Contract
Creation of a trade contract
A trading contract refers to a legal agreement between two or more parties (Contractor and sub-contractor) that agree to engage or not engage in some activities. A trading contract engages a sub-contractor who specializes in electrical, plumbing, and construction. This process involves discussions, information exchange, and understanding. It must be formed with the knowledge of both parties that are involved. This paper aims at discussing a trade contract in which the sub-contractor specializes in piling systems for the contractor development, risks involved, assessment, risks involved, and how to mitigate them.
I would be a sub-contractor I would be supplying piles to various institutions, which would be under construction. A contract has some essential elements. There must be an offer and acceptance. This implies that one party should be willing to give the contract and the other party should be ready to take the contract. An intention to come up with a legal relationship is another characteristic. Law consideration is the third element in which one should be willing to reciprocate the other party. The last element is capable of parties. The parties should demonstrate the ability to do as required and must be competent.
Risks
Risks are categorized into three:
First, some risks are involved before a contract is made. They comprise strategic alignment, business case risks, procurement risks, and contract creation risks. Second, risks during a contract include transition-in of the vendor, monitoring and evaluating performance risks, and transition-out of vendors. Finally, there are risks after a contract has been made such as closing our risks and ending obligations risks.
Risk identification
There are a variety of risks that are involved in this trade agreement. Most of them can be mitigated. Others could be prioritized for the sub-contractor to increase the contract’s performance outcomes. These risks include: hiring and employing the right people to work in piling is a challenge. The reason is that some of them are not skilled and may lose their lives during piling. There are risks on policy regarding how workers in this sector should be paid. This indicates that workers would ask for higher salaries and if they would not be given, they would boycott from work, delaying delivery of resources to the institutions that would be waiting.
Another risk would be a high competition of the product in the market because there are many suppliers, who are offering similar services. The mode of procurement is another issue that would be a risk. There are no specific procedures that would be followed during the procurement of documents in this contract, making it difficult to know what the outworking has spent and the benefits he or she has acquired from his or her sales. It is not certain whether all institutions would use piles. This implies that the supplier could incur losses, which could result in the closure of his or her company.
Risk assessment and prioritization
Risk assessment and prioritization would be based on ISO 31000, where the service provider would concentrate on adding existing risks to new theory so that they would be managed. About this contract, a risk assessment would involve reducing the accountability difference in the contract, arranging in a line objective of governance of the contract, implanting an administrative system that gives feedback to the contract, and generating a uniform risk method evaluation metric.
Figure 2. A table summarizing risks.
Mitigating risks involved
According to ISO 31000, there are many ways of managing risks. A sub-contractor should consider keeping away from risks, accommodating them, eliminating them, altering their likelihood and consequences, involving another supplier, or keeping them using an informed decision. In this contract, the sub-contractor would share risks with other suppliers with similar products so that they would share and develop ways of mitigating risks. He or she would also eliminate sources of risks such as workers who would not be hard working and incite others to strike. In addition, he or she would accommodate them to pursue an opening.
Moreover, he or she should aim at preserving them using informed decisions. For example, competition from other service providers would be retained using the application of informed choices made by the supplier. By doing so, the service provider would learn tactics from his or her competitors and improve the quality of his or her products. He or she would avoid poor procedures of procurement and this would lead to profit maximization. Therefore, it is critical to understand that risk management is crucial to any contractor. If they are better managed, the objectives of a contract would be easily achieved. It would be the responsibility of the sub-contractor to ensure that risks are managed in advance to avoid interruptions in transactions. Notably, the service provider should utilize all the avenues to manage the risks that could emerge in time.
Risks treatment
The sub-contract would deal with training his or her workers so that they could acquire relevant skills and knowledge. Application of technology in transacting a business would be another way of taking care of risks. Time and energy would be saved because many machines would be applied. This would reduce manpower needed and increase efficiency in a contract. Procurement would be done effectively and efficiently due to the application of technical know-how and expertise. Manpower would be taught the importance of accountability and responsibility. By doing that, services provided would be of high quality, making the service provider popular and the trade contract successful.
