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July 23, 2008

6 Approaches To "Take It Or Leave It" Contracts

Bid with Exceptions. This has two advantages. First, your company presumably has already shown its technical brilliance in response to the RFQ - maybe all of the "good" of your bid will make the customer overlook the page of "exceptions" that you have attached. Second, you do not need a lawyer to  create an exceptions sheet. Your sheet simply would note items like: "Bid is conditional on working out a fair sharing of design risk."

Provide Specific Alternative Language. If there is a contract term that is particularly worrisome, it can be effective to show the customer the not-so-bad substitute language that you are proposing.

Appeal on the Basis of Fairness. Talking through the fairness of a particular problematic clause can serve to make the legal problem less theoretical.

Appeal on the Basis of Risk Control. A widely recognized pillar of good risk allocation is that risk should be allocated to the party that is best situated to affect the outcome. Some types of risk that owners try to pass on to contractors do not meet this test - and can be argued against accordingly.

Incorporate Your Proposal. Get it listed as one of the official contract documents. (thus incorporating your own terms).

Use the CSIA Rider. The Control System Integrators Association has developed a one-size-fits-all "rider" as a partial antidote to one-sided contracts.  (We should know - we wrote it!)

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