This topic came to us again by way of Mike Purdy’s Public Contracting Blog.[i]
1. Corruption of Contracts/Subcontracts. We are often called upon to draft contracts or subcontracts for clients, and make modifications to certain companies’ standard form contracts. After drafting these, custom-crafted documents, which generally involves significant interaction between us and the client, we turn the document over to our clients for their use.
It has also been our experience that some years afterwards, when the client encounters a dispute involving a contract document that we have drafted, to our amazement, we discover that the document we “drafted” and is part of our files bears no resemblance to the contract document that the client has used on the project involved in the dispute. It is very disheartening to advise the client that the document it invested substantial resources in became “corrupted” in the client’s organization. It is a waste of money to pay a law firm to draft custom contracts that address the specific company concerns, only to have it changed by project managers, engineers, and administrators to the point that the protections paid for are no longer in the form contract.
In tracking down how the forms become corrupted and bastardized over time, we have learned that when the form is put into use by the company, project managers negotiating with subcontractors, vendors, or owners may make changes to the form to accommodate particular project needs. Instead of maintaining the original in some type of master form, it is modified and then, instead of using the master form to write the next contract, the modified form is used over and modified again, such that the final form bears little resemblance to the original form that was drafted by our firm.
This corruption of the contract form is similar to the game of “telephone” played around the campfire where the person at the beginning of the circle whispers a sentence into the ear of the person’ next to her, that person whispers what she heard into the next person’s ear, and so on. By the time the sentence has made its way around the circle, the sentence that is uttered last is so “corrupt” that it bears no resemblance to the original sentence that was spoken at the outset.
Mike Purdy recommends the following safeguards to prevent such corruption:
- Centralized Maintenance of the Master Document. Maintain the standard language in a centralized location. Electronic versions of the document should not be e-mailed to others outside of the organization unless it is protected or in a PDF version.
- Password Protect the Document. If the organization’s procurement is centralized, the document can be password protected so that if the document is modified, it shows up in track changes and modifications are readily apparent.
- Document Changes. Develop a mechanism to document and track the date and nature of changes to the standard document that can be posted online for anyone to see.
- Latest Revision Date. Include a “last revision date” in the footer of each document to ensure that the most recent version is being utilized.
2. External Controls. Be cautious about sending an electronic, non-password protected version of your contract documents to others. Inadvertent or purposeful changes can be made without your being aware of the change. It is the best practice to only send a tracked changed password protected or PDF version of the document electronically to outside parties.
[i] Mike Purdy’s Public Construction Blog, The Corruption of Contracts, October 22, 2013.