- Unless otherwise stated or agreed the latest writing in time between the parties will have precedence over the prior writings. This means that documents like amendments or change orders need to be carefully written.
- All documents that are incorporated by reference into a document will have the same precedence as the document. For example, if you had a Statement of Work that incorporated the Supplier’s specifications into it, and the Statement of Work was silent on precedence, the Supplier’s Specifications would have the same priority as the Statement of Work.
- Agreements are interpreted as a whole. The simple example of this is if Document 1 required items A through M to be done and Document 2 required N through Z to be done, The requirement would be A through Z. If part of M conflicted with part of Z only then would you consider the precedence between the two documents that include the conflicting language.
Order of Precedence only deals with conflicts between documents. In the same situation described above, if you incorporated the Suppliers specifications into the SOW and that contained contract terms, those would be included in your contract. You need to read and make sure you understand and agree with any document you incorporate.
- As between multiple documents the precedence is normally established by an order of precedence provision.
- As between documents of the same priority, the precedence is given to the latest writing in time between the parties on the same subject matter.
- Precedence may also be established where there is a clear showing of intent shown within the agreement such as stating the requirements included in a specific section shall not apply or not have precedence over what is being agreed to in that section. (This is called a “Trumping” provision).
- When you incorporate Supplier generated documents into your agreement, those documents could contain terms that may restrict or limit the protection of your contract given the precedence that would be given to those Supplier documents. An Order of Precedence only protects against conflicting terms. It doesn’t protect against additional terms. So always read the Supplier documents and exclude any terms in them that you don’t want to be included in your agreement.
- As amendments are a later writing in time between the parties on the same subject matter, the amendment will have priority over both prior amendments that have been written and the agreement that the amendment is written against. Amendments need to be written carefully so it’s very clear exactly what is being amend and for what purpose. For example you may have a single product that you want to have slightly different terms on, if you aren’t clear you could me making that change for all. Here’s a simple example. A Commodity Manager had a Master Agreement and a Statement of Work with the Supplier. The Master Agreement was evergreen with no fixed expiration date and the Statement of Work had a 2 year term. The Commodity Manager wrote an amendment that referenced both the Base Agreement and the SOW that extended the term to a specific date. That amendment changed the date of the SOW to the desired date, which is what they wanted to do. That amendment also changed the Master Agreement from being an evergreen contract to a contract that now had a limited term.
Contracts are read to be complimentary and what an order of precedence does is give priority in the event of a conflict. This means that if you had two documents (priority 1 (P1) and priority 2 (P2), if the P1 document required items A-M and the P2 document required N-Z there would be no conflict. It would be interpreted to require A-Z. However If P1 said Supplier will provide X and P2 said Owner will provide X, then you would have a conflict between the two documents and then the order of precedence would come into play. It would be interpreted that the Supplier must provide it because that was established in the higher priority document.