Ever wondered what it takes to be the master of the contract universe? Buckle up, because Luke1 and Luke10 are about to take you on a wild ride through the essentials of procurement contracts, spiced up with our signature blend of humour and wisdom. From the quirky charm of intent in everyday deals to the solemn gravity of binding business agreements, we'll navigate you through the 5 elements with the ease of a seasoned barista crafting your perfect cup of joe. And let's not forget Aaron, our podcast wizard, who deserves a hat tip for making us sound sharper than a lawyer's suit.
Prepare to laugh, learn, and possibly face-palm as we challenge the notion that only a "Karen" can haggle like a pro and debunk the myth that your name seals your professional fate.
Enjoy the episode..
Ever wondered what it takes to be the master of the contract universe? Buckle up, because Luke1 and Luke10 are about to take you on a wild ride through the essentials of procurement contracts, spiced up with our signature blend of humour and wisdom. From the quirky charm of intent in everyday deals to the solemn gravity of binding business agreements, we'll navigate you through the 5 elements with the ease of a seasoned barista crafting your perfect cup of joe. And let's not forget Aaron, our podcast wizard, who deserves a hat tip for making us sound sharper than a lawyer's suit.
Prepare to laugh, learn, and possibly face-palm as we challenge the notion that only a "Karen" can haggle like a pro and debunk the myth that your name seals your professional fate.
Enjoy the episode..
welcome to another episode of let's talk procurement, the only show you need to master the art of procurement. Let's go. Welcome back to another episode with me, luke, luke1 and joined today, as always, by Luke10.
Luke 10:How you?
Luke 1:doing Luke10?, everything alright.
Luke 10:Good, good. You say, as always, as if you don't value my contribution.
Luke 1:Oh, did it come across like that? I'm not very good at introducing people.
Luke 10:Took it personally.
Luke 1:Well, to be honest, from sort of feedback I've got from from the pod, I think you're, you're the, you're the ear candy, if I'm honest yeah, I mean the way I sort of see it is.
Luke 10:I am the face of the podcast, the. The looks and the humor that you know draws everyone in, brings everyone back listening to multiple episodes and you're kind of like the bodyguard. You're the brains behind it.
Luke 1:The strong one.
Luke 10:You're the mental bodyguard. You keep us from getting cancelled.
Luke 1:Well, to be honest, even I'm struggling with that. I mean, I'm blown away by, uh, by the amount of support and sort of um feedback we've had from for my listeners. It's actually been incredible. I think in a little over what six weeks?
Luke 10:yeah, I mean, I think we're sort of, by the time this gets published, it will probably be a while since we launched, but when we're recording this, we we've recently launched and I've got a lot, of, a lot of good feedback. So much appreciated on that. Thanks everyone. And if you've uh, if you've tuned out by now, then you know you weren't, you weren't worth it anyway, we never liked you. But if you stay here, then you know, thanks for coming back, thanks for bearing with us. Hopefully we'll get better at some point.
Luke 1:Look, I'm going to be honest with you. I'm kind of hoping that my dad is still listening at this point. He got kind of irate in one of our episodes you know the Sips Tips episodes. Early on he thought that you were mugging me off a little bit about bashing one out. But obviously we both know how to bash the tips out.
Luke 10:You messaged me this earlier in the week. You said that he called you and he was really angry because he thought that you didn't know that I was taking the piss, wasn't it something like that? Yeah, so he thought that his wonderful son didn't know that I was taking the piss or something. Was it something like that?
Luke 1:yeah. So he thought that, um, his wonderful son didn't know what bashing one out would kind of be an innuendo for, and I had to sadly explain to my, my dad, that I knew exactly where he was going with it. Um, but he should see, he should see the humor in it sure that was a great conversation to us yeah, uh, a highlight of my uh, my father's own career with him, but we'll see.
Luke 1:Hopefully he's still here if you are. Hello, rob, thanks for listening and persevering. Um, right, as always. Not only are we joined by luke 10, but it's time to uh crack joke. Ah shit, here we go again.
Luke 10:So did I tell you I'm still going with this.
Luke 1:I think so. Yeah, did I tell you that I took the shell off my racing snail? I thought it would make him faster, but if anything, it just made him more sluggish.
