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Subject: Minutes Draft July 2 - v2
Folks, Here is the second draft of the July 2 minutes. It includes many corrections courtesy of Dr. Leff. Because these were mostly typographical I have NOT marked them with the usual '***'. (Thanks to Dr. Leff for taking the time to do a detailed review.) I will look forward to our meeting in a few hours. Best, Dave Marvit Fujitsu Labs of America Special Projects Consultant -------------- Draft Minutes (Version 2) OASIS LegalXML eContracts Technical Committee July 2, 2003 Conference Call. Summary: - Some discussion about scheduling a face to face in SF - Rolly presenting his construction contracts scenario ---------------------- The following were present: Rolly Chambers Charles Gillam Dan Greenwood Jason Harrop Dr. Leff Dave Marvit John McClure Zorin Milosevic Discussion about face-2-face in SF concluded as follows: - We have an hour from 9 to 10 in the Fairmont hotel to discuss things(a mini-face-2-face) with the cyber-law group. - We will shoot for Saturday, Aug 9th, late morning through lateafternoon for a face to face. (noon to 5 or so). More information on avenue is pending. Starting the meeting: DG: I believe that our only agenda item is Rolly's scenario. Rolly: I'll keep it short and sweet. I want to thank Jason, Zorin, and Peter for letting me shamelessly plagiarize their good work on the other scenarios. When I started I was interested in taking the general information item that Jason et al. had described and seeing if those items could and might apply to marking up construction contracts. I was trying to see what we already had and apply it in a specialized contractual settings. I did that, proceeding as Jason had - considering the document generation and management challenge more than the automation challenge. After going through the exercise I am satisfied that the information items generate for other scenarios apply well to construction contracts. Notice, event, obligation, outcome, title, date, and governing law all apply readily to construction contracts. In particular we need to explore and experiment more with the obligation item. Certainly the obligation, in any contract -- especially in construction contracts -- has a lot of legal and factual significance. It would be good to try that out on a few contracts. A lot of what contracts will turn out to be are a bunch of obligations. (There will be other stuff as well.) I was trying to see if obligation is a high level item that would contain other items like payment and notice. Governing law item is what I would think of as a boiler-plate item. I see that as part of a standard piece of verbiage. There are other pieces that are in that category such as a merger clause, ("this document represents the entire agreement...") DG: I call that an integration clause. Is that the same thing? RC: Fair enough. There is a severability clause. That states that if one clause is found to be unenforceable it doesn't invalidate the entire contract. The point is that the governing law item brought to mind that there are several other items that fall into what I call the boiler plate items-- even though that is not an artful term. Other items might be more specific to construction: the name and location of a construction site, the scope of work, changes. Construction contracts are a little more plastic than many other contracts because of changes in the scope and changes in the price and time. Construction contracts typically have built in provisions that allow for those kinds of changes to be made. In working through the scenarios the question of warranties and representations emerged as something that merits examination. Representations are statements about existing facts. Warranties are about future facts. In construction there are statements (representations , or more often warranties about a set of future existing facts) that bring with them legal obligations, but are not obligations in and of themselves. With respect to dispute resolution... we took provisions from a bunch of construction contracts (with Zoran). I think Zoran has done a good job of doing that. Litigation, and arbitration are legally binding. Mediation and negotiation are non-binding forms of dispute resolution. The scope of the dispute that is subject to a form of dispute resolution is defined or described in the clauses. Sometimes the procedure is also described. For example, the American Arbitration Association has different procedures for different industries. Many times a well drafted dispute resolution clause will describe what set of rules to follow (using those from the AAA or some other org) From all of that, another area bearing more consideration, is looking at how markup of dispute resolution provision might be integrated with other items - such as the notice item. Zoran: It is a good point about integration of other items. We think of the breach event as a common concept. When there is an obligation there needs to be some event to be checked against. These are specialized concepts that need to be checked against Rolly: When I was thinking about events and outcomes I was going from events to outcome. And outcome as I was thinking about it, is a conditional obligation. If this happens, then the outcome happens. Zoran, you are suggesting that we should look in the other direction as well. How are obligations met or fulfilled. In the process ... DG: You put a note that you wanted to further clarify the distinction between event and condition...? Rolly: Yes, for a fist pass, I didn't make the distinction. I called everything an event. But it would be possible to call events that give rise to an obligation versus .. DG: For conditions, when you look at automated processes or automated rules that might trigger a notice or something... having the system know what these conditions are and know how to apply them would be important. But that may happen at the application level. I'm not sure what needs to be encoded in XML. I could imagine that applications might know what events trigger other actions... I'm just sharing with the group my thoughts as to what should be in the standard Zorin: One way is to think about , for every item, why capture this. I fit is for search or management then we need to capture that as an event. Condition can be used for search and for management. Condition can be used to monitor things at runtime. Is that too abstract? DG and Dr; Leff: Yes. Dr. Leff. The AI and Law community has discussed events triggering obligations. You also have a workflow perspective. There, you are looking at one event triggering another. And you are looking at