This isn’t a good thing for you as a contract manager. Just look at what happened to Bear Stearns and the buyout — one trifling little mistake in the contract has cost hundreds of millions of dollars. Imagine being the poor guy who green-lighted that contract.
But how do you keep up with new laws and regulations? If the contract is busted because you as the contract manager didn’t notice that new SEC regulation, well, guess who’s next on the firing line? That’s right — you.
Therefore, keeping up with the regulations and rules passed by the appropriate entities is crucial.
Know Your Law
There are lots of regulations and agencies that potentially might impact you. Consider the case of an athletic director at a major university. He or she will have to clearly follow the NCAA rules, of which there are many. These rules govern situations like academic eligibility, hours, student pay, scholarship eligibility, permissible contact between athletes and recruiters, and on and on.
But there’s more than the NCAA to worry about: there’s also the school board of governors, state agencies, workers’ compensation, and the whole host of governmental regulatory agencies. Tax issues too. The same is true of most areas of compliance: you have to watch out for more than just the obvious agencies. Many differing regulatory bodies could have an impact, and it is important to think of each one and check it out. Don’t forget state, local, and federal levels of agencies.
Not only are regulations important, but case law is also significant. Lots of the rules of contract interpretation — i.e., the rules that help you write a good contract — are made by the courts, not the legislature or the agencies. This isn’t just basic contract interpretation — there are specific rules of interpretation for some contracts and various presumptions. For instance, a landlord-tenant contract for residential units is interpreted a lot more favorably for the tenants than a highly sophisticated lease deal, which is a lot more “even,” as it were. These things are important to know.
Other things useful to know are the Uniform Commercial Code (UCC) and the Restatement on Contracts. The UCC as used in each state may differ — it’s important to be up to speed on those.
Know Where to Find the Rules
The first things to know are the basic rules of contracts — don’t even think about getting a job as a contract manager unless you know all about consideration, integration, and so forth. To this end, certain books can help cover the intricacies of contract law, and I highly recommend that you get a reference book, like something from Nolo Press, or the ultimate, Corbin on Contracts. Of course, you’ll need room for about 40 thick volumes, but Corbin is the best there is.
If your company resides in a state that uses the Restatement on Contracts, that is also extremely helpful to have. Most states use the 2nd Restatement, but the 3rd Restatement is becoming more popular as well.
Getting the draft UCC as well as knowing where to find your state of contract’s version that they enacted are also crucial.
Besides the actual laws, any contract manager in the United States should be familiar with the Code of Federal Regulations as well as the Federal Register. The Code of Federal Regulations, or CFR, is the bible of regulations. Once a year, all the new regulations or amendments are revised into the corresponding sets of volumes of the CFR. So the volume containing the regulations of the agency you are interested in is perhaps up to one year out of date. That’s what the Federal Register is for — it’s a weekly update of proposed regulations, plus an index of which issue contains the text of enacted regulations.
Keep up with both of these. State agencies have similar systems. Read the CFR first, then the Federal Register, to get the complete picture. Agency websites are also useful.
I highly recommend having a subscription to the Federal Register if you are a compliance officer. If you are searching for a job as a contract manager, being able to identify the relevant regulations and rules for the company you are applying to will be enormously helpful.
Best of luck!
