Legal Risk Management

Running head: LEGAL RISK MANAGEMENT
Legal Risk Management
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LEGAL RISK MANAGEMENT
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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LEGAL RISK MANAGEMENT
Introduction
The contract can be considered to be a vital activity in any project, as it creates a legal promise
between the parties. Various types of risk exist in different projects such as uncertainty, event
delays, liquated damages, high costs, and low quality among others (Pawar, Jain, & Gaikwad,
2015). Hence, the parties involved in different projects have to develop a contract for
establishing a reliable work process, wherein both parties need to perform their obligated tasks as
per the contract. Moreover, a contract helps in executing a project successfully. This mainly
focuses on the Right-For-Purpose of a contract to reduce risks related to different projects. At the
same time, limitations related to the ‘Opportunistic’ and ‘Adversarial’ behaviour of a contract
has been evaluated through this study.
Discussion
The key associate of a project generally develops various types of contracts such as lump sum,
incentive, cost-plus, design-build, and integrated project delivery among others contract
(Associated Builders and Contractor, 2013). Each of the contracts has its own purpose for
providing legal security against various risks. Through a contract, a party receives a
responsibility to other parties. This responsibility can be changed on the basis of the mentioned
contract type. For this reason, the key management of different projects modify responsibilities
as well as the conditions based on the contract type along with its impact on the project (Legal
Services Commission, 2019). This helps in establishing a proper contract in different projects,
wherein the reliability of both parties can be significantly increased. The success of different
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LEGAL RISK MANAGEMENT
projects depends on it, which can be considered as the main importance of ‘Right-For-Purpose’.
Trust can be considered as the main risks in any construction projects. Besides, a construction
project faces various work conditions such as bad weather, machine dispute, and labour delays
among others. For this reason, an uncertain work dispute has been initiated, wherein the cost of
any project can be increased. It can be considered to be a risk of a project. In addition, the
construction can delay due to late payments and fewer workers’ interest in work. This type of
risk can incur a loss, which can lead to customer dissatisfied (Zhang, Zhang, Gao, & Ding,
2018). A huge amount of indemnification or compensation may be paid by the contractor due to
high negligence at the time of the construction process. On the other hand, a proper budget is
prepared prior to every construction project. Hence, failed to achieve budget cost and revenue
can lead to causing liquidated damages, which also considered to be a major risk related to the
project contract. However, the management of any project must hold enough contractual
documents so that the issue associated with trust can be reduced. Lack of contract documents can
also lead to a risk for different projects. It can further result in different projects towards failure.
For the mentioned reasons, parties of different projects such as construction must develop a
contract so that risks can be mitigated successfully.
Based on the above discussion, it has identified that a project can be affected for various reasons.
Financial risk has identified as the most feasible risk with respect to various projects (Ross,
2016). Simultaneously, a project needs various approvals as well as planning to get expected
results. Client satisfaction is considered to be one of the major facts, which leads a project
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