Contract Preparation & Strategy
The right contract protects the project, not just the paperwork.
Getting the contract right before you commit
Procuring complex technology or equipment without a well-structured contract is one of the most common and costly mistakes in energy and industrial projects. The contract defines risk allocation, performance expectations, payment obligations, and what happens when things do not go as planned. Getting it right before signing is significantly cheaper than resolving disputes after.
Auryx Energy supports buyers in reviewing, structuring, and negotiating contracts for the procurement of complex technology, equipment, and installations. We bring commercial and technical experience to the process, helping buyers understand what the contract actually means in practice and where the critical points are.
Starting from the right foundation
Where possible, we recommend starting from a recognised standard contract form rather than building from scratch or accepting a heavily customised document without a clear baseline. Standard forms we work with include:
Orgalim
Widely used in European industrial and equipment supply contracts. Relevant Orgalim conditions include S 2022 for supply contracts, SI 24 for supply and installation, the Turnkey Contract for Industrial Works for complete plant and installation delivery, and M 17 for maintenance agreements. These provide a balanced and widely recognised starting point for buyers and suppliers across the sector.
FIDIC
The international standard for engineering and construction contracts, commonly used in large energy and infrastructure projects. FIDIC contracts are well understood by EPCs, licensors, and international buyers, making them a practical basis for complex procurement.
Custom procurement contracts
Many larger buyers, including EPC contractors, use their own standard procurement documents. These are typically written to protect the buyer and may apply the same template across very different types of equipment and scope. Where a buyer chooses to base their contract on a custom document, understanding how it deviates from recognised standards is an important step in ensuring it remains balanced.
What a well-prepared contract needs to cover
Not all contract clauses carry equal weight. A well-structured procurement contract addresses the areas that matter most commercially and technically, without creating a document so one-sided that suppliers price in the risk or walk away.
We use a risk matrix approach to identify which elements require careful drafting, which are standard practice, and where the balance between buyer protection and supplier acceptance needs to be actively managed.
Where we focus
Liability caps and consequential loss
What is the seller's total exposure under this contract, and is it proportionate to the contract value and the nature of the scope? Uncapped liability or broad consequential loss provisions can represent a significant risk for smaller suppliers.
Liquidated damages
Delay and performance LDs are standard in equipment supply contracts, but the rates, caps, and trigger conditions vary significantly. We assess whether the LD structure is commercially reasonable and where adjustments are warranted.
Performance guarantees
For energy producers buying technology or process installations, performance guarantees are among the most critical contract elements. What output, efficiency, or process performance has the supplier committed to? Under what conditions are those guarantees tested and verified? What are the remedies if guarantees are not met, including remediation obligations, retesting rights, and the point at which rejection or financial compensation applies? We review performance guarantee provisions carefully to ensure they are measurable, realistic, and enforceable.
Intellectual property and technology ownership
Who owns modifications, adaptations, or developments made during execution? For technology vendors and licensors, IP clauses require careful attention.
Scope and specification
Ambiguity in technical scope is one of the most common sources of contract disputes. We review scope definitions against technical documentation to identify gaps before they become claims.
Financing party requirements
Where the buyer's project is financed by a bank or investor, the financing party may require specific contract terms, step-in rights, or assignment provisions. These requirements can significantly affect what the seller is being asked to accept, and need to be understood in that context.
Finding the balance
Minimising risk for the buyer is the goal of any contract negotiation. In practice however, a contract that pushes all risk onto the seller is rarely achievable, and often counterproductive. Sellers price in risk they are forced to accept, or sign obligations they cannot realistically fulfil. The most effective contracts allocate risk to the party best placed to manage it.
We help buyers understand which clauses are standard practice and likely to be accepted by suppliers without difficulty, which represent genuine risk for the seller and may require negotiation, and where a financing party or project structure is driving requirements that need to be explained and managed rather than simply imposed.
Payment terms, letters of credit, and bank guarantees
Payment terms and cash flow
For smaller suppliers, cash flow is not a secondary concern. It is often a determining factor in whether a contract is viable at all. A payment schedule that front-loads risk on the supplier, with large milestone payments tied to late-stage deliverables, can create serious cash flow pressure even on a profitable contract. We help buyers structure payment terms that are workable for both sides. A cash-neutral payment scheme, where the supplier's costs are broadly matched by incoming payments throughout execution, is often achievable and improves the commercial relationship without increasing the buyer's overall cost.
Letters of credit
Letters of credit provide payment security for suppliers in international transactions, particularly where buyer creditworthiness or country risk is a factor. We advise on when an LC is appropriate, how it should be structured, and what conditions need to be met to ensure it is workable in practice.
Bank guarantees
Advance payment guarantees, performance bonds, and retention guarantees are standard instruments in equipment supply contracts. We review guarantee terms to ensure they are proportionate, have clear expiry conditions, and do not expose the supplier to open-ended obligations.
Incoterms
The choice of Incoterm defines where risk and cost transfer from seller to buyer, and has direct implications for insurance, logistics responsibility, and import and export obligations. In complex equipment supply involving international shipping, the wrong Incoterm choice creates ambiguity that becomes expensive to resolve.
We review Incoterm selection as part of the commercial contract review and advise on the most appropriate term given the delivery scope, logistics arrangement, and risk appetite of both parties.
Who we work with
Small and mid-size energy producers
Procuring technology or installations for the first time, or without dedicated procurement expertise, and needing structured support to put a contract in place that protects their interests.
Technology vendors and licensors
Buying equipment or engineered systems from OEMs as part of their own delivery scope, and needing to ensure the procurement contract is aligned with their own downstream obligations.
Project developers and investors
Structuring procurement contracts for new energy projects where financing requirements add complexity to standard contract terms.
A note on legal advice
Auryx Energy provides commercial and technical contract support, not legal advice. For legal review and formal legal counsel, we work alongside your legal advisors or can refer you to specialists with experience in the energy and industrial sector.