Business and Corporation Law: Contract Analysis Project Report

This project analyzes a Building Facility Management and Service Agreement between ALDAR Properties PJSC and a facility manager for the Shams Meera Abu Dhabi building. The report examines contract formation, identifying the need for clear registration numbers, defined renewal processes, and measurable key performance indicators. It also assesses remedies for contract breach, noting gaps in monetary damages and the potential for imbalance in termination clauses. The analysis further addresses contract implementation, highlighting the absence of defined timeframes and work schedules. The dispute resolution system, primarily arbitration, is evaluated for its brevity and lack of detail on costs and procedures. Additionally, the project explores the methods of payment and compensation, pointing out the lack of specified payment methods and the absence of provisions regarding the conduct of apartment owners. The report identifies several legal issues and gaps, offering insights into how to strengthen the contract.

Running Head: BUSINESS AND CORPORATION LAW 0
Project MGMT
MPM 541
5/12/2019
Student’s Name

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Contents
Background of the report.................................................................................................................2
Introduction......................................................................................................................................2
Contract formation...........................................................................................................................3
Remedies for Contract Breach.........................................................................................................4
Contract implementation.................................................................................................................5
Dispute Resolution System..............................................................................................................6
Method of payment and compensation............................................................................................7
Legal issues missing in the contract................................................................................................8
Conclusion.......................................................................................................................................9

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Background of the report
The contract is a legally valid agreement that is enforceable to each party and the same
consists of certain terms and conditions, which reflect obligations and entitlements of parties
(Bonner, 2019). Here to state that in case of breach of contract, another party can sue the
defaulting party. In this manner, a contract also determines remedies for the innocent party to the
contract and therefore it is necessary to develop the terms and conditions related to a contract
carefully. This requirement becomes more crucial when it comes to the development of
significant commercial contracts where huge money is involved. Parties may suffer heavy loss
out of a contract if they do not include each of the potential terms of transactions. In the
presented report, terms of a contract will be reviewed in different aspects and the legal issues and
gaps identified in them will be also be focused and discussed.
Introduction
Contract selected for the preparation of this report is a Building Facility Management and
Service Agreement that is developed between ALDAR Properties PJSC and a facility manager.
As the name implies Facility management is important kind of document that provides the terms
and other provisions related to a facility management work in relation to the infrastructure of
different industry such as airport, hospital, power station, real estate, and many others. Aldar
Properties is a real estate company of Abu Dhabi. Further to say that the contract is developed in
relation to the building named Shams Meera Abu Dhabi. Although the contract is very detailed
and covered all the possible aspects, yet the same left some areas, which could be included in the
same.

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Contract formation
A contract is formed when offer and acceptance are there in addition to a valid
consideration and intention to create legal relation (Epstein, 2012). All these factors seem to be
validly incorporated in the subjective contract. Nevertheless, in the introductory part of the
contract, registration number of parties should have been mentioned, as the same is a company
and not an individual. In addition to this, under clause 2 of the agreement, it is mentioned that the
parties will do all the necessary things, which are required to do for the renewal of this contract.
It creates ambiguity for the readers of the contract. Parties might have stated the name of
documents, which need to be executed and signed to give effect to the renewal for further
clarification.
Further facility management services required to be performed by a facility manager are
mentioned but the standards/key performance indicators are not mentioned which the service
provider is required to achieve. Section 3 of the clause states that the facility manager will be
entitled to get reimbursement of all the expenses done in the course of performance of the duty in
addition to the cost of services performed by the same. It is a very important clause of this
contract, which consists of consideration for the facility manager. An amount is not mentioned
here but the same should have been. It is very clear that the expenses are real and cannot be
evaluated earlier but the cost of services can be. Parties might have decided the amount, which
will be due in favor of facility manager irrespective of the amount of expenses incurred by the
same. Under clause 4 of the selected contract, obligations of the facility manager are mentioned
and stated that such a manager is required to perform the functions considering Minimum
Service Levels. This term could be more detailed. Minimum service levels are mentioned under
schedule 2 of the contract, but in addition to this, the key indicators should have been

