Contracts are a major part of our business deals. Contracts are binding and it is very important to make sure they are well defined and reviewed before they are signed. Recognizing the risks involved and opportunities available is essential to avoid breaching the contract and ending up in costly legal litigation.
The contract creation and management simulation reveals the importance of contracts in dealing with customers. During the period of the contract, disputes and dissatisfaction can arise from either parties and the contract is the decisive factor for such disputes. This memo identifies the legal risks and opportunities present in the simulation and describes what the managers need to do to avoid and minimize those risks.
TO: All Mangers
DATE: March 21, 2010
SUBJECT: Recognizing Contract Risks and Opportunities memo
Span System and Citizen-Schwarz (C-S) entered into one year contract where Span is going to develop a banking software for C-S. The project is enormous and very important to C-S. Around the middle of the contract period, C-S expressed its discontent and will to terminate the contract. Thanks to our swift reaction, we were able to amend certain clauses in the contract and reach an agreement that relieved C-S concerns and worries. Neither of us wanted to end the contract, or resolve to courts to solve the issue.
During a dispute, the interpretations of the contract play a major role. Ambiguity and vague clauses can result in different interpretations that will lead to more disputes. There are many risks that we can identify out of this contract. I will go through each risk and identify the measure that need to be taken to minimize the legal risk or realize legal opportunities.
Requirements Change: This is a major factor that can affect the scheduling and quality of the deliverables. Change in requirements process need to be clear and detailed in the contract. The contract had vague clause regarding “ordinary” changes... [continues]
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