Contract Creation and Management Simulation Essay
In completing the Contract Creation and Management Solution it was found that it is extremely important parties involved in a contract to understand all of the elements that fall within the contract. It was noted that Span Systems and Citizen-Schwartz were not on the same page in regard to the software contract that was set forth. Each company risks the cost of litigation because of alleged breaches of contract. In an effort to remedy the situation, Span Systems amended the contracts to work for both company’s and to ensure that no litigation proceedings would have to take place.Span Systems and its customer Citizen-Schwartz AG (C-S), a large German bank, are in a major confrontation about legal issues that result from a breach of contract. The company’s are in difference of opinion over the quality and timeliness of deliverables of the company’s software.
The software that Span Systems has delivered to C-S was questionable in the regard that the software had major bugs that were discovered during the testing process of C-S. C-S is concerned about the contract between them and Span Systems, because it is worth $6 million. C-S has requested that all codes and asserted the rescission of the contract.
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This is concerning to Span Systems because the purpose of this contract is to advance to a larger contract with e-CRM which is based on the success of the C-S contract. The contract between both companies states “that neither party may cancel this agreement, in whole or part, subsequent to more than 50 percent of the consideration having been tendered by the other” (UoPX Simulation). With C-S requesting that the code be relinquished to them they are possibly setting themselves up to go through litigation because this is another major form of breach of contract.It is the responsibility of Span Systems to try to rebuild the broken business relationship that has formed with Citizen-Schwartz. Legal Issues Many issues are presented between the two companies. In regard to Span Systems the legal issues that arise are that neither company is upholding their end of the contract because the company is constantly sending in deliverables in an untimely manner.
Also the quality of the product is ideal. The software that the company is sending out is inferior and has bugs in it upon inspection from C-S.Although the company has been through some management changes since the contract was signed, they are still dealing with the issues three months later. In regard to Citizen-Schwartz the breach of contract comes into play when the company allegedly went to another company to continue the contract that Span Systems neglected. In the contract it states that states “that neither party may cancel this agreement, in whole or part, subsequent to more than 50 percent of the consideration having been tendered by the other” (UoP Simulation).In doing this the company risks litigation.
In order to remedy the situation the two companies decided to form an alternative dispute resolution plan. The ADR that the companies decided to use were to reinstate the contract and make changes to it. According to M. P. Furmston: “Rescission is essentially an action to undo, or terminate a contract to return the contracting parties to the positions they occupied prior to the transaction. When fraud, a mistake, undue influence, misrepresentation, or lack of capacity to contract is present, unilateral rescission is available.
The failure of one party to perform entitles the other party to rescind the contract” (Furmston, 2008). Span Systems amended the contract to make it suitable for both parties. The amended contract clauses are in regard to performance, change control, communications and reporting, and project structure.
The new contract heavily involves both parties of each company so the breach of contracts will not insult the professional relationship again. Contract In order for both companies to come to the agreement of not going through litigation, Span Systems decided to amend certain portions of the contract n an attempt for both parties to uphold each end of the contract. Span Systems indentified and acknowledge what the issues were in the contract and redesigned the clauses in order for C-S to concur with the decisions. Span Systems sent the amended clauses to chief negotiator at C-S for approval. C-S either approved or addressed the concerns and sent back for Span Systems attorney approval.
In the simulation the contract should have been addressed via e-contract like it was. This is the only way for the contract to get administered because C-S is in another country.The way it was administered was the correct way because if both parties do not agree on the contract then it would not be worth bringing it to the table in order for it to get signed. In the simulation, Span systems were able to amend the clauses of the contract to work for both sides of the company’s. It would allow better productivity from Span Systems to have better quality control and delivery promptness, and it would allow C-S to have more of an overview of what Span Systems was doing so that the company would not have to void the one year contract and go with another software company.
The decisions that were made in the simulation for Span Systems were the right decisions for the company. Citizen-Schwartz was happy with the amended clauses and gave Citizen-Schwartz more control over what would be going on in the production areas at Span Systems. In conclusion, it is important when entering a contract that each party upholds their ends of the bargain. This is the only way to ensure that each party will walk away from the contract with the objectives fulfilled.In creating contracts it is important for both parties of the contract to be on the same page. The contract should enlist backup measures in regards to employment changes, status changes, and financial changes. This would keep each party on the same page and would ensure that no breach of contract would happen.
ReferenceFurmston, M. P. (2008). Chapter 18:Breaches of Contract and Remedies. Retrieved from myweb. csuchico. edu/~evu/..
. /bLaw%20Chapter%2018. htm University of Phoenix.
(2012). Contract Creation and Management Simulation. Retrieved From ecampus. phoenix. edu