Regarding: Contract risk and opportunities
Date: March 17, 2010
A contract is a promise between two or more parties creating obligations enforceable by law (Jennings 2006). Span Systems has a one year contract with Citizen-Schwartze AG, a German bank to develop transaction software for the banking giant. AG has become dissatisfied the quality and expresses concerns regarding the late delivery schedule. AG’s most influential negotiator has threatened to rescind the contract on the basis of performance breaches. The contract between AG and Span contained clauses under performance, change control, communication, and reporting project structure. Within each section legal issues with corresponding legal principles arose. Identifying risks, how to avoid such risks, minimize liability and create opportunities are essential elements for businesses to be aware and for managers to operationalize.
The principle of standard performance within a contract details requirements for complete performance. Considering reasonable acceptable levels determines performance (Jennings 2006). A contract between Span and AG contains concurrent conditions and contemporaneous conditions. AG provides changing information to Span to develop software for their particular requirements, but Span is experiencing difficulty meeting the timelines and quality due to constant changes. After eight months AG contends Span’s deliverables are behind schedule and quality issues have arisen. The contract states Span will incorporate ordinary changes, but qualifying information is not present. As with many long term projects involving developing or building, complex execution can result in errors that creates performance issues.
Many of the legal risks identified in the scenario are a result of reduced clarity in words and phrasing. Failure in performance may, in fact, result from... [continues]
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