Contract Review & Negotiation
Know which battles to pick, and which to let go.
The contract lands on your desk. Now what?
EPC contractors and large buyers set the commercial tone early: here is our standard contract, these are our terms, and the project timeline is already moving. For OEMs and equipment suppliers, the pressure to sign quickly is real. So is the risk of signing something that creates serious exposure down the line.
The challenge is not identifying everything that could be improved. A lawyer reviewing a standard EPC procurement contract will return it covered in comments. The EPC contractor will not accept most of them, and pushing too hard risks losing the opportunity entirely.
The real skill is knowing which clauses represent genuine risk to your business, which are standard practice you can accept, and where a targeted, well-reasoned negotiation position is likely to land.
EPC contracts are written for EPC purposes
A standard EPC procurement contract is designed to protect the EPC contractor's position on a project. It is often the same document used across very different types of equipment and scope, from bulk commodities to complex engineered systems, without meaningful differentiation. For a supplier of technically complex equipment or systems, this creates specific challenges:
Scope and liability provisions written for commodities
A liability structure appropriate for standard equipment may be entirely disproportionate when applied to a complex engineered system with performance obligations, long lead times, and significant engineering content.
Performance and delivery obligations that do not reflect your scope
Liquidated damages tied to project milestones you have no control over, or performance guarantees that extend beyond what your equipment can reasonably be held responsible for.
IP and technology clauses that were not written with your product in mind
Standard EPC contracts often include broad IP assignments or rights to modifications that are unacceptable for technology providers or licensors.
Unlimited or disproportionate liability
Uncapped liability provisions, broad consequential loss clauses, and unlimited indemnities are common in EPC procurement contracts and represent serious commercial exposure for suppliers.
Recognising which of these apply to your specific situation, and which are genuinely negotiable, requires experience on both sides of the table.
Knowing which battles to pick
We use a risk matrix approach to map contract clauses against their commercial and technical impact for your specific scope and business. This creates a clear, prioritised picture of where to focus negotiation effort and where acceptance is reasonable.
What we focus on
Liability caps and consequential loss
Establishing a proportionate liability cap and limiting consequential loss exposure are typically the highest-priority negotiation points for any supplier. We assess what is achievable given the contract value and the EPC contractor's standard position.
Liquidated damages
LD rates, caps, and trigger conditions vary significantly between EPC contracts. We assess whether the LD structure is proportionate, whether the triggers are within your control, and where cap or rate adjustments are realistic.
Intellectual property and technology ownership
Broad IP assignments, rights to modifications, and access to proprietary information are common pressure points in EPC contracts. We identify what needs to be protected and what language is acceptable.
Scope definition and technical specifications
Ambiguity in scope works against the supplier once the project is underway. We review scope definitions against your technical proposal to ensure alignment before the contract is signed.
Indemnities and cross-liabilities
EPC contracts frequently include broad indemnity provisions that extend supplier liability well beyond what is commercially justifiable. We identify and challenge provisions that go beyond reasonable risk allocation.
Performance guarantees
What exactly are you guaranteeing, under what conditions, and what are the consequences of falling short? Performance guarantee provisions need to be technically accurate and commercially bounded.
Finding the right negotiation position
Minimising risk is the goal of any contract negotiation. In practice however, pushing for every possible improvement is rarely achievable and often counterproductive. EPC contractors have standard positions and limited appetite for deviation. A negotiation that challenges everything achieves less than one that focuses on what genuinely matters.
The most effective approach is a targeted one. Identify the clauses that represent real commercial or technical risk for your business. Build a clear, well-reasoned position on each. Accept what is standard and reasonable. And know in advance where your walk-away point is.
We help suppliers build that position, drawing on experience of what EPC contractors typically accept, where there is genuine room to move, and how to frame negotiation points in a way that is commercially credible rather than legally defensive.
Payment terms, letters of credit, and bank guarantees
Payment terms and cash flow
For smaller suppliers, cash flow is a determining factor in whether a contract is viable at all. EPC payment schedules frequently front-load risk on the supplier, with large milestone payments tied to late-stage deliverables or project events outside the supplier's control. A cash-neutral payment scheme, where incoming payments broadly match the supplier's cost profile throughout execution, is often achievable and worth negotiating early.
Letters of credit
Where buyer creditworthiness or country risk is a factor, a letter of credit provides payment security for the supplier. We advise on when to request an LC, 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 create open-ended obligations.
Incoterms
The choice of Incoterm has direct implications for risk transfer, insurance obligations, and logistics responsibility. In complex equipment supply involving international shipping, an Incoterm that does not reflect the actual delivery arrangement creates ambiguity that becomes expensive to resolve. We review Incoterm selection as part of the contract review and advise on the most appropriate term given the delivery scope and logistics arrangement.
Who we work with
OEMs and equipment manufacturers
Supplying complex engineered equipment or systems to EPC contractors and large buyers, and needing to identify and negotiate the critical risk points in procurement contracts without losing the commercial opportunity.
Technology providers and licensors
Where IP, performance guarantees, and technology ownership clauses require careful attention alongside standard commercial terms.
Specialist subcontractors and service companies
Operating within EPC or operator supply chains and needing to manage contract risk proportionate to their scope and capacity.
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.