Contracts 101

CONTRACTS 101

WHAT'S YOUR DOGGONE HURRY?

I see one of my most important roles as a Contracts and Supply Chain Manager as being able to lessen or mitigate the business risks and legal risks of my employer. I'm a problem solver and I often feel like a battle-scarred crusty sargeant whose job it is to make sure my superior, the freshly minted 2nd lieutenant from West Point with no battle experience, doesn't get us all killed. An extreme analogy, I know, but one that I think fits more often than not. There just is no substitute for experience gained in the harsh realities of everyday business. So here comes my first "war story".

Early in my career, I was a Contracts administrator for a small flight simulation company. We outsourced the actual manufacture of the simulators themselves, but we designed in-house the flight simulation software and related training materials that went with it. I got a frantic call one day from one of our major customers that provided military aircraft to the Air Force. He needed us to send him a flight simulator ASAP because HIS military client was breathing down his neck for the simulators to be delivered before the next shipment of my client's planes was to arrive at the base. I did some checking with my program manager who said, yes, we had one ready to roll in a few days. I told the client, "yes, we can deliver the flight simulator and training materials early if you accept our standard terms and conditions" and offered to fax those to him along with our quote. He said "I haven't got time for that. Here's your ***** purchase order number . Just ship the ***** right now!" I thought "hmmm, I can't believe he doesn't even want to see the terms". Sure enough, here came his purchase order over the fax about 10 minutes later, with NO terms and conditions of any kind attached. I sent the confirmation letter back along with our standard terms and conditions, including payment terms that stated that 90% of the total payment price was due upon notice of shipment from the factory, and that title and risk of loss passed to the Buyer upon shipment, not delivery. I thought to myself "man, I sure wouldn't have made that deal like that. This guy must either be new, or really in a hurry, or both".

Well, you guessed it. The 18 wheeler carrying the flight simulator jack-knifed going over the Continental Divide and a multi-million dollar piece of equipment got smashed all to hell. The buyer from the airplane company calls in a state of panic, tells me what happened, and demands to know what I'm gonna do about it. I calmly informed him that title and risk of loss had passed to him the second it left the dock and we had just sent him an invoice for 90% of the purchase price. His voice went up about three octaves and he said "For ***** sake, can't you do ANYTHING????" I again explained that the risk of loss was entirely his and that his only recourse was against the shipper, not us. I could tell that for this poor guy, the Gates of Hell were opening wide. I said, "I'm sure you bought freight insurance, didn't you?" Long silence, no answer. He said in a much weaker voice "uhhh, I guess we did. I'll have to check. But I still wanna know, WHAT ARE YOU GONNA DO ABOUT THIS????"

I said, "well, I guess we can always sell you another one".

CLICK!!!

About three days later I got a call from their "NEW" guy, ordering another flight simulator. I never forgot that episode and I swore that from that moment on, I didn't care if the building was on fire, I would always take ONE LAST LOOK to protect my company (and my own derriere) before I ever let anything go out under my signature ever again. I'm sorry, but it's my job, my ethical duty to my employer and my profession , and my rear end. In that order.

So, WHAT'S YOUR DOGGONE HURRY?