Contract Risk and Opportunities
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Contract Risk and Opportunities
LAW 531
July 12, 2010
Contract Risk and Opportunities
Unfortunately for many businesses, contracts are often shrouded in a veil of ambiguity. An excellent example of the ambiguity contracts can contain was given in the University of Phoenix simulation, Legal Environment of Business: Contract Creation and Management. The simulation outlines contract disagreements between Span Systems, a banking software manufacturer, and Citizen-Schwarz AG (C-S), a German bank. Throughout the simulation, the student is asked to play the role of a project manager with Span Systems whose primary goal is to save and improve upon the current contract existing between the two organizations.
Contract Ambiguity
As a project manager for Span Systems, the student chose three specific areas of contract re-negotiation based upon failure of the initial contract. These areas were the internal escalation procedure for disputes, requirements change, and communications and reporting. In these three specific areas, the student believed that both Span Systems and C-S would gain the greatest benefit for additional specifics and definitions.
Internal Escalation Procedure for Disputes
The initial contract between Span Systems and C-S indicated that if either party became aggrieved, that party had the obligation to follow a specific internal grievance system. Citizen-Schwarz, when requesting complete rescission of the contract, was in full violation of this clause. Therefore, Span Systems requested that C-S rescind the request for dismissal of the contract based upon this obvious breach. Citizen-Schwarz, apologized for the breach, but argued that this is not the root of the problem. Although C-S has a valid point, this has bought Span Systems additional time to save and properly revise the contract.
Requirements Change
The initial contract between Span Systems and C-S allowed only ordinary, minor changes to be requested by C-S. The changes in...
LAW 531
July 12, 2010
Contract Risk and Opportunities
Unfortunately for many businesses, contracts are often shrouded in a veil of ambiguity. An excellent example of the ambiguity contracts can contain was given in the University of Phoenix simulation, Legal Environment of Business: Contract Creation and Management. The simulation outlines contract disagreements between Span Systems, a banking software manufacturer, and Citizen-Schwarz AG (C-S), a German bank. Throughout the simulation, the student is asked to play the role of a project manager with Span Systems whose primary goal is to save and improve upon the current contract existing between the two organizations.
Contract Ambiguity
As a project manager for Span Systems, the student chose three specific areas of contract re-negotiation based upon failure of the initial contract. These areas were the internal escalation procedure for disputes, requirements change, and communications and reporting. In these three specific areas, the student believed that both Span Systems and C-S would gain the greatest benefit for additional specifics and definitions.
Internal Escalation Procedure for Disputes
The initial contract between Span Systems and C-S indicated that if either party became aggrieved, that party had the obligation to follow a specific internal grievance system. Citizen-Schwarz, when requesting complete rescission of the contract, was in full violation of this clause. Therefore, Span Systems requested that C-S rescind the request for dismissal of the contract based upon this obvious breach. Citizen-Schwarz, apologized for the breach, but argued that this is not the root of the problem. Although C-S has a valid point, this has bought Span Systems additional time to save and properly revise the contract.
Requirements Change
The initial contract between Span Systems and C-S allowed only ordinary, minor changes to be requested by C-S. The changes in...