Luke 10:Oh, lordy Jesus, Fair enough, that's not a bad one, yeah, now I think it's a good story and it's a kind of heartwarming, one Kind of opposite to when I went on a drive the other day. I decided to go and visit my childhood home and I asked the people living there if I could go inside and have a look, because I was feeling a bit nostalgic. But they refused and they slammed the door in my face.
Luke 1:My parents are the worst brilliant. So I'm not quite sure I'm happy with you kind of bouncing back a joke, to be fair, like I spend hours researching it and then you just pull it out of your, your bank. So maybe we'll just crop that bit out.
Luke 10:Yeah, what's today's topic then, luke? I mean we probably said it about five minutes ago, what is it? Oh, sorry, I remember now it's the five tenants. How do you say it? Tenants, david, tenants of a contract.
Luke 1:Yeah, david, tenants of a contract.
Luke 10:Five.
Luke 1:David tenants of a contract. Five David Tennants of a contract.
Luke 10:Right then. So what's a contract? That's where we should do a segment change. Now we're trying to be more professional and everything.
Luke 1:Oh yeah, keep a segment change in there.
Luke 10:Yeah, aaron, we're going to keep this bit in because we want everyone to know that you exist. Actually, we should give a shout out to Aaron because he's probably got the hardest job of all three of us making us do sound bearable. That's what I'm talking about.
Luke 1:That's why he's everything. That's why he's the GOAT, the GOAT. Yeah, I'm slightly frustrated with not with Aaron, with myself, really, because my microphone is so tinny and I should probably just stop being a tight, tight.
Luke 10:Basically a procurement person.
Luke 1:Yeah, I just need to. You know it's an investment, it's not a, it's not just a random spend. I feel like maybe we should upgrade our microphones and just take that ear pleasure to the next level.
Luke 10:I kind of hope that when you procure your new mic you mess it up so we can have another, you know another segment for the procurement duck-ups or whatever we're calling them segment.
Luke 1:Oh yeah, I'll buy a mic and Magic Mike will turn up, or something like that.
Luke 10:I'm sure that'll be a fuck-up. I suppose it depends isn't it?
Luke 1:My wife might like that. I'm sure that would be a fuck up. I suppose it depends, isn't it? My wife might like it. So now we've rolled on smoothly with our little sound intro. What is a contract?
Luke 10:What is a contract? A binding agreement between two parties or more. Can there be more? There must be able to be more than two.
Luke 1:You can have a tripartite contract or a multipartite contract or a partypartite. No, you can't have a partypartite, but there's lots of different iterations.
Luke 10:Does it go like a quadpartite and a whatever the five one is?
Luke 1:Yeah, syncopartite, sort of yeah, and then whatever comes after that, six, six, six, septa, yeah, and it goes on like that. But you could probably be here for hours just kind of guessing what those might be. Yeah, and interestingly I don't know if you know this a contract does not have to be written.
Luke 10:You can have an oral contract yeah, I've heard of such things, but I've never. I've never seen the like in business transactions, probably not. That's probably a good thing never had your car washed yeah, that's not a business transaction though no no business to business it's, though, no, no, business to business, it's B2C, isn't it?
Luke 1:Business to customer, consumer? I mean, you know, I've driven down a dark alleyway, some bloke's come out with his hose. I said, oi, luke, I don't know how he knew my name, but oi, luke, five pounds and I'll clean you inside and out.
Luke 10:Hey yo, what the fuck yeah?
Luke 1:no worries, mate, and there we go. That's a cheeky little contract isn't it?
Luke 10:What if, then he cleaned it and he said oh no, I told you it was tenner and you accepted it.
Luke 1:It's nothing to say that you know it's official, the oral agreement of five pounds. And that's where it gets difficult right. And that's probably something else we'll touch upon is actually looking back at a contract and kind of understanding what your rights are and what you can kind of claim against it.
Luke 10:Yeah, I feel like that's something we could potentially do on an Everyday Dave episode.
Luke 1:Yeah, I mean, hopefully the first one of those is aired by now, if not the second one as well, because that was quite interesting. So yeah, a contract, legally binding promise or agreement can be written or or by by one party to another or to several others, and there's kind of five david tenants that make it up and I think I think they kind of go hand in hand. But I'll just I'll rattle them out quickly, All right, so offer acceptance, consideration, capacity and intention to create legal relations.
