Why every contract needs ‘quality control’ clauses

Setting a benchmark

Quality control clauses have two aims: (1) to set a firm standard and quality for content; and (2) to establish the product’s or service’s expected purpose or how it is to operate. The agreement may stipulate a level of expertise that must be attained in order for the contract to be fulfilled. Although it is difficult to describe the quality, it should as far as possible be specified even by equating it to an existing product or service.

Do not make assumptions as to the quality of the work that can be achieved and assume that the demonstrated marketing model is what will be delivered. Ask questions and find out more about the factory where the products will be produced and see examples of their work. If specialist experts or personnel are required to make a contribution to the project, then they should be named and any substitutions either agreed or excluded.

The right to terminate

The company which has commissioned the work or service may decide that the quality control clauses have not been complied with and that they shall exercise the right to serve notice of termination. The contract should be clear as to whether any sums will be refunded and whether payments due may be withheld. The supplier should also agree that the commissioning company will not be liable for any costs or expenses incurred in reliance on the contract by the supplier if the contract is terminated on that basis.

Software and function

Where the contract requires software to be developed ensure that the targeted aim is clearly set out with a stipulation that it must be achieved in accordance with the budget and timeline. If the budget is spent or exceeded without any degree of functionality being achieved – in other words it is not fit to go ‘live’ – there must be a procedure in place and clauses which set out the liability and responsibilities of each party for such a consequence.

Many software contracts fail to set any criteria as to what actually has to be completed and how it is to be stored or function. This allows the developer to merely seek more funding for additional work and argue that they have got it working even if it is not very good and that there were unforeseen difficulties. The failure of the NHS data storage agreements which cost millions and were then abandoned is a classic example. Whether you are commissioning online content, an app, or creating a new website, it is crucial that a very detailed description of how it is to work is set out in a schedule which forms part of the contract.

Quotation or procurement applications – add more detail in the contract

The source of the material and the ingredients as well as dimensions, colour, structure and function or purpose must be described in relation to any sample, final product or service. If there is to be no substitution of any materials, then this should be agreed.

Do not limit the contract to what you have been quoted or has been set out in an application document. All the information that you may seek to rely on when things go wrong must be set out in the main contract. You need to create your own additional requirements even if the quotation or application is attached as a schedule.

Payments and Safety

It is common for staged payments to be linked to approval of a prototype, draft material or a completed product. You also need clauses which set out the consequences if any material is rejected.

A company may allow access for assessment tests to be carried out as well as undertaking to comply with health and safety legislation, policies and codes of practice in agreed countries. Product liability and risk to the public are major concerns and it is worth setting a high bar.

Editorial control

Where content is being submitted for use online or for publication you should have final editorial control and the right to edit, adapt and delete any material. It is unwise to limit any right to delete just to the threat of litigation or defamation. A company may wish to edit material on the grounds that it is incompatible with its brand image so you want the right to remove material for any reason.

Timescales

The schedule of dates by which work is to be completed; material is to be delivered or a project is to be in working order and used by the public are also part of the quality control provisions. You therefore need to link completion of work, delivery of services and the deadline for use by the public so that payments are only made when these are complied with. Clauses are needed which address the issues of delays and non-compliance so that money can be withheld. The other party may even agree to be liable for the cost of the delays.

Packaging and marketing

Treat the design, cover and promotion as an important element and clarify who will be completing the work. Then have in place a system of approvals of samples and finished products which you can approve or reject in all formats and languages. If you have no such right, then insist upon the right to be consulted so that your views can be considered.

This will enable you to check credits, copyright notices, trade marks, logos, domain names, and images which the contract states should be displayed on all copies and on any advertising, marketing and packaging.

What happens if the quality required is not supplied?

An agreement can fail at any stage and so there is a need for clauses which provide a method for problems to be resolved prior to litigation. There are a number of options which are not mutually exclusive. The parties may agree several different ways of resolving disputes, from notification of the disputed facts and then an agreed period of discussion to resolve the matter, to more formal mechanisms such as dispute resolution or the nomination of an agreed person or governing body, mediation and arbitration. The agreement should clarify who will pay any costs that may be incurred for any of the choices.

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