the kind of thing a computer would know about. But without an XML event that corresponds to a notification then the computer can't know. DG: Thanks. That's helpful. On the change orders that you mentioned earlier, are you envisioning that the change orders themselves would be electronic documents... or would those continue as paper... RC: I'd envision them as being electronic. DG: And how would they be referenced to the original? RC: I don't know. But I would think that there would have to be some association of the change order with the original agreement. There is aw hole procedure for getting sign-off and doing this in the paper world. Some way to mimic that electronically is probably in order. DG: There were big scandals here in Massachusetts (that I was not involved with -- for the record) associated with not managing change orders on the 'big dig'. Change orders were being sent in and approval was not part of the process. Would there be not just signature, but approval of change-order element? RC: There would need to be something that would describe the change order. I don't know if signature and approval elements need to be distinct. Imagine if during the big dig the contractor hits rock instead of dirt. You don't want to delay the project for the weeks that the approval process will require. So, typically, the contractor goes ahead and takes the risk without knowing what the change order will look like. DM: By automating change orders and approvals the process can be sped up considerably - thereby reducing the risk the contractor is taking by continuing the job. After all, he is only going to be continuing for, say, 1 week before he knows if the additional work will be approved instead of, say, 4 weeks. Dr. Leff: Change orders exist elsewhere. My University's collective bargaining agreement with its union provides a procedure for amendments. Those mechanisms are also being discussed in eBXML. [Note: Dr. Leff points out that EBXML provides for the association of XML documents in a "conversation." This would provide a potential mechanism for associating change orders with a contract.] Zoran: What part of eBXML are you referring to. Dr. L: The business process specification has a way of doing that. RC: I was going to add before that I had spent some time looking into other efforts that are under way to promote the use of XML in construction contracts. It appears that efforts are VTC construction, an ITC effort backed by the govt. of Finland, or some university there. There is an effort (eLegal) out of the UK that is looking at developing XML tools for contract authoring and negotiation. The AEC(Architectural Engineering and Construction) that is proposing a vocabulary for data elements for administrating and marking up construction contracts - for payment purposes for example. There is markup for different systems (heating, electrical building materials)etc. I just raised this because it drives home that whatever we do we must allow these other vocabularies to be used. We do not want to recreate these other vocabularies. JM: Do non-AEC members have access to that information? Rolly: Everyone has access. I'm happy to send you the URL. DG: They are dealing with cad-cam stuff. They have dealt with bidding(RFPs and proposals) and the other big part deals with subcontractors. Rolly: There is an emphasis on creating what they call a virtual enterprise. This would be web based and all of the participants on a construction projects would contribute. Zoran: I have a question. How do you deal with multi-party contracts? Do they always reduce to many bilateral contracts? RC: The example that comes to mind is not from construction but from partnerships. All of the partners are agreeing to whatever the partnership is. In the construction context multi-party agreements are unusual. It is generally 2 party. Zoran: And a bunch of subcontracts... RC: If surety bonds are issues, then there are other parties that are the beneficiaries of the contracts. I want a bonding company with deep pockets that will promise me that if my contractor goes out of business then they will pay to get things finished up. Dr. Leff: The business ... the trend that I am picking up is that multi-party agreements reduce to bilateral agreements. DM: That was our conclusion at Fujitsu- without the benefit of higher mathematics to support our conclusion. RC: That seems counter intuitive, but I won't say no.... (Still, if we enter into a partnership between all of us it is not clear how that reduces to bilateral agreements.) DM: It reduces to N*(n+1)/2 bilateral agreements. Though this may not be practical in the paper world, it should be no big deal in an electronic world. RC: Next steps would be to refine the scenario and incorporate some references to other work. DG: Is it worth contacting the AEC folks RC: Yes. I think it would be good if we had more to offer, but I think it would be good to reach out to any of these groups in any case. DG: I'm sure that if we were up front and told them that we were in knowledge acquisition mode they would respect that. RC: Yes. I think it is important that we make sure that our XML standard support the use of these standards. Dr. Leff: The IEE (not the IEEE) had some work going back to '95. DG: Would you mind sending out a list of folks that we might want to liaise with? Dr Leff: Sure. DG: Do you have more? RC No. I think I hit the high points. It is useful to go through t he exercise of marking everything up, and seeing how it fits into the dispute resolution issues. DG: Thanks Rolly. That was great. What's the next scenario on the agenda for the next call? Dr. Leff: The next scenario to cover is the data consortium. DG: John, will you be ready for that? JM: Yes, I will. RC: If I could add, postings about the scenario are quite welcome... DG: It would also be useful to take the good abstract work that has been done and seeing how it applies to actual transactions. Zoran: Is he suggesting that we come up with a meta-model that would find relationships between these data elements .. a breach event is a special kind of event. DG: That'd be great. The AECXML web AECXML.org site had some excellent use cases. Very clear and easy to understand. Dr. Leff: There are many formalism that might be useful. UML and others. DG: Anything further? JM: I thought we might talk for a moment about the clause model... DG: We were hoping to keep the meeting to an hour. Perhaps that should be on the agenda for the next call. Do you want it on the agenda... it could eat into your time for the call.... [scheduling discussion] [meeting adjourned]
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