Luke 10:Nice. I like how all of them were so concise and easy to remember. They're all one word what's the last one? Yeah, I mean that just really ruined it, to be honest the last one I like to shorten to intent.
Luke 1:So offer, acceptance, consideration, capacity and intent. So offer and acceptance. Sometimes instead of seeing five tenants and SIPs likes to make sure it's five tenants because it goes nicer in an essay exam you can get maybe five marks per tenant that you talk about. But actually offer and acceptance together form agreement. So the bloke in the alleyway he offered me five pound for a car wash, but that's just an offer, right, I could have driven past him because you didn't accept it because I didn't accept it.
Luke 10:However, if I chose to accept it, then we then got our agreement so you're saying an offer and acceptance without consideration and intention, and whatever the other one was would just be an agreement yeah, just be a an agreement, it's not.
Luke 1:There's other bits that we need to kind of get into. So, um, to go over offer an agreement, the offer can be made, and sips likes to take it quite back to its bare basics. The offer can literally be spoken um, it can be implied, it can be written um. And the kind of examples that they always go back to are a supplier just providing you with a quote. So even even at a basic level, an everyday dave level, um, strutting down the tesco aisle when you see chicken nuggets 50 chicken nuggets for two pounds that's an offer right. And until you take it to the till to buy it for £2, there's no agreement or no acceptance right.
Luke 10:So what happens? If you get to the till then and someone Mr Tesco says, oh, it's actually a fiver, would they be within their rights to do that? Or once they've advertised that price, then that's the price they've got to stick to.
Luke 1:Well, there's different rules around that. Once they've advertised that price, yeah, and that's the price you've got to stick to. Well, there's different rules around that, and I'm not sure that the legality is on it, but I know that. So, for example, if if they've mislabeled something, or if they've labeled it as five pounds and you get to the two and it's seven pounds, you can point back to the label and then you've got your consumer rights to kind of go.
Luke 10:Well, actually you were offering at five pounds so you have to honor that, yeah, but the potentially the reputational damage of looking like a karen in store might not be worth the two pounds it could be saving, although in this economy nowadays not that we're going to start talking about the economy in this podcast, but you know, maybe you decide that it's worth it to to save two pounds and use that to go towards your eating to be honest, I'm slightly disappointed with you.
Luke 1:Come on, it's luke. Um, I'm a big fan of karen's. I think karen's are something that the economy needs, and actually they're a bit of a dying breed.
Luke 10:There's less you know, someone called karen, didn't you?
Luke 1:no, I don't, but there's less and less karen's in in the schools these days, you know, and if they are, they're kind of the teachers, so that the future Karens are kind of in jeopardy right.
Luke 10:So you're saying you want to bring back the Karens?
Luke 1:well, I mean, yeah, kind of I think we should. You know you're not. You're not going to name your daughter Karen because of the fear of the stigma of her turning into a Karen. But actually, actually, what is the stigma? I mean, she speaks to managers, she's got confidence. You know she's tenacious. Everything we need comes from a Karen.
Luke 10:So you're saying you want to bring back the Karens?
Luke 1:then yeah, I think we should make Karen great again.
Luke 10:Make Karen great again. That's something that I mean. I don't know how many programs we've tried to start on this podcast, but we've started a lot. Maybe this could be. Our hardest challenge yet is to kind of make it so that Karens are liked again. Karens aren't too bad. If you know anyone who's called Karen and they're actually a nice person you know, send a bow or give them a shout out.
Luke 1:Yeah, I'll tell you what a little penny's just clicked as well. Sorry, forgetting Karen for a second. I know we love Karens, the cheeky little term invitation to treat.
Luke 10:Yeah.
Luke 1:So invitation to treat is very similar to an offer, but it's more of a pre-contractual communication. So it's a little song and a dance to kind of get someone in. So quite often SIPs might actually use, let's say, the price of a used car as an example of an invitation to treat. Because you'll be walking down the road and you'll see it and you'll go oh my God, that Ford Fiesta is only £17,999. And then you'll go in.