There are many reasons why the contract would produce excellent performance outcomes. First, risks have been evaluated and considerations have been given to the ones that need immediate attention. By doing so, priorities have been granted for the supplier to succeed. Modern technology would be applied as aforementioned. This would promote efficiency in the treaty. The outworking has enough funds to carry out his or her operations. He or she has also adequate manpower to ensure that it runs smoothly. It is correct to say that the contract would be successful because a lot of effort has been put in by all stakeholders to ensure that it achieves its objectives.
Negotiation
It refers to a discussion between two parties who are involved in an agreement. Discussions take place until an amicable agreement is reached. Negotiations usually would take place before a contract is made, during the making of a contract, and after a contract has been made. When should one pay and what currency should be used in the negotiation process. In addition, negotiation would specify regulations related to the distribution of commodities in the transaction involved. This would result in the development of confidence between the parties that would be involved.
Advantages of negotiation
- It makes parties involved get what they think is best for them. This would be through discussions on what would be expected from both sides in the treaty.
- Negotiation strengthens the relationship between the two groups because both of them would be part and parcel of the covenant.
- It forms part of a contract in a business context. This is because a treaty cannot exist without negotiations.
Strategies used in negotiation in a trade contract
The first strategy would be hiring a consultant who knows a piling development. If there is no one with the capability in analyzing a negotiation arena, it is advisable to get one. If it is expensive to get one, it is imperative to buy literature or look for one from the internet to subscribe to one who is a recommended expert. This strategy is significant because it would help the sub-contractor to acquire knowledge, that he or she did not have.
The second strategy would be choosing a team to work within the contract wisely. A good, small, and competent team to manage costs, plans, and one that would communicate effectively would be more effective than a large, inexperienced team. This is because a large team wastes a lot of time and could do little. For example, in the agreement, workers who are inciting should be vetted out and remain with a small number that is ready to cooperate. In cases where workers want more salary and yet they are doing little, consideration should be given to screen them and retain only experienced manpower.
It would be advisable that the service provider should apply a strategy of offering a low salary and increase it as workers who would be assisting him or her continue to work and negotiate for an increment. This would strengthen their relationship and promote cooperation between them.
Third, the supplier would weigh his or her competitor’s bargaining power and manner of discussing issues. Weighing competitors snipping power would assist him or her to compare, contrast and understand the opponents’ strengths and weaknesses. The outworking could choose to change his or her style of conferring to improve his or her service delivery method. Therefore, negotiation strategies are critical to the success of any business, and if utilized well, performance outcomes would be excellent. It is also significant to note that, once the service provider utilizes relevant resources and manpower, the results would be impressive and he or she could gain popularity.
How objectives set in the strategic plan would be achieved
All stakeholders in the contract would be consulted before any decision is made. Workers would be met individually to investigate whether there could be approaching challenges. In case of any suspicious element, it would be tackled immediately. There would be the utilization of modern technology. Many tasks would employ technology to hasten the process of service delivery. As a result, the quality and quantity of goods and services would be improved. The supplier would come up with a strategy of evaluating his or her performance outcomes. Weaknesses and strengths would be realized through this strategy. Where weaknesses would be more than the strengths, measures to improve the area would be put in place. A supplier can earn a good reputation when he or she offers quality services.
Key boilerplates in trade contract
A boilerplate refers to a provision in a contract that gives specific rules that govern a contract. Boilerplate clauses should not be discriminating against any involved party. They should promote understanding in the treaty. Boilerplates are key, especially when a contract is written. They help parties involved in a treaty to adhere to the set rules and regulations. They include time, entire agreement, governing law, submission to jurisdiction, and remedies cumulative.
Figure 3. A table showing boilerplates in a contract.
From the above table, it is clear that various clauses play significant roles in a contract. Most of them protect both parties from violating the conditions given in a contract. For example, the time clause gives a timeline and specific days and dates when particular events should be done. Notably, boilerplates are many and play different roles in contracts.