Contracting and Contract Management
Contracting and contract management tests contract formation, key terms, remedies for breach and the disciplines that keep a contract performing after award. Expect questions on offer and acceptance, conditions versus warranties, liquidated damages, variation control and performance review.
Core rules and concepts
- A binding contract normally requires offer, acceptance, consideration, intention to create legal relations and capacity.
- Terms may be express (negotiated or in the documents) or implied by statute, custom or course of dealing.
- A condition is an essential term; breach allows termination and damages. A warranty is a subsidiary term; breach gives damages but not automatically termination. Innominate terms are classified by the seriousness of the breach.
- Remedies include damages, liquidated damages, specific performance and termination. Liquidated damages must be a genuine pre-estimate of loss, not a penalty.
- Contract management includes a contract register, obligations matrix, KPIs and SLAs, governance meetings, change control, dispute escalation and exit planning. Contract administration handles records and payments; contract management actively manages performance and risk.
- Variations should be agreed in writing by authorised signatories under the change control procedure.
Worked example
A contract requires delivery by 1 June and includes liquidated damages of £200 per day for late delivery. Delivery occurs on 11 June. The buyer has suffered no identifiable loss because it held buffer stock. The LD clause is likely enforceable if £200 was a genuine pre-estimate at contract formation, not a penalty. The buyer can claim 10 days × £200 = £2,000 without proving actual loss. If the clause were punitive, a court could strike it down and the buyer would need to prove ordinary damages. The reasoning turns on the clause's purpose at formation, not on the buyer's actual loss afterwards.
Traps that cost marks
- Accepting a verbal variation without change control.
- Treating every breach as a right to terminate.
- Confusing liquidated damages with a penalty.
- Assuming an SLA breach automatically ends the contract.