Contract terms contradict each other? Does one trump the other?

[jeremy_williams]

How does a contract work when one clause somewhat contradicts another?

For example:

In no event shall "company A" be obligated to reimburse "company B" for any cost overrun not expressly agreed to by "company A"

and

This contract is final and binding. No amendments to this contract shall be effective unless in writing and signed by both parties.

"expressly agreed to", from what I researched, can be an oral or written agreement, but this second clause states nothing is effective unless in writing. If someone from company A agrees to a change but it isn't in writing, it will be hard to prove, but the first clause makes this possible...or does the second clause make this not possible....

Also, if someone like a secretary orally agrees to a change, does the first clause hold the company responsible for her making the decision for that agreement or again, does it need to be in writing??

 

[justalayman]

without looking at the entire contract, based on my interpretation, those statements have nothing to do with each other.


a simply says any overruns must be agreed to


b says an amendment to the contract must be in writing.


Agreeing to an overrun is not amending the contract.

 

[jeremy_williams]

I don't have the full contract, this is a negotiation I'm preparing for in my MBA program. They leave things a little unclear to make the negotiations less predictable.

Let me explain a little more. I believe the original contract states the specifics of what is supposed to be built. Type of wood, etc.

The contractor (company B) used a different type of wood that cost a lot more per unit. This was not approved in writing but a secretary in the business agreed to the change verbally. So it was "expressly agreed to" causing a price overrun but the contract was not amended to include this change.

Does that help?

 

[Silverplum]

I don't have the full contract, this is a negotiation I'm preparing for in my MBA program. They leave things a little unclear to make the negotiations less predictable.

Let me explain a little more. I believe the original contract states the specifics of what is supposed to be built. Type of wood, etc.

The contractor (company B) used a different type of wood that cost a lot more per unit. This was not approved in writing but a secretary in the business agreed to the change verbally. So it was "expressly agreed to" causing a price overrun but the contract was not amended to include this change.

Does that help?

Yes, it helps a lot to find out your question is merely homework.

 

[jeremy_williams]

Yes, it helps a lot to find out your question is merely homework.

Ya, no big possible lawsuits coming out of this one.

Just trying to get my ducks in a row so I know my strong and weak points for this negotiation. Appreciate any help given.

 

[justalayman]

see what happens when you don't give enough info?


Altering a specification within the contract would require an amendment. A cost overrun in itself would not. Changing the type of wood specified requires an amendment. Not sure why you see it as a cost overrun when in fact it is an alteration of the terms of the contract.

but beyond that:

does the secretary have the authority to agree to either an amendment or a cost overrun?

 

[jeremy_williams]

Sorry for the lack of info. Since it is an alteration in the terms of the contract, this would need to be in writing and not the verbal ok that they received, correct? Which would make a stronger case to not pay for the additional costs not put in writing?

The secretary was given the authority to handle any "details". The secretary was told over the phone before she made this deal to not make any decisions that would cost extra money.

 

[justalayman]

jeremy_williams;3258043]Sorry for the lack of info. Since it is an alteration in the terms of the contract, this would need to be in writing and not the verbal ok that they received, correct? Which would make a stronger case to not pay for the additional costs not put in writing?

if the type of wood was specified, not only could they refuse to pay the higher cost but they could refuse the entire lot of them made with the incorrect wood. Good point to be negotiating from, at least as far as the buyer is concerned.

again, without the entire contract, anything I say is unsettled. Additional points in the contract could change everything I have said. As an example, if the type of wood was not specified but was stated more like: product to be manufactured using an acceptable type of wood, or it went further and gave a list of acceptable types of wood and the manufacturer simply included the cheaper type of wood as it's choice when making it's proposal, using a different type of wood that results in a higher production cost may not be an amendment to the contract. Additionally, using a more expensive type of wood which could result in a cost increase in itself may still not be considered a cost overrun. It depends on so much more than you have stated here.

The secretary was given the authority to handle any "details". The secretary was told over the phone before she made this deal to not make any decisions that would cost extra money.

but if the person asking the question doesn't know that and she claimed to have the authority, her statements may be binding.


as you should be discovering; without all the details, there really is no clear answer. Even with the entire contract, often times the contract is susceptible to interpretation.

while typically helping with work is frowned upon on this forum, I occasionally enjoy the discourse it provides, especially knowing that, just like on the show "Whose Line is it anyway?", the points are meaningless.

 

[jeremy_williams]

Great. That does help me comprehend the situation a bit better and helps me understand how these clauses work.

These cases are left with a lot of grey areas since I only have my side of the argument to work with. I wish they were a little more real world friendly and had the full contract. Thank you for the help

 

[justalayman]

Great. That does help me comprehend the situation a bit better and helps me understand how these clauses work.

These cases are left with a lot of grey areas since I only have my side of the argument to work with. I wish they were a little more real world friendly and had the full contract. Thank you for the help

having only one side of the argument is not the issue. Lacking facts is the issue. You, or I, can suggest myriad arguments but unless they take into account the entire agreement, they are meaningless, unless of course the intent is to get you started on one point and then start tossing in various details to see if and how it changes your position.


I think the only right answer to an unanswerable question is not to attempt to give an answer. A question regarding a contract without the entire contract to review is such an unanswerable question.

so, with that in mind, the best answer to your original question is:

it cannot be properly addressed without the entire contract available.

 

[jeremy_williams]

having only one side of the argument is not the issue. Lacking facts is the issue. You, or I, can suggest myriad arguments but unless they take into account the entire agreement, they are meaningless, unless of course the intent is to get you started on one point and then start tossing in various details to see if and how it changes your position.


I think the only right answer to an unanswerable question is not to attempt to give an answer. A question regarding a contract without the entire contract to review is such an unanswerable question.

so, with that in mind, the best answer to your original question is:

it cannot be properly addressed without the entire contract available.

Totally agree with you, wrong choice of words on my part. Understanding the facts I do have will help my preparation for this. My professor knows the author who has stated that this case is pretty much unsolvable. But the big lesson I believe this is attempting to teach us is how to prepare without all information available, and also it's about coming away with the best possible outcome for both parties by fulfilling the interests of both parties as much as possible. (interests other than money, like relationships, etc.)

Appreciate all the insight and quick responses though.

 

[justalayman]

Totally agree with you, wrong choice of words on my part. Understanding the facts I do have will help my preparation for this. My professor knows the author who has stated that this case is pretty much unsolvable. But the big lesson I believe this is attempting to teach us is how to prepare without all information available, and also it's about coming away with the best possible outcome for both parties by fulfilling the interests of both parties as much as possible. (interests other than money, like relationships, etc.)

Appreciate all the insight and quick responses though.

so, how far is it to the moon?



but to your case being unsolvable:

bs

A court would give you an answer. It would be based on the facts as presented and the arguments and support for those arguments presented. It would be solved.

then if either party disagreed, the court would simply tell you: res judicata prevents you from litigating the same matter again so unless you have the grounds for an appeal, go away.

 

[jeremy_williams]

so, how far is it to the moon?



but to your case being unsolvable:

bs

A court would give you an answer. It would be based on the facts as presented and the arguments and support for those arguments presented. It would be solved.

then if either party disagreed, the court would simply tell you: res judicata prevents you from litigating the same matter again so unless you have the grounds for an appeal, go away.

Unsolvable to both parties that would possibly be the best alternative if I believe I could win it. This class is all about coming out with the best outcome on both sides. You are definitely correct though sir