bergmann attorneys at law bjl bergmann attorneys at law helsinki contractual relations in finland...

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




CONTRACTING CULTURE UNDER FINNISH LAW

Introduction

BERGMANNA t t o r n e y s a t L a w 3

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


LAYERS FORMING A CONTRACTUAL RELATION

Contract document

Legal provisions

Side agreements and common practices

Commercial usages and fairness


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




PROACTIVE CONTRACTINGPart 1


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


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


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




SIDE AGREEMENTS AND COMMON PRACTICES

Part 2


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


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


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




CONTRACT MANAGEMENTPart 3


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


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


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




Doing Business in Finland

44 pages information bookletcan be ordered free of charge from the speaker




BJL Bergmann Attorneys at LawEteläranta 4 B 900100 HelsinkiFinland

Tel. +358 9 696207-0Fax +358 9 [email protected]

Peter [email protected]

Thank you.

bergmann attorneys at law bjl bergmann attorneys at law helsinki contractual relations in finland...

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