Contract Negotiations At Mersin Refinery In 1992- Essay


In 1992, we received an invitation from Mersin Ataş refinery, which is now closed and liquidated as of 2004. They wanted rehabilitation on the last of the three existing steam boilers, we did a site survey, they were CE design square boilers with fuel oil burners in the corners, the old erroded steam pipes would be replaced, the entire insulation would be renewed.

We took the existing technical drawings of pipes to be disassembled, renewed, made labor pricing, estimated the proposal price, we were invited to the workplace after the proposal evaluation, we went to the refinery as a team of four engineers, we explained our price, we defended, the offers of the rival companies were presented to us, the competitors who did similar business before were not very successful, our price was a little bit expensive but no big deal, we were whispered that if we get on the same level we would get the tender.

We left the price issue aside and entered the negotiation of the contract document, we were going through a 100-page common text, sentence by sentence, we passed the simple subjects, the document was in English, Ataş was a foreign partner company, the contract should be in English, it was not a problem for us, we are all METU graduates with English education.

We passed the items gradually, finally we came to Force Majeure clause.

Ataş has listed the “force majeure” conditions one by one, and would not accept any other situation. They wanted the suggested counter proposal to be written clearly.

We, on the other hand, sent the English document to our US partner and received an legal opinion, US lawyers wanted a statement to pass into a final contract, “third party involvement beyond our control”.

We explained our reasoning as follows, “For example, if a plane crashes into the Ataş refinery, or a nuclear submarine passing by explodes,” these are not under our control, but negative situations created by third parties.

As for the price part, the bid file of our competitor who gave the cheapest price was put in front of us and we were asked to go down to this price. Our figure was very high. Our team, which has been negotiating from morning to night for a week, has run out of patience,

We said, “We are quitting, whatever you do”, we stopped negotiating, left the meeting and left on Friday evening at the weekend and returned to Ankara.

On Monday, our British general manager of our US joint venture company explained the situation to the senior officials of our local partner parent company. He said that it was impossible for us to get the job with this price and this contract wording, that we broke the ties and turned. Our local parent top management gathered.

Two-hours later, they said, “We will do this job at this price and with this contract, no matter how you tie it up, but tie it up, sign the contract and get the job”.

The British general manager returned to his room, wrote a new acceptance letter as if we had not broken the ties on Friday, we got the job, we signed the contract a week later at Ataş refinery.

We held the first kickoff meeting at the nearby Karatoprak fish restaurant by the sea, we ate fish, on fish-scented papers. We set the project planning. That fishy-scented table paper kickoff meeting entered the contract file as the starting document, the work took a year, no submarine was close by, no plane crashed into the refinery, we had no need for force majeure.

Why did I tell this story? The Anglo-Saxons determine the risks clearly and price high while we Turks take the risks more easily. I don’t know which one is correct, what do you think?

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