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CASBO October 4, 2002
Phyllis Prokop, CPPBSupervisor of Purchases
City of Middletown, Connecticut
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Contracts- basic Contracts- basic overviewoverview
For Purchasing Professionals-- Contracts and contract administration is the most difficult but necessary aspect of the job
A CONTRACT is the written document signifying an agreement between two parties—it details the promises or agreements for which the law has enforceable duties and remedies
CONTRACT ADMINISTRATION- the process by which purchasing ensures that the contract is performed in accordance with the stipulated terms
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Contracts- continuedContracts- continuedContracts- continuedContracts- continued Contracts can be both Express or
Implied EXPRESS CONTRACT—can be written or
oral and must have elements of a formal contract
IMPLIED IN FACT CONTRACT – the elements occur through actions/conduct rather than words
PURCHASE ORDER is considered a contract
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ESSENTIAL ELEMENTS OF A ESSENTIAL ELEMENTS OF A
CONTRACTCONTRACT CONSIDERATION OFFER and ACCEPTANCE OBLIGATION LEGALITY
COMPETENCY DEFINITIVENESS
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TYPES OF CONTRACTSTYPES OF CONTRACTS
CONSTRUCTION SERVICE COMMODITY TERM TIME AND MATERIALS CONSULTANTS
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UCC ENACTED 1952UCC ENACTED 1952
Contracts are regulated by UCC -provide uniformity in laws among states to support interstate commerce
All contracts over $500 - must be in writing deals only with sale and purchase of goods or sale
/purchase of REAL ESTATE— does not apply to services or intangibles
Duration must be greater than 1 year Application of reasonableness Distinguishes between Merchant and Non- Merchant PAROLE EVIDENCE RULE
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Common law generally provides one remedy for a mistake
--- if mistake is not obvious, the party making the mistake is required to perform the contract if the other party wants it.
The party making the mistake may be relieved of the obligation to perform it under certain conditions
--- party accepting the offer may not enforce it if the offer contained is a mistake that was obvious or should have been obvious or detected.
MISTAKES IN MISTAKES IN CONTRACTSCONTRACTS
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DUTIES AND OBLIGATIONS DUTIES AND OBLIGATIONS OF RECEIVEROF RECEIVER
Inspection : buyer must inspect goods in a timely fashion , defects must be reported promptly
Buyer has several options 1.) reject all goods 2) Accept all goods 3.) reject non conforming goods 4.) accept conforming goods
Latent Defects
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PAROLE EVIDENCE RULEPAROLE EVIDENCE RULE
court will not admit evidence, either written or oral, of prior understandings or negotiations to vary or contradict the contract’s terms
***Verbal commitments cannot be used to modify or contradict a written contract.
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IMPLIED WARRANTY—that the goods will meet certain standards, that they will perform as they are intended.
IMPLIED WARRANTY FOR A PARTICULAR PURPOSE—seller knows about the buyers needs , buyer is relying on sellers expertise /knowledge to provide product to fit purpose
Merchant and Non- Merchant– the UCC rule becomes extremely important in this scenario.
WARRANTIESWARRANTIES
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BREACH OF CONTRACTBREACH OF CONTRACT
when party fails to perform in accordance with the contracts terms, the breach gives the other party a legal basis to pursue monetary damages
Lawsuits / Mediation Liquidated Damages Clause: they specify
a predetermined dollar amount assessed usually per day of delay
Performance Bonds
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CONTRACT CLOSEOUTCONTRACT CLOSEOUT
Contract closeout requires the following:1. Contractual issues must be settled2. All changes incorporated into final document3. All deliverables items received4. All borrowed equipment returned5. All classified documents must be returned6. Final payment must be made
Contract Administrator must write formal closure document for file
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CASBO October 4, 2002
Phyllis Prokop, CPPBSupervisor of Purchases
City of Middletown, Connecticut
www.cityofmiddletown.com
TRENDS IN PURCHASINGTRENDS IN PURCHASING
AUTOMATION COMPUTERIZATION E-COMMERCE EBULLETIN BOARDS ONLINE BIDDING
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TRENDS IN PURCHASINGTRENDS IN PURCHASING
RULES MUST BE ENFORCED LATE BID IS LATE- DO NOT
ACCEPT INCREASED EFFICIENCIES COST SAVINGS
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TRENDS IN PURCHASINGTRENDS IN PURCHASING
PROCUREMENT CARDS Accepted widely Easy to use Financial controls Reporting/ Financial
integration
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TRENDS IN PURCHASINGTRENDS IN PURCHASING
Misconception-Stumbling Block
Diverse Functions Responsive to Customers-
internal/external Broad Knowledge
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TRENDS IN PURCHASINGTRENDS IN PURCHASING
Resourceful: DODGE REPORTS /
THOMAS REGIONALS Networking: PPAC- Public Purchasing
Association of CT- 100+members
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NATIONAL INSTITUTE OF GOVERNMENTAL PURCHASING- (N.I.G.P) http://www.nigp.org/
A PREMIER TRAINING AND CERTIFICATION ORGANIZATION FOR PUBLIC PURCHASING OFFICIALS
PROVIDES OVERSIGHT FOR PUBLIC PROCUREMENT ETHICS AND POLICY
CONVENES BEST PRACTICES FOR PUBLIC SECTOR PURCHASING
PROVIDES CERTIFICATION FOR PUBLIC PURCHASING AGENCIES
TRENDS IN PURCHASINGTRENDS IN PURCHASING
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State of CT- DAS CT Gov Center--Orderlink CRCOG—cooperative
contracts (natural gas) U.S. COMMUNITIES- ECONOMIES
OF SCALE- multi-state contracts
TRENDS IN PURCHASINGTRENDS IN PURCHASING