonable time is defined by the nature, purpose and circumstances

13. UCC Article 2 - Sales • Sole source of law governing sales of goods • Supplemented by state law only to the extent a subject is not addressed by UCC • Addresses: • Contract formation • Performance/non-performance • Cure rights • Warranties

14. UCC Article 2 - Sales • Contracts for sale of goods > $5,000 must be in writing • To be enforceable it must: • Provide evidence a contract for the sale of goods existed • Signed by party to be charged • Specify a quantity

15. UCC Article 2 - Sales • Does not require: • Time and place of payment • Delivery location • Warranty • No need to use special forms

16. UCC Article 2 - Sales • Contracts not in writing can be validated by “partial performance” (acceptance and payment) • Signed offers are irrevocable for a reasonable period not to exceed 3 months or as stated in the offer • Acceptance of an offer may be made by any reasonable method including shipment/promise to ship (performance)

17. UCC Article 2 - Sales • Last piece of paper rules .... • Terms and conditions printed on order forms (by offeror) may be countered by terms and conditions on order acknowledgement • Such terms are a “counter proposal” • Counter terms may be accepted if: • Offer does not expressly reject alternate terms • Acceptance is conditional on the additional terms • Objection is made so as to reject additional terms.

18. UCC Article 2 - Sales • “Course of Performance” includes acts by either party that are not objected to • “Course of Dealing” a basis of conduct predicated on past transactions that establish precedent • “Usage of Trade” are practices or methods regularly observed (customary) and justify an expectation that they will apply to the transaction

19. UCC Article 2 - Sales • Modifications need not include consideration but must satisfy the “Statute of Frauds” • Modifications must be in writing • Must meet the test of good faith • Modifications not meeting the above can be considered a waiver.

20. UCC Article 2 - Sales • Seller must make best efforts to forward the product to the buyer until payment is received • Tender • Buyer obligated to pay when product received and inspected • Goods must conform in all respects to the terms of the contract • Buyer may reject non-conforming goods and not be bound to subsequent performance

21. UCC Article 2 - Sales • Implied Warranties • Merchantability - reasonably fit for general purpose for which they are sold • Fitness for a particular purpose- item is fit for the specific purpose for which it is sold • Warranties may be disclaimed but disclaimer must specifically state • No warranty of implied merchantability • “As-is”

22. Repudiation • Refusal (especially by public official) of a contract or debt • One party may wait reasonable time for performance and then seek remedy for breach • Can do so while it continues to wait for performance in the case of anticipatory repudiation • Repudiation may be retracted until next performance is due unless • Aggrieved party has cancelled or materially altered its position • Announced it considers the repudiation final • Parties may require adequate assurances of the other parties performance and may suspend their performance pending such assurance. Son, I Say Son ... That constitutes Anticipatory Repudiation

23. Sarbane-Oxley Act • Public Law 107-204 July, 2002 • Requires changes to corporate accounting so as to control how value is created/recognized • Large impact on CM since contracts are principle revenue generating device • Impacts most seen in commercial (predominantly B to B enterprises) since contracts with Federal Government required more stringent accounting