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Construction Law/How can we minimize the exposure of risk when we enter the overseas market using contract management?

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Question
Dear Mr. Peter,

My company wants to enter into overseas market, but we want to minimize the risk with stating in the MOU / JOA agreement that -   in case of PROJECT loss, our partner shall take over all liabilities upon the overall amount of such loss. Also when negative cash flow occured, our partners will cover up the negative project cash flow. What do you think about such kind of provision in the contract? How can we minimize the exposure of risk when we enter the overseas market using contract management?
Thank you for your attention.

Best regards,


Seno

Answer
Dear Satrio,

I think that there is a low possibility of any partners accepting your conditions, especially as part of the losses or negative cash flow could be caused by your actions or inactions.  You can minimise your exposure to risk by paying for insurance policies to cover your risk or by government insurance, if available.  You need to cost your risks and then add an amount to your bids to cover that cost.  Of course, that extra cost may mean that you lose the tender, but that is part of the risk of the overseas market.  

Considering your comments, I suggest that you need more investigation of the methods of entering the overseas market further and the risks involved.  

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Peter M. Elliott

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First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

Experience

Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

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