Recognizing Contract Risks and Torts

Recognizing Contract Risk and Opportunities Memo

Dana G. Gregory

LAW/531

November 07, 2010

Professor Paul Irving

TO: Kevin Gran, Director

CC: Harold Smith, Attorney

From: Dana Gregory, Project Manager

Date: May 09, 2011

Subject: Contract Risks and Opportunities

Span Systems and Citizen Schwarxz AG (C-S) are in the process of re-negotiating clauses that are within our current contract. This is an attempt to resolve ongoing disputes between both companies. There have been some inconsistencies with the terms of the contract relating to performance, change control, communications and reporting, and project structure. This memo is intended to review each clause in order to identify legal issues, and the principles that are applicable to each issue. This will help managers learn how to avoid these risks and to minimize liabilities. Managers will also benefit from opportunities by evaluating alternatives that will lead from pursing legal action from both companies.

Contract Issues:

Span systems have a one-year contract with C-S that is worth $6 million to develop software for banking. If successful, Span will have an opportunity to gain a bigger e-CRM order from C-S. Due to the tardiness and quality of deliverables, Span received a request from C-S’s IT Outsourcing Director, Leon Ther, of immediate transfer of all unfinished codes and demanded the rescission of the contract. Span’s behind in scheduling of deliverables may cause C-S to miss deadlines of releasing transaction software in the market. In order to avoid legal action, Span Systems wants to settle this unfortunate dispute with C-S by using an alternative dispute resolution.

Legal Risks and Opportunities:

Each legal risk or opportunity is governed by specific principles that were reviewed by Span Systems and C-S for contract re-negotiation. Span has suggested alternative measures in which Mr. Ther agreed will help get the project back on schedule. These alternate...