Recognizing Contract Risk
- Submitted by: zcarbal
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- Date Submitted: 04/24/2011 07:30 PM
- Pages: 7
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Memo
To:
From:
CC:
Date: [ 5/10/2010 ]
Re:
Recognizing Contract Risk and Opportunities Memo
This memo is about the contract creation and management simulation of Span Systems, a California-based custom e-banking software developer and Citizen-Schwarz AG (C-S), a German bank trying to break into the fiercely competitive and profitable U.S. banking market. This simulation demonstrates the errors and mistakes taken during the contract performance causing these two companies to disagree on principle points of the contract, which eventually leads to Span Systems trying to salvage the contract through renegotiations (University of Phoenix). These contractual disagreements usually lead to loss of production, severance of business relationships, and expensive legal costs. This memo will examine the legal risks, opportunities presented, and alternatives for solving disputes in the simulation.
The first contractual breach is the fundamental principle of Span Systems performance of the contract. C-S claims that Span Systems deliverables in the past few months are behind schedule and the quality of those deliverables is unacceptable with major bugs detected during the user testing stage. The contractual agreement on performance stated that neither party can cancel the contract when more than 50% of the promised specifications are completed (University of Phoenix). During the eight month there was a risk of rescission by C-S with Span Systems completing over half of the software requirements, this would breach the 50% completion clause of the contract. This part of the contract is favors Span Systems, except for the quality of the software containing five errors per deliverable, which is contrary to the baseline of zero errors required through the metrics the companies agreed on. Span Systems software developers on the project continually met C-S requirement changes and schedule demands which, unfortunately for the task...
Memo
To:
From:
CC:
Date: [ 5/10/2010 ]
Re:
Recognizing Contract Risk and Opportunities Memo
This memo is about the contract creation and management simulation of Span Systems, a California-based custom e-banking software developer and Citizen-Schwarz AG (C-S), a German bank trying to break into the fiercely competitive and profitable U.S. banking market. This simulation demonstrates the errors and mistakes taken during the contract performance causing these two companies to disagree on principle points of the contract, which eventually leads to Span Systems trying to salvage the contract through renegotiations (University of Phoenix). These contractual disagreements usually lead to loss of production, severance of business relationships, and expensive legal costs. This memo will examine the legal risks, opportunities presented, and alternatives for solving disputes in the simulation.
The first contractual breach is the fundamental principle of Span Systems performance of the contract. C-S claims that Span Systems deliverables in the past few months are behind schedule and the quality of those deliverables is unacceptable with major bugs detected during the user testing stage. The contractual agreement on performance stated that neither party can cancel the contract when more than 50% of the promised specifications are completed (University of Phoenix). During the eight month there was a risk of rescission by C-S with Span Systems completing over half of the software requirements, this would breach the 50% completion clause of the contract. This part of the contract is favors Span Systems, except for the quality of the software containing five errors per deliverable, which is contrary to the baseline of zero errors required through the metrics the companies agreed on. Span Systems software developers on the project continually met C-S requirement changes and schedule demands which, unfortunately for the task...