March 4, 2024
Collaborative contracts are underpinned by various drafting principles that parties should turn their mind to during contract negotiations. Importantly, where parties understand and agree on how collaborative principles should operate within the contracting regime, it can assist parties maximise the value which can be drawn from collaborating.
Collaborative Contracting Provisions
Collaborative contracting can be facilitated through the inclusion of cooperative values, cooperative obligations, and cooperative interfaces.
These collaborative drafting principles each underpin a separate requirement or principle which the parties must act in accordance with. Practically, they each operate differently, and it is important for the parties to understand such in advance of agreeing to their inclusion.
Cooperative Values
Cooperative values reflect a mutual agreement by the parties to work together. They do not impose an explicit obligation or requirement, but instead underscore the intended collaborative approach the parties intent to take.
Common wording which can be included in such clause’s include an:
- intention to act in a cooperative way;
- intention to act in a collaborative manner;
- agreement to work collaboratively in a spirit of mutual trust; or
- agreement to cooperate in the performance of each parties’ obligations.
Ultimately, they record the behaviour expected from each party, which may include explicit reference to cooperation or collaboration.
Parties should be conscious of what these overarching principles are, but should acknowledge that there is not explicit obligation or requirement that directly provides what a party must do.
Cooperative Obligations
Cooperative obligations take these matters a step further by imposing a specific obligation or requirement on a party (or parties) to act in a cooperative or collaborative manner.
These normally function as “add-ons” to the normal obligations under the contract, imposing additional requirements on a party (or parties) to act in a certain manner or do certain things.
An example might be with respect to obligations arising in connection with WHS Legislation. A contract might provide two obligations clauses to the following effects:
- Traditional Obligation: The Contractor is required to ensure that all subcontracts comply with their respective obligations under WHS Legislation, and the Contractor must comply with its WHS Legislation obligations to consult and coordinate activities with any other persons who have WHS relations.
- Collaborative Obligation: The Contractor must cooperate with the Principal to ensure all parties are able to comply with their obligations under the WHS Legislation.
The above example indicates how contractual drafting of cooperative obligations can serve to extend traditional contractual obligation, by imposing a requirement to work collaboratively to achieve it.
Importantly, given this departs from the obligations typically seen in other contracting models, parties should ensure their project teams are acutely aware of these obligations. Given they have the ability to expand the everyday obligations of a Contractor (taking the above example), their project team needs to be aware of what is explicitly required of them and how they can achieve compliance with such.
Cooperative Interfaces
Cooperative interfaces provide for a level of cooperation and facilitation by the parties when interacting with third parties.
These interfaces typically arise in all constructions project and can include liaising with authorities or other contractors appointed by the Principal.
Relevantly, while third parties cannot be regulated or controlled by the contracting parties, the contracting parties can prescribe obligations regarding their own actions. Therefore, while third parties conduct may be unpredictable and uncertain, cooperative interfaces introduce obligations on the contracting parties to increase flexibility and collaborative in addressing third party issues as they arise.
Such cooperative interfaces can include obligations to work collaboratively with contracting parties to:
- assist in dealing and communicating with authorities, such as where an approval may be required;
- address how other contractors can conduct and undertake works; and
- prepare and collate information or documents which a third party may require.
While cooperative interfaces normally imposed obligations on the delivery partner (i.e. Contractor), much like collaborative obligations, they can be imposed on any party and may be subject to negotiation during contract formation.
Where specific collaborative interfaces are included within a contract, project teams should be made aware of such, so they understand the specific requirements being imposed on them and so appropriate interface management guidelines can be implemented.
Collaborative Contracting
LPC Lawyers have extensive experience drafting collaborative contracts, tailored for specific project requirements. If you need assistance with your next collaborative project, LPC Lawyers can leverage its extensive experience and understanding to develop a contracting model that works best for you.
If you would like to discuss any matters raised in this article as it relates to your specific circumstances, please contact LPC Lawyers.
The content of this article is for information purposes only and does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
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