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measurable, relevant and time-based. Being a project manager, it is required to have a look upon
to each of term of this contract individually and to check whether the inserted terms are clear
enough or not.
Law is an important topic of each contract that governs the same. Each commercial
contract is regulated by one or more legislation in addition to the common law. In the contract
selected hereby, the applicable law is mentioned everywhere. Further, the interpretation section
states the meaning of applicable law as all the laws, regulations, ordinance, code, and other legal
requirements of any government authority in addition to injunctions, judgment or other
requirements of any court. This definition is very general and makes the scope of applicable laws
very wide. It may put the parties in the loss. Here the parties were required to mention the names
of laws, which are applicable to this contract, and if the same was not possible to do then at least
they might have listed out some legislation, which will be considered by the judges while
deciding the disputes.
At last, valid mode of communication is missing in the contract and it gives an
assumption that the parties may communicate everything in oral mode. This can create issues as
oral statement has no records for future.
Remedies for Contract Breach
Remedies are an important part of every contract. It provides safeguard to innocent
parties in that situation where the other party breaches one or more condition of the contract or
do not perform the obligations as per the expected manner. Money damages, specific
performance, rescission. Reformation and restitution are some of the major remedies that are

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available to an innocent party in case of a contract breach (Contracts.uslegal.com, 2019). In the
respective contract, remedy related to termination is mentioned. Clause 16 of the contract is
developed in the topic of default and termination. Provisions related to voluntary terminations as
well as compulsory termination are mentioned in this clause. Clause 16.2 of the contract outlines
those situations where the contract may be terminated by the developer. Further, clause 16.3 of
the contract provides those situations where facility managers will be able to terminate the
contract (Shamsmeera.com, 2019). No other remedies are mentioned there such as damages or
specific performance. This seems to be a huge gap while discussing the contract. Clause 16.2
says that developer may terminate the contract in case of failure to rectify the reach within 60
days by the facility manager. Although this is a valid clause, yet remedy of monetary damages
could be mentioned for some specific kind of breach, which is not major. Providing power for
termination of the contract in case of every breach gives, immense power to the developer that
does not seems to be moral for facility manager under common law. The same is applicable to
clause 16.3, which gives such limitless power to facility manager in case of non-ratification of
breach by the developer. In other words to say that parties should have developed the list of
events of breach according to the nature of remedies in order to make the entitlements of the
parties clear.
Contract implementation
Firstly, in the agreement itself, time is not defined up to which the other party can accept
the offer. The same should have been there. No such event is specifying in the contract form
where the contract will deem to be implemented between the parties. The work schedule is one
of the important aspects that is missing from this contract. Obligations of facility manager are

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mentioned but the way and event, how and when they are required to perform are missing.
Contract implementation outlines the way in which a documented contract is performed in
practical and therefore it is required to mention some event dates, which are not there in the
subjective contract.
Dispute Resolution System
Disputes can be there in any contract. These are the situations where parties do not
become agree with each other and dispute can be related to any topic. Clause 24 of the subjective
contract is based on the dispute resolution process. Apart from the mutual discussion, only one
kind of dispute resolution process is mentioned under this contract, which is arbitration. The
clause is very brief and does not include much detail. The selected contract only provides the
manner in which a dispute will be resolved between the parties but did not cover other aspects
such as it do not include anything related to the cost of the arbitration process. Here to state that
the arbitration process is not free of cost and an arbitrator who perform the function of arbitration
demands fee for his/her functions. Further parties have chosen the London Court of International
Arbitration (LCIA) and decided the place of arbitration Emirate of Abu Dhabi. As per provisions
of Article 28 of LCIA arbitration rules, parties to a case may be jointly or severally liable for the
cost of arbitration. In this manner, there is a gap in the subjective contract as incomplete
information can create another conflict between the parties (Internationalarbitrationlaw.Com,
2019).
Here another gap is that the three-step procedure is mentioned for the dispute resolution.
According to this contract, firstly parties are required to resolve a dispute in mutual. Then after if
they fail to resolve a dispute in this manner, then they have to approach to their senior officers.

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At last, if such senior officers also get fails to resolve the dispute then only parties can proceed
with the arbitration. Period of each step is defined under this contract. In the case of non-
availability of senior officers, what will happen to a dispute, it is an open question, which has not
been answered by this agreement? It is not clear that in such situations whether the parties to the
contract can directly approach to LCIA or not.
Method of payment and compensation
In the case of facility management and service agreement, payment remains a
consideration for the facility manager, which is an important term as mentioned earlier too.
Mode and method of payment is an important aspect for each contract. There may be various
method to make the payment such as cash, internet banking transfers and cheque. This method
must be clearly mentioned under the contract in order to remove any confusion regarding
payment between the parties. The contract selected hereby only outlines liability of developer to
make the payment and states that he is liable to make the payment of expenses occurred by a
facility manager in addition to service cost but do not provide that which payment method will
opt for such payment.
Situations are also not mentioned in which parties will be entitled to claim compensation
from each other. It is mentioned under clause 16.1 of the subjective agreement that in case of
termination at will, no parties will be liable to provide any compensation to others but the
incidents where the parties will be liable are not mentioned. This is one of the gaps that has
identified while reading and reviewing the chosen agreement. Further, clause 12 of the
agreement provides the capacity of the manager and states that the performance of the same will
be subject to the performance of apartment owners. The true beneficiary of this agreement is

