Describe several situations when contract is considered incomplete. What are the main terms of contract closeout?
There are many circumstances where a contract may be considered as incomplete. On its face value, the contract might look as absolutely fine and perfect, but there are always circumstances which cannot be anticipated. For example if the supplier is bound to supply a product over a certain period of time but the factory catches fire and is burnt. What would then happen with the supplies? This is a condition that cannot be covered in a contract between any two parties. The same is the case with insurance contracts. For example in case of what is defined as “an act of God” there are always loopholes which may go against the customers or the insurance company depending on the interpretation of the “act of God”.
Any contract that does not corresponds to the state of the world can be considered as an incomplete contract. Having said that, it is extremely to anticipate the state of the world in future and most of the contract would become incomplete with this definition. The debate about a contract being complete or incomplete is an ongoing discussion.
A contract closeout happens when the requirements of the contract are complete and the administrative procedures related to the contract are met. Following are some of the main terms of contract closeout.
- An interim contract completion statement is issues by the government.
- It is made sure that all classified documents are deposited.
- Audit of the contract is completed.
- All interim costs are decided and settled between the contracting parties.
- The submission of the final report regarding the subcontracting plan collection is made prior to the contract closeout.