Legal Issues to be considered in a project

Contract law, in and of itself, is a tricky legal game and it can vary from state to state. Every project management
effort needs binding and legal agreements to protect your company against litigation, whether you’re dealing with
in-house or outsourced project management.

Many project managers do not err on the side of caution, unless they’re in the building and construction industry,
and they often make verbal agreements that are unreachable. Often, employee or team theft of confidential or
proprietary information is another reason for a client to seek an attorney.

While it’s best to have a contract attorney in your state write your project management services agreement, we have
provided this example-only template of a service agreement; it should not be used in lieu of legal advice. To ensure
you have full protection from litigation, have your counsel write your service agreement. Keep in mind that you
may need to alter your services agreement per project to avoid legal issues resulting from a project you’ve
managed.

If you do have a service agreement in place, does it cover the following?

 Project contract- A project will always include numerous contracts. The drafting of the project contract includes
the most of lawyer’s contribution. While contracting, he would have to go through the nature of obligations that
would arise from the contract and also, the evolution of agreements whilst making business-related decisions. After
he is done with the contractual phase, the lawyer needs to deal with the post-contractual phase as well. The post
contractual phase will include his’ and party’s hidden obligations which he needs to analyze and perform.

 Project Terms – Not only should this include the timeline of the project, it should state who will manage and work
on the project. Include a change order clause as well for unforeseen expenses. Your client may request a penalty
clause if work is not completed as promised.

 Outsourcing – If you need to use outside resources, vendors, and even suppliers, how will you monitor these
sources? A sub-contractor agreement with your company named as an additional insured is a must.

 Imposing restrictions - In a project contract between two parties, it is common that the restrictions would be
imposed on party by another. It is the duty of the lawyer to check that the restrictions are in consonance with
Section 27 of the Indian Contract Act, 1872 which states that “Every agreement by which anyone is restrained from
exercising lawful profession, trade or business of any kind, is to that extent void”. However, exception to this can
be like not revealing secrets of the company to prevent exercise of insider trading, etc. and to preserve the goodwill
of the Company.

 Communication – How much communication will there be between you and the client? If it’s weekly, indicate
that. Stick to a written communication agreement and make sure you outline if communication can be verbal or in
the form of email or faxes.

 Risk Insurance – Do you have enough project or business liability insurance in case of litigation? What about
employee theft insurance? Speak to your company’s insurance broker to ensure you have enough coverage and
coverage that will pay for attorney’s fees in the event you are sued. Check with your insurance carrier as well.
Often it will provide risk management training to help you avoid unnecessary litigation.

 Arbitration or Mediation Clause – Court battles and lawsuits can cost hundreds of thousands of dollars. To
prevent this, make sure your attorney includes a mediation or arbitration clause. This forces both parties to enter
into an outside court source to solve the dispute. While it’s not free to mediate, it is certainly less costly.
Also, it must be added that which law would govern either parties in cases like, if both the contracting parties are
foreign entities or either of them is and such other cases. It is also vital to decide the jurisdiction beforehand in case
anyone approaches the Court.