Law 531 - Business Law
August 2, 2010
Professor Dominik Musafia
Memo: Legal Risks and Opportunities
TO: Kevin Grant, Director
FROM: Jennifer Stucky, project manager
DATE: August 2, 2010
SUBJECT: Dispute over contract with C-S
CC: Harold Smith, Attorney
This memo is in response to the dispute over the contract between Span Systems and Citizen-Schwarz AG (C-S). Management is taking the necessary steps in resolving the issues C-S is reporting of low quality deliverables and schedule delays. C-S is threatening rescission of their contract and demand immediate transfer of all unfinished codes (University of Phoenix, 2002, Legal Environment of Business: Contract Creation and Management, Law 531). C-S must prove a material breach is occurring and give adequate notice to Span Systems to issue a rescission (Cheeseman, 2010). Span Systems and C-S signed a one-year contract worth $6 million dollars that has five clauses for breach of contract and a project structure clause. This memo will identify what management is doing to avoid legal risks, minimize liabilities, and benefit from opportunities presented to make this contract successful.
Substantial Performance of Contract Clause: Span Systems is stating that substantial performance of the contract is met as the project is eight months underway, which constitutes 60% of the project schedule being complete. C-S asserts that Span Systems is in material breach of their contract for inferior performance because only 40% completion of the project and the low quality of the recent deliverables. According to metrics dashboard, the contract allows +-5 days for schedule slips and the current schedule slips is +2 days per deliverable (University of Phoenix, 2002, Legal Environment of Business: Contract Creation and Management, Law 531). The issue lies in the amount of five defects per deliverable currently and zero defects...