Luke 10:Actually that opens the discussions that that doesn't necessarily mean you're going to go in there and buy it for 17 999 so it doesn't give you the right to turn up with a briefcase full of 17 999 exactly, and then you have the right to drive away with that car.
Luke 1:Well, I think you do, actually, but it's more for you then, because you're paying full price at a used car dealership, true, which is why you'd hope a procurement professional isn't going in and paying full shop window price. You don't want to be too Karen about it, but you've got to get a discount secured. And now I'm talking about Karens. Actually you set me off here a discount secured, and now now I'm talking about karen's actually you set me off here procurement is just a profession for a karen.
Luke 1:We are professional karen's I'm not sure if we want to be, we want to be branding ourselves as that, but we are, though. I mean, look, we speak to managers, we speak to you know, we're not scared to escalate things.
Luke 10:We chase after a discount I would say something delivered late handbags I mean a karen to me is someone who is like a bit annoying and goes over the top for no reason. You know something small might happen and they go a bit mental about things and just basically being a bit irrational and I wouldn't, I wouldn't describe procurement as that at all so if you were hiring, you know, for a procurement professional, you would just not accept a Karen um what? Purely on the basis of name? Or someone who who acts like a Karen?
Luke 1:just purely on the basis of name and a bit you. Let's just say they rock up with a Bob handbag Ten seat car in the car park. What are you saying?
Luke 10:I know there's a whole segment online about people whose name matches their occupation. Whose name matches their occupation I don't know like a thirsty drink water as someone who works for a water company. Um, I like that, but um, I don't believe that just purely a first name can affect your personality. So I would think, I would like to think that I'd be objective in my analysis of of of said Karen going for the job. Um, you know, if they fit the job description, then they're in. They're not just purely out just based on the fact they're a Karen no, I'm impressed with that answer.
Luke 1:Actually, I thought you might be a bit more discriminatory, given how you started this sort of current topic, but good um, a man of, uh, multi-different, of many, many surprises, you know multi, multifunctional god, that was the most dysfunctional sentence I've ever heard I can do many things, but saying a normal sentence is not one of them. No, look, I'm really excited for some of the episodes where we're looking at exploring cultural differences and things like that, because I know you've got a lot of knowledge and expertise in that field.
Luke 10:In the accent field.
Luke 1:Well, I've heard a rumour that that might be one of your strengths. We'll have to wait and see.
Luke 10:Please don't build it up, because it will be atrocious. I think you have to start with your expectations.
Luke 1:I don't want to get cancelled either, but I mean, I've seen a TV show called Phone Jacker and I think you give them a good money for their money, phone Jacker, good TV show. Anyway, we've gone majorly on a tangent, as per so we've gone through offer and acceptance, and then, I think, we move swiftly on to the next one, which was intent next one, which was, uh, intent, yeah, so do.
Luke 10:do we know? In your kind of actually, I was going to use your, your alleyway story um, you and another man in a dark alleyway but I think I might change it up back to a example that we like to touch on a lot is barbershop. Yeah, so you know, if you're just walking on the street, someone comes up to you and shaves off your hair and gives you a skin fade, then asks you for a tenner, you know you didn't. What if you didn't want that?
Luke 1:You didn't consent to that.
Luke 10:Didn't consent. I do kind of like the idea of just like that being the way that barbers make money just going up to people along the street who have bad haircuts and just giving them a good haircut and then asking for money.
Luke 1:Yeah, I feel like if that happened, you know you could give them a good nickname as well, like jack the trimmer or something like that. Yeah, goes around fixing people, you know, and, uh, hopefully not butchering their haircuts. Um, go on, carry on. What's your example?
Luke 10:um, I think I'm kind of it. That was, that was as far as the oh no so yeah, the intention.
Luke 1:I mean look, so if I'm, if I'm down a dark alleyway getting a car wash, it's probably not the car washer.