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apartment owners. The contract states that the facility manager is required to perform the
functions in the best interest of the apartment owner. In this manner, the developer provides
safeguard to the interest of apartment owners. But what about the interest of facility managers for
the conduct of apartment owners? Nothing is mentioned about the obligation of apartment
owners to facility developer or obligation of the developer to facility manager with respect to the
conduct of apartment owners. This term might be there in the contract as it is one of the
important terms that could influence the right of the manager.
All the above-mentioned gaps have been identified in the existing terms of the contract. It
means these are the deficiencies found under the contract. In addition to these deficiencies, some
other terms are also there which are missing from the selected contract completely. In the
following section, such legal issues are mentioned which should have been there.
Legal issues missing in the contract
 Penalty clause:- It is an important clause of each contract, where the parties to the
contract decide their obligations with respect to the payment of penalties. Financial
penalty provisions should be there for those situations where the facility manager fails to
work according to the standards. It is given that such manager is required to work as per
minimum standard but penalty provisions are not there in cases of breach of this term. In
this manner, the developer has only the right to terminate the contract.
 Schedule maintenance: - Provisions related to schedule maintenance are very important
as wear and tear is fact of life and therefore the same is an important part of the facility
management contract. In addition to this, it must have been clear that which party will be

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liable for procuring spare parts (Lloyd, 2016). It becomes more important when the wear
and tear are related to the equipment provided by the developer.
 Interface with third parties: - The contract discussed hereby is related to the operation of
facilities. It is clear that the main motive behind the development of this contract is to
ensure that the facility manager will not delay or interfere with day to day operations. In
such a manner, the interaction of the facility manager with the third parties must be
regulated (Lloyd, 2016). Being on site it is obvious that such manager and apartment
owners can come into interaction. In this manner, it becomes the liability of a manager to
work in the best interest of the developer and not to make any deal that may affect the
interest of developer in an adverse manner.
 Handback Procedure: - In the world full of commerce, it is obvious that everyone wants
to get the best deals. Re-tender is a facility that developers in facility management
agreement opt in order to know the best competitive rates in the market. In this manner,
the developer may think to change the facility manager on the event of finding a more
suitable manager. There may be other reason for the termination of services of facility
manager. Provisions related to the termination of the contract are mentioned but hand
back procedures are not. In case of appointment of a new facility manager, the outgoing
manager may be required to brief the work to new managers. Handback provisions state
the manner in which work should be hand over to another facility manager (in the context
of facility management and service agreement.
Conclusion

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In a conclusive way, this is to state that the agreement reviewed hereby is very detailed
and is very inclusive in nature yet some gaps are there in the same which have been identified
and discussed in this report. In addition to these reports, some areas of legal issues also been
found and discussed which were not there. By inserting these terms, this agreement can make
better and clear.

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References
Bonner, M. (2019). What is a Legal Contract? Retrieved From:
https://www.thebalancesmb.com/what-is-a-legal-contract-462462
Contracts.uslegal.com. (2019). Breach Of Contract: Remedies. Retrieved From:
https://contracts.uslegal.com/breach-of-contract-remedies/
Epstein, A. (2012). Sports Law. Australia: Cengage Learning.
Internationalarbitrationlaw.Com. (2019). International Arbitration Network and Resources.
Retrieved From: http://internationalarbitrationlaw.com/about-arbitration/international-
arbitration-rules/lcia-arbitration-rules/lcia-arbitration-rules/
Lloyd, E. (2016). Facilities Management Contracts: A Few Things to Know. Retrieved From:
https://www.tamimi.com/law-update-articles/facilities-management-contracts-a-few-
things-to-know/
Shamsmeera.com. (2019). Building Facility Management and Services Agreement. Retrieved
From: http://www.shamsmeera.com/downloads/Building-Facility-Management-and-
Services-Agreement.pdf