A thorough understanding of the legal framework can impact day-to-day procurement. Anybody purchasing goods and services on an organization’s behalf should have sufficient knowledge of contract law to know what the pitfalls might be so that they can recognize them and seek appropriate legal advice in a timely manner. It is essential for procurement professionals to be able to:
- Demonstrate a good understanding of standard contracts operating in their own
- Identify the various risks that exist at the formation stage of contracting and how to address these.
- Demonstrate a clear understanding of the potential liabilities and claims that can arise between buyers and suppliers when concluding contracts.
- Operate with a clear awareness of the purpose behind a range of widely used contractual terms and conditions.
- Show a sound understanding of how suppliers’ terms differ from buyers’ terms and the reasons for these differences.
- Operate with enhanced knowledge of recent developments in the field of procurement law.
In order to develop such capabilities, it is essential to understand the core of legal aspects of procurement. In this way, organizations can prevent legal issues from interfering with their business and make it more efficient.
Here are some steps to take to avoid procurement challenges:
Educate Internal Stakeholders through training
By ensuring that employees understand the relevant regulations, teams can make the whole process more efficient in terms of time and resources. It is essential for key staff members to attend dedicated training on procurement regulations to ensure they understand and are familiar with the rules which affect their areas of work. By ensuring colleagues from other departments have the sufficient training, procurement professionals can reduce the time spent chasing and gathering the required information.
Procurement professionals should work with key stakeholders within their organization, such as the finance or commercial departments, to ensure they understand the latest process and the information required. An adequate training and development program about legal issues in procurement will benefit the employees in terms of contracts and other legal aspects. At Procurement Academy, the competence development program for legal aspects in Procurement covers all the necessary features that professionals should know; from fundamental to advanced courses, employees have an in-depth understanding of the subject.
Better communication and teamwork
Companies need to move away from the idea that the procurement department has the sole responsibility for ensuring the company complies with regulations. During the process, each department involved in procurement, such as finance, commercial, contracts and legal, needs to work together to ensure that contracts abide by the regulations and laws. It is essential for procurement professionals to establish an internal process to ensure each aspect of the contract follows all the relevant requirements. Working together early in the process can help prevent headaches further down the line.
Understand the basics
The first step in a contract question is always to make sure that a contract actually exists. Certain elements must be present for a legally binding agreement to be in place:
An offer: An expression of willingness to contract on a specific set of terms, made by the offer or with the intention that, if the offer is accepted, he or she will be bound by a contract.
Acceptance: An expression of absolute and unconditional agreement to all the terms set out in the offer. It can be oral or in writing. The acceptance must exactly mirror the original offer made. A counter-offer is not the same as an acceptance. A counter-offer extinguishes the original offer: you cannot make a counter-offer and then decide to accept the original offer. It is very important to distinguish an offer from an invitation to treat – that is, an invitation for other people to submit offers.
Consideration: The mere fact of agreement alone does not make a contract. Both parties to the contract must provide consideration if they wish to sue on the contract. This means that each side must promise to give or do something for the other.
Intention to create legal relations: This is defined as an intention to enter a legally binding agreement or contract. Intention to create legal relations is one of the necessary elements in formation of a contract. It is because; intention to create legal relations consists of readiness of a party to accept the legal sequences of having entered into an agreement. If there is no intention to create legal relations, the contract will not be enforceable, legal or binding.
It is also important to understand some of the fundamental basics of contract. For example, many people are still under the mistaken belief that a contract must be in writing, or that it can be changed unilaterally by one party without the agreement of another, or that it can be terminated whenever one likes.
People often do not understand that silence is not consent, the difference between express and implied terms, the uncertainty caused by the battle of the forms, the difficulties which poor representation can cause how force majeure can affect things, the main principles of legislation and so on.
Organizations should make sure that procurement professionals understand the legal aspects of procurement for more efficient operations and to avoid facing legal challenges. An innovative training solution will help employees gain the necessary knowledge about the subject.