Luke 1:They're not going to have the intention to create a legally binding relationship, right, they're not going to give me a receipt, it's a, it's a kind of off off record deal. But we're both happy because we get it cheaper and he doesn't pay tax for doing the work. However, going to a traditional car wash where you do get a receipt and you kind of got all the prices published and you kind of make that agreement, there is an intent from the car washing company to give you the service and also to it to basically sign up and agree that they will meet minimum requirements and they will abide by the law in carrying out the services. And there's intent for me, because I'm sitting there in my dirty car and I need to clean and I'm obviously paid for it and you've driven into the car wash lot or wherever they're doing it yeah, and obviously that'll be different in loads of scenarios, but you kind of just what the courts will do, is they kind of walk through the scenario?
Luke 1:Was there a clear intent from both parties to create that legally bonding relationship?
Luke 10:How could that be referred to in a business context? I know we do a lot of rambling about non-business stuff, but what would be an example of intent to contract in business?
Luke 1:so a good example of it is let's say, you've got, you've called someone in to fix your um, your water machines, because they're broken, you've not agreed a price or anything, but the the engineer turns at the door receptionist, lets him in and then he goes about his day and completes the work in the office. Now, whilst there's no written agreement, nothing other than a phone call, the intention is there on the basis that we have let another business onto our property to carry out the work and, from the engineer's perspective, the intention is there because they've turned up with their you know their work equipment and they're ready to go yeah, so obviously it's not going to be able to to be argued that, oh, we just let a plumber on site, but we thought it was just going to sit in the corner and do nothing yeah, you wouldn't just let a plumber onto your well, into your company and just hope he does work for free and then never wants payment and walks off site again.
Luke 1:Yeah, and then that takes us on nicely actually to consideration. So consideration is effectively saying there has to be an exchange between the parties, most commonly Money, most commonly it's money, a monetary exchange. However, it doesn't have to be.
Luke 10:As in it could be like I'll give you my car for if you go and put some towels on my roof or something.
Luke 1:Yeah, so my gym PT. He will give me a PT session if I give him procurement advice.
Luke 10:That could be a fair trade of services, okay so it doesn't even have to be something physical, it can just be like a there can be services yeah, be services.
Luke 1:You know I could um. I get five PT sessions from him in return for 50 AAA batteries fine, yeah sounds like a good deal, to be honest it does sound like a good deal. And then the final one is capacity. Any ideas on this one?
Luke 10:I think we sort of means like if you're, if you are like four years old and we had to sign a contract there we go.
Luke 1:That's better. So capacity, if I go into it in kind of its definition format, the parties have to be over the age of 18 or 18. So 18 years of age or older. That's a UK law, it's the current, current defined law for being able to enter into a contract. So think about your mobile phones. To enter a contract you have to be a minimum of 18 years old. Um the employee. If you're signing on behalf of a company, you have to have a formally delegated power of authority to legally commit. You have to have a formally delegated power of authority to legally commit employees of that company to a contract, and then you actually have to be able to carry out the contract. So not you necessarily personally, but you and the party you are representing. So if I'm signing on behalf of McDonald's to do a catering contract, uh, I would be comfortable that you know we've got the facilities to deliver food. Basically how?
Luke 10:how, going back to the age thing, how does that work in terms of, like, I don't know if a kid wants to buy a chocolate bar, because is there not like an? Obviously there's not a written contract or anything there, but I don't, yeah, I don't really know. How does that basically work?
Luke 1:yeah, I'm not sure. If I'm honest, I think that's a good question, but it's not. It's not. It's not business to business contract, is it? But it's a yeah kind of retail contract which probably has different regulations around it um, so, so how?
Luke 10:and then, the second thing you said that I wanted to to pick up on as well was about um like say, for example well, what reminded me of this was something about a procurement duck up, which we may or may not not do, it might be too political. But say, for example, that, um, you had an order for 20 000 phones, 20 000 nokia phones, right, but your company made dressing gowns. Could that be something that the courts could then say, yeah, what? The company?
Luke 1:the company, they don't have capacity to produce phones because they just do dressing gowns, for example yes, that's exactly right, and the one that interests me the most actually is kind of delegated authority to sign. So it's one. I've seen quite a lot and how do I know or how do you know the person you are dealing with has the right authority to sign a contract on behalf of their employer? We don't right. So In the eyes of the court, what happens is they look at the situation, the person who has signed that contract, and whether the other party could reasonably assume that that individual did have authority to sign for £10 million of Railway Works and Joe Bloggs' job title is Junior Buyer and Joe Bloggs proceeds to sign that contract. Do you think that I as an individual could reasonably assume that Joe Bloggs has the capacity to commit their company to the Railway Works?
