Minimizing Legal Risks,
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- Category: Politics: Economics
- Date Submitted: 06/17/2010 02:05 PM
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Minimizing Legal Risks, Liabilities, and Gaining Opportunities with Breach of Contract
Before entering into a contract, organizations should have a clear process for understanding and developing a contract. Taking such measures will go a long way in avoiding a breach of contract conflict, which could ultimately affect the bottom line. The first, and best, opportunity to prevent these occurrences is in the pre-contract or negotiation stage, while the second opportunity is in the performance stage. How much effort the organization must devote to risk identification, management, and resolution in the second stage, that is, during the project, will depend upon how successful the organization has been in the first stage, in negotiating the contract. The smart, careful organization will realize that it can make project performance far easier and much less risky if they pay careful attention to the contract before it’s signed. Otherwise, the organization is likely to “buy-in” to unknown and certainly unnecessary risks before the project even begins (International Risk Management Institute, 2004). Effective contract review requires an organization to have legal experts that can focus on those provisions like the ones shown in the simulation; performance, requirements change, communications and reporting, intellectual property rights, and dispute resolution (University of Phoenix, 2002). By focusing on the key risk provisions, understanding how they work, and negotiating them effectively, the organization can do a great deal to minimize the legal problems and liabilities they are likely to face once the job begins (International Risk Management Institute, 2004).
Before entering into a contract, organizations should have a clear process for understanding and developing a contract. Taking such measures will go a long way in avoiding a breach of contract conflict, which could ultimately affect the bottom line. The first, and best, opportunity to prevent these occurrences is in the pre-contract or negotiation stage, while the second opportunity is in the performance stage. How much effort the organization must devote to risk identification, management, and resolution in the second stage, that is, during the project, will depend upon how successful the organization has been in the first stage, in negotiating the contract. The smart, careful organization will realize that it can make project performance far easier and much less risky if they pay careful attention to the contract before it’s signed. Otherwise, the organization is likely to “buy-in” to unknown and certainly unnecessary risks before the project even begins (International Risk Management Institute, 2004). Effective contract review requires an organization to have legal experts that can focus on those provisions like the ones shown in the simulation; performance, requirements change, communications and reporting, intellectual property rights, and dispute resolution (University of Phoenix, 2002). By focusing on the key risk provisions, understanding how they work, and negotiating them effectively, the organization can do a great deal to minimize the legal problems and liabilities they are likely to face once the job begins (International Risk Management Institute, 2004).