Procurement Contracts
Procurement contract close-out is a heavy and important topic for firms that have procurements needs on a consistent or even a fleeting basis as the materials and products acquired through these procurements products are often needed to keep the flow of good sales going and/or keeping operations under control and running in optimal fashion. There are really only a few basic ways that an executed contract can end with the hoped for outcome, and probably the usual one as well, being that the contract is fulfilled at the satisfaction and agreement of both sides of the contractual ledger with consideration and exchanged being carried out across the board.
However, there are some pitfalls and other negative outcomes that can happen before, during and after a procurement contract is in force and indeed procurement contracts can end in a quite ugly fashion if one is not careful and/or does not exercise a proper amount of foresight. Even with this potential blowback, this does not mean that a remediation cannot be found as this is often done in an orderly fashion. This is especially true if the problem causing the contractual issue was not foreseen or predictable by either of the parties involved.
Lastly, there is the concept of operating in good faith and in a non-fraudulently manner as this is something that can certainly come up and if/when it does come up, it has a large bearing on how a contract is closed out and/or whether the contract is even valid in the first place. A similar but different example is if the contract is based on something that eventually becomes, in full or in part, illegal to execute and/or the contract is not fulfillable based on something that could not or at least was not foreseen on the part of one or both parties. This report will explore all of the above including what happens under normal conditions and what can happen when things go terribly wrong.
Chapter II -- Analysis & Summary
There are three basic outcomes that can arise when speaking of how a contract is wrapped up for otherwise satisfied in a legal manner. The usual, and no-doubt expected manner, is that the procurement of goods is done on-time, on-budget and in a complete manner (Banker, Kalvenes & Patterson, 2006). There are instances where this may not occur but this is not to say that adjustments to the contract itself and the steps called for therein cannot be adjusted to compensate. Plans do change sometimes and there are ways to deal with that.
However, for a contract to be fulfilled in the first place, it has to have all of the relevant information and the information must be accurate (Rob, 1986). There must be no fraudulent or otherwise inaccurate representations of the facts as they truly exist as this can invalidate the contract entirely making it completely void and unenforceable. The incorrect and/or misrepresented facts need not be posed intentionally for problems to exist in executing the contract. However, if there is bad faith and one of the parties presented or vouched for facts that they knew to be wrong, then that will almost always make the contract null and void.
However, for times when the "facts on the ground" change and there was little to no way to foresee it, the parties to the contract can come together and revise the terms of the deal or even void it if that makes the most sense to everyone involved and everyone agrees to it. For example, if a raw material included in a contract is cut off due to something like terrorism or war, then the contract can be reworked to use an alternate material or otherwise deal with the shortage. As long as all of the parties agree to the revision, then that is perfectly acceptable. However, it has...
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