This contract tip is about learning from others' contract disaster stories.
We all have had contracts turn into disasters. Something went terribly wrong that could have been avoided with a different contract clause. These stories offer us valuable information. I often learn a lot from them. It may be a risk I hadn't considered before. Or a way to add clarity to avoid a misunderstanding that happened to someone else.
These stories are especially valuable when they come from my counterparties during negotiations. It often starts with a revision that makes no sense to me. When I ask, sometimes I hear their contract disaster story. Then I understand their "why" at a deeper level. And knowing that helps me in this negotiation and may help me in others too.
Here's one of my contract disaster stories.
A vendor delivered a $3M critical piece of equipment eight months late, causing us damages many times the price. Despite that, we could only recover the liquidated damages (LDs) capped at 10% of the price. Since then, I draft my LDs so it never happens again.
What's a contract disaster you experienced that could serve as a cautionary tale for the rest of us?
