MOST FREQUENT SOURCES OF CLAIMS AND DISPUTES

One way to recognize risky terms and issues (and reduce the probability that things will go wrong) is to learn from previous experiences involving claims and disputes. In its tenth Annual Survey, 2011 Top Terms in Negotiation,1 the international Association for Contract and Commercial Management (iACCM) asked negotiators—both sell-side and buy-side— from around the world what terms are considered the most frequent source of a claim or dispute. Table 5.1 summarizes the core findings:

The results show that delivery and acceptance issues constitute the most frequent source of claims and disputes. Experience tells us that this is probably due to confusion about requirements, either through ambiguity from the beginning or through the implementation (or lack) of change management procedures (number 3 on the list).

There is a major difference between these results and those listed among iACCM Top Terms of Today describing where negotiators spend most of their time in negotiating deals today. in the latter, year after year, terms such as liability limitations and indemnities top the list.[1] [2] on the other hand, the iACCM Top Terms of the Future indicate that negotiators see more value in negotiating terms relating to change management, scope and goals, and the parties' responsibilities. The survey results present an opportunity to shift the focus of contract negotiation. Chapter 4 examined negotiation strategies and mindsets that can help make this shift happen, and Chapter 6 will introduce further ways in which mindsets and ways of working can be changed to enable a new focus, better decisions, and better results.

Table 5.1 IACCM 2011 most frequent sources of claims and disputes

Issue

% reported

Delivery/acceptance

41

Price/charge/price changes

38

Change management

32

Invoices/late payment

30

Performance/guarantees/undertakings

27

Service levels and warranties

27

Payment

25

Responsibilities of the parties

22

Liquidated damages

22

Scope and goals

21

Warranty

16

Limitation of liability

16

Indemnification

14

Service withdrawal or termination

14

Intellectual property

12

Audits/benchmarking

10

Assignment/transfer

8

Dispute resolution

8

Data protection/security

7

Communications and reporting

7

  • [1] iACCM (2011a) 2011 Top Terms in Negotiation. international Association forContract and Commercial Management, available at https://www.iaccm.com/members/library/files/top_terms_2011_1.pdf. See also Chapter 3 of this volume, Table 3.1.
  • [2] See the left-hand column "Top terms of today" in table 3.1 in Chapter 3 of thisvolume.
 
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