Luke 10:£10 million is quite a lot, so I would say no, although they are buyers.
Luke 1:So I would say no with a view to probably challenging it or just making sure, so kind of getting someone else to kind of confirm that that individual has authority at the supplier side. And that's kind of an example where it's, you know, a bit more on the edge. And you know, some organizations might give a junior buyer 10 million pounds of purchasing authority. But also we see a solutions architect signing a 10 million pound contract and then you've got to go hang on.
Luke 1:Yeah, and and especially in this day and age where there's a lot of directors sitting in a company and I feel like directors kind of lost its seniority or its kind of meaning. You know, you see directors at all various levels and actually it's perfectly normal for someone on the other side to assume that a director might have signing authority. But that's not necessarily true. But if the courts look at it and say, well, actually, yeah, his job title is director of director of toilet cleaning, um, then the other party could reasonably assume that that he did have the right to sign the contract. So companies have to be really, really careful about what, what job titles and what kind of people are doing in terms of committing, trying to commit their company to, to work well, that will make sense.
Luke 10:so to kind of recap, the five um david tenants have a contract, then you You've got offer and acceptance, which is agreement, and then consideration, capacity and intention. What was the full title Intention to enter into?
Luke 1:Legally binding? Yeah, and I think, before we wrap it up, I was going to give you a cheeky little, cheeky little example question. See if you see, if you learned something today nerve-wracking john. John offers his car for sale for ten thousand pounds. Okay, janet is willing to pay ten thousand pounds if john repairs the damage to the bonnet. What essential feature of a legally binding contract is absent, so we'll go over it again. John offers his car for sale for £10,000. Tiffany is willing to pay.
Luke 10:Tiffany, hold on that's her middle name yeah, tiffany, janet is willing to pay.
Luke 1:Or Janet, tiffany is willing to pay £10,000 if John repairs damage to the bonnet. Okay, so big john, big johnny is offering his car for ten thousand pounds.
Luke 10:Yeah, tiffany is willing to pay ten thousand if john repairs damage to the bonnet okay, so I going to assume that both parties are overage and have the capacity to enter into a contract.
Luke 1:I've ID'd both of them and they do have capacity. You've ID'd both of them, cool.
Luke 10:Yeah, okay, so that one's ticked off. You've then got the consideration, which is the £10,000 that has been kind of said. That will be will be given. Um, john's put the offer of 10 000. Janet's returned the counter offer, yes, of 10 000 if the bonnets are repaired, and that signals intention from both of them to enter into a contracting relationship, which then leaves, if my calculations are correct, acceptance oh, mate, you're a star people.
Luke 1:That is, that's fantastic. Um, yeah, so there's no acceptance right or um agreement over what they're going to accept. Um john needs to come back and say whether he accepts it or not.
Luke 10:I mean, they will come to an agreement and hopefully proceed with the sale and also, am I right in saying that if John declined that offer then in theory the previous offer of 10K, not excluding the I mean nothing to do with the repairs that previous 10K offer has been declined by the fact that Janet returned back a counter offer returned back a counter offer yes, so.
Luke 1:So janet or tiffany or whatever you want to call her, um effectively has rejected it by saying that actually that's too much money for for that car, including the damage bonnet. So either she's going to say, well, repair the bonnet and I'll do 10 000, or I'll give you 9 000 and I'll pay the the money myself.
Luke 10:Nice. No, I thought that was a good question. Maybe we should start doing more of them at the end, testing my knowledge a little bit.
Luke 1:Yeah, and hopefully the listeners if you got this far, had a little go at that question yourself and got to the right answer as well.
Luke 10:Well, I guess the only thing left to do is almost wrap up, but before we do that, send this to someone if you like them. I'm going to change it this time. Send it to someone if you like them, or send it to someone if you've ever been to space. Wholesome, because unless you know an astronaut, that means the person likes you.
Luke 1:What a lovely little note to end on that one, thank you.
Luke 10:Cheers everyone. See you later. See you later, Thank you.