Australia: 10 tips for effective contracting

1. Obtain security for performance and advance payments
2. • Address form and provider—non-cash security should be "as good as cash"
   • Provide right to recourse without notice where university has a bona fide claim
   • Require replacement security to be provided following recourse
   • Provide for return of security
   • Avoid sunset dates and otherwise include a regime for replacement of security before sunset date

2. Consider including liquidated damages (LDs) for performance and delay
3. • If there are LDs for delay, ensure that there is a mechanism to extend time for university-caused delay (to avoid time being set at large due to the operation of the "prevention principle")
   • Ensure that any LDs are a genuine pre-estimate of loss or damage (to avoid unenforceability due to the doctrine of penalties)

3. Use exclusions and limitations of liability and indemnities to allocate risk to the party best able to control it
4. • Consider appropriateness of monetary and other caps on liability and time bars on claims
   • Ensure that any losses or damages for which liability is excluded are clearly defined (e.g. do not rely on phrases such as "consequential loss")
   • Use indemnities for serious areas of risk, third party claims, to extend the limitation period and to avoid contractual damage principles of remoteness and mitigation
   • Identify appropriate carve outs (e.g. criminal acts, fraud, gross negligence, insurance proceeds)

4. Consider contracting out of proportionate liability
5. • Check whether contracting out is possible under applicable legislation
   • Where proportionate liability is not expressly excluded, consider whether it will derogate from indemnities and other liability provisions

5. Require insurance that is necessary and obtainable
6. • Assess risks to be insured and insurance required
   • Consider who should be responsible for insurance and who should be covered
   • Arrange a broker review of contract to ensure adequacy of insurance and to identify any impact on existing insurance

6. Ensure compliance with Australian Consumer Law (ACL)
7. • Ensure contracts comply with ACL requirements, including that any "consumer contracts" are aligned with the unfair contract terms provisions

7. Include WHS provisions where necessary
8. • Consider whether work health and safety provisions need to be included (e.g. where work is being performed on campus)
   • If appropriate, appoint the contractor as principal / main contractor

8. Address Personal Property Securities Act in drafting
9. • Consider whether the contract creates any security interests in personal property (e.g. step-in rights)
   • Perfect security interests through prompt registration on the Personal Property Securities Register

9. Specify termination events
10. • Provide for termination for default
    • Consider including right for the university to terminate for convenience, but be aware of potential "good faith" obligations

10. Provide for fast, efficient and simple alternative dispute resolution (ADR) processes with litigation as a last resort
11. • Specify whether ADR is final and binding (consider dollar cap)
    • Draft to ensure enforceability of provisions (e.g. avoid agreements to agree).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.