Bus Law 531 Week 3

Recognizing Contract Risk and Opportunities

Heather Condit

LAW531

University of Phoenix

July 1, 2010

Span Systems is leading its biggest banking software project. Span System’s client is a large German bank call Citizen-Schwartz. Currently there is a one-year contract between Span and Citizen-Schwartz. The contract is worