New UCC Rules on Contract Formation and Terms
of the Deal are Around the Corner!
-and-
Go Ahead, Make my (Contract) Day!
Charles Rumbaugh, CPCM, Fellow
Overview of Impact of UCC changes on buying/selling organizations/professionals:
Nature/operation of UCC in private sector transactions.
State-by-state adoption of UCC changes.
U.S. Gov't contract implications: commercial items; general source of guidance.
Potential need for revisiting company contract terms / practices.
Applicability/Scope of UCC—Article 2:
Definition of “Goods”
Sales v. Leases of Goods (Article 2A)
Excluded items: Services, information, etc.
Applicability for mixed transactions, e.g. goods/information; goods/services, etc.
UCC “As compared” to Convention on International Sales of Goods (CISG).
New Definitions / Relationship to Recent Electronic Commerce Statutory Changes:
“Record” verses “writing”.
“Electronic,” electronic agent,” and “electronic record”.
“Sign”.
Contract Formation and Terms of the Deal—“Battle-of-the-Forms” coverage greatly changed. Does it end the battle?
The new §2-207 (as compared to old §2-207)—Scope of the deal! Terms of the Deal!
The new §2-204 and §2-206—Formation of the Contract.
New “Statute of Frauds” threshold of $5,000—§2-201.
Absence of Shipping Terms in Revised Article 2
UCC as “filling the gap” for contract interpretation--§2-202, 2-204, & 2-207
Course of Performance, Course of Dealing, and Usage of Trade—§1-303.
Risk of loss, price, etc.
Modifications, waivers, etc.—§2-209
UCC may be varied by agreement of the parties—§1-302
Exceptions: Good Faith, diligence, reasonableness, and standard of care.
Warranties:
Express warranties—§2-313
Implied warranties (quality/title/infringement) continue—§2-314, 2-315, & 2-312
“Remedial promises”—part of §2-313.
“Pass-through warranties”—§2-313A & §-313B.
Performance and Breach:
Changes in areas of acceptance, rejection and revocation—§2-508, §2-601, §2-608, §2- 610, §2-612, §2-703, §2-708, §2-710, §2-711, & §2-718.
Remedies:
Statute of Limitation changes—§2-725.
Recommendations
Discussion of "Go Ahead, Make my (Contract) Day!" Issues!
NCMA Puget Sound Workshop
"Go Ahead, Make my (Contract) Day!"
Charles Rumbaugh
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Issues for Discussion |
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Notes |
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1. The SOW in a cost type contract is not tailored by the Contract Manager with a "fine tooth comb" to clearly and concisely reflect the actual work to be performed--after all it is a cost type contract! Ø Why should you care and what are the legal/ethical concerns? Ø Also see, Armed Services Board of Contract Appeals, ITT Federal Services International Corp., ASBCA, No. 54001
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2. The Subcontract Manager sends a "Show Cause" letter to a supplier on your program…. Ø Why should the Contract Manager be concerned? Ø Why should the Contracting Officer “luv” this type of correspondence?
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3. Why should a prime or subcontractor NOT accept a letter DoD contract/subcontract for a production contract when the price is open? Ø What’s the problem? Ø How to "solve" the problem by using ADR!
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4.
What is the CO "really" saying when s/he calls you after negotiating
and finalizing a price and says:
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NCMA Puget Sound Workshop
"Go Ahead, Make my (Contract) Day!"
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Issues for Discussion |
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Notes |
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5. How are you using the Contingency Cost principle? Ø How can it be used for its intended purpose?
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6. What should a Contract Manager do if s/he has a CO and COTR “who do not communicate” well with each other? Ø What if it impacts the program? Ø What if it is the Contract Manager “does not communicate” well? Ø Who is “negotiating” with whom? Ø Read the “want-ads?”
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7. In the absence of an expressed schedule what is the schedule? What is the schedule if the expressed schedule was waived?
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8. How should you structure Teaming Agreements which “require” that the potential subcontractor must develop certain aspects of its deliverables prior/during contract performance? Ø See ATK Thiokol, Inc. v. US (Court of Federal Claims, No. 99-440C—November 30, 2005)
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NCMA Puget Sound Workshop
"Go Ahead, Make my (Contract) Day!"
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Issues for Discussion |
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Notes |
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9. You have just received a very complex RFP and after conducting a risk identification/mitigation exercise, you have concluded that there is “too much risk” associated with a key requirement. In planning for the “discussions/negotiations” with your customer, you envision your customer will “down play” the risk and ask you to step up to the challenge! Ø How can you respond when confronted with this potential scenario?
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10. You are a proposed subcontractor and after reviewing the draft RFP from the prime (based in part upon the draft RFP from the ultimate DoD customer) you notice that the prime desires to retain a proprietary position in deliverable data. Ø Is this proper? Ø How does one address this concern? Ø Should you raise any issue with the CO?
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11. Reserve for scenarios that may be sent to the chapter prior to the seminar.
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12. Reserve for scenarios that may be sent to the chapter prior to the seminar.
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Charles E. Rumbaugh is an attorney practicing in commercial/international/government contract law with an emphasis in the private dispute/negotiation related arena as an educator/trainer, professional speaker, arbitrator/mediator, private judge, and ADR Consultant. He is a frequent writer/publisher and speaker on substantive and Negotiation/Dispute Resolution topics and has presented advanced/basic negotiation, mediation, and arbitration skills training seminars/workshops in Latin America, Canada, Far East, and throughout the United States.
Previously, Mr. Rumbaugh was Corporate Director of Contracts & Pricing for Lear Astronics Corporation where he was responsible for the contracts, pricing, and business management functions. Earlier he was Assistant to Corporate Vice President, Contracts and legal counsel at a major business unit for Hughes Aircraft Company (Hughes Electronics). Before joining Hughes he was Corporations Counsel for the California Department of Corporations.
Mr. Rumbaugh received his Bachelor of Science degree in engineering from UCLA and was employed as an engineer with Westinghouse Electric Corporation prior to attending California Western School of Law where he received a Juris Doctor degree. He also has an ADR Mediation Certificate from Harvard University, Pepperdine University and Center for Conflict Resolution, an Advanced Management Program Certificate from the USC Graduate School of Business and is currently an adjunct professor at several universities for their commercial/business, contract & procurement, international law and ADR/Negotiation programs. He was an advisor to the California State University Contracts and Procurement Certification Program.
His current/past
membership on arbitration and mediation panels includes the Large,
Complex Case Panel of the American Arbitration Association as well as the
following:
· Center for Conflict Resolution panel of
Arbitrators/Mediators
· State of California Department of Insurance Qualified Mediator
· State of California Public Works Contract Arbitrator
· EEOC Qualified Mediator
· Los Angeles Superior Court Judge Pro Tem
· Former Federal Administrative Law Judge, EEOC
· Numerous Federal/State Courts and Administrative Boards and
Arbitrator/Mediator panels
Charles Rumbaugh is an active member of NCMA, past co-chair of its ADR committee, CPCM, Fellow, member of the NCMA Board of Advisors, and former member of the Editorial Board for the NCMA Journal. He is past Co-Chair of the California State Bar Franchise Law Committee and immediate past Vice-Chair of the California State Bar Business Law Section ADR Committee. He is an active member of the American Bar Association (ABA) including Vice-Chair of the Strategic Alliances Committee of the ABA Public Contract Law Section and founder of the Public Contracting Committee of the ABA Dispute Resolution Section. He is also a member of the Procurement Committee of National Defense Industrial Association and has represented it on joint industry/Air Force ADR IPTs. He also is immediate past Chair of the Federal Acquisition & Subcontract Management Group of the Institute for Supply Management.
P.O. Box 2636
Rolling Hills, CA 90274
Arbitrator/Private Judge/Mediator
(310) 373-1981 / FAX (310) 373-4182