Institutional and Organizational Design and Contractual Relations
Contractual Relations in Finland
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Transcript of Contractual Relations in Finland
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BERGMANNA t t o r n e y s a t L a w
BJL Bergmann Attorneys at Law
Helsinkiwww.bjl-legal.com
CONTRACTUAL RELATIONSIN FINLANDProactive Contracting and Contract Management
Peter JaspersAttorney at Law
Moscow, 31 January 2012
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BERGMANNA t t o r n e y s a t L a w
BJL Bergmann Attorneys at Law
Helsinkiwww.bjl-legal.com
CONTRACTING CULTURE UNDER FINNISH LAW
Introduction
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DIFFERING CONTRACTING CULTURES
• Non-formal contracting under Finnish law• Contracts can be made, changed or terminated
– orally– by common practices– as a consequence of changed circumstances
• Awareness of Finnish contracting culture important, otherwise company– may be surprised by contractual obligations– may rely on contractual provisions that turn out to be ineffective
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LAYERS FORMING A CONTRACTUAL RELATION
Contrac
t documentLegal provisions
Side agreements and common practices
Commercial usages and fairness
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FOCUS OF THIS PRESENTATION
Staying in control of contract relations
1. Proactive contracting Take an active role in contract negotiations Make negotiations a showcase of your professionalism
2. Side agreements and common practices Do not be surprised by contract elements that are not in the
contract document
3. Contract management Prepare your organization to control a contract relation from
beginning to end
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BERGMANNA t t o r n e y s a t L a w
BJL Bergmann Attorneys at Law
Helsinkiwww.bjl-legal.com
PROACTIVE CONTRACTINGPart 1
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WHO MAKES THE FIRST DRAFT?
• Local partner can produce a contract under Finnish law more easily saves effort and costs
• However:– The party providing the draft easily gets the upper hand in
negotiations– The Finnish party may invoke alleged legal requirements in order to
drive its own interest– Your company will have to get acquainted with the legal framework
anyway in order to negotiate equally– It is a good idea for a foreign company to show that it is prepared to
work professionally in the Finnish market
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DEVELOP YOUR OWN VISION OF THE CONTRACT• …reflecting a firm vision on the progress of the
project a well-prepared contract draft can also be a marketing tool
• …reflecting an understanding of local conditions and the interests of both parties
the other party will not be tempted to play the “Finland card”
• …and of course protecting your own interest in an appropriate manner
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INDIVIDUAL TERMS FOR FINLAND
• Re-use of Russian domestic models problematic• Domestic tools may not protect you in Finland
e.g. right of pledge for commodities in circulation
• Conversely, alternatives offered by Finnish law may remain unused
e.g. pledge on enterprises
• Cultural aspectUncommon clauses as negotiation obstacles
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BERGMANNA t t o r n e y s a t L a w
BJL Bergmann Attorneys at Law
Helsinkiwww.bjl-legal.com
SIDE AGREEMENTS AND COMMON PRACTICES
Part 2
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AGREEMENTS BEFORE SIGNING
• Course of negotiations can change understanding of the contract
• Depending on the circumstances, such communications can prevail even over explicit contract clauses– Example: Properties of a product mentioned in negotiations– Example: Estimations of required masses given by project purchaser
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AGREEMENTS AFTER SIGNING
• Contract‘s content can change at any time by agreement of the parties
• Such agreement does not need to be in writing– Any oral agreement– Even established common practices can be sufficient
• Even contract clauses explicitly demanding written form for changes have been disregarded by courts
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AUTHORITY TO MAKE AGREEMENTS
• Finnish law often accepts agreements as binding even if it was made by a person not formally authorized
• Factual authorization can be based on a person‘s position and the situation – „the right man at the right time“
• Particularly important in construction and other project work– additions to scope of supply– changes to technical specifications– price adjustments
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BERGMANNA t t o r n e y s a t L a w
BJL Bergmann Attorneys at Law
Helsinkiwww.bjl-legal.com
CONTRACT MANAGEMENTPart 3
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THE CONTRACT LIVES!
• The signed contract document is important, but it is only a snapshot
• Continuous contract management necessary– especially in long-term, construction, and project contracts– in order to have complete knowledge what the own obligations under
the contract are– in order to be able to demand the other party to fulfil its own
obligations– in order to prevent detrimental changes from happening without own
knowledge– in order to be able to take appropriate measures to secure own rights
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CONTRACT MANAGEMENT (1/2)
• Make sure that there are clear responsibilites for contract management at all times
• Define authorized persons for contract changes throughout the process and communicate these authorizations to the contract partner
• Make sure that all relevant events are recorded in written documentation– minutes of meetings– one-sided meeting notes
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CONTRACT MANAGEMENT (2/2)
• Establish continuous monitoring of the situation and needs for action– organizing functional flow of information to contract manager– treatment of change requests on a sufficiently high level– objection to non-conforming behaviour or performance by the
contract partner– identification of performance obstacles and appropriate reaction– early addressing of payment delays
• Make sure that legal expertise in the applicable law is available
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BERGMANNA t t o r n e y s a t L a w
BJL Bergmann Attorneys at Law
Helsinkiwww.bjl-legal.com
Doing Business in Finland
44 pages information bookletcan be ordered free of charge from the speaker
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BERGMANNA t t o r n e y s a t L a w
BJL Bergmann Attorneys at Law
Helsinkiwww.bjl-legal.com
BJL Bergmann Attorneys at LawEteläranta 4 B 900100 HelsinkiFinland
Tel. +358 9 696207-0Fax +358 9 [email protected]
Peter [email protected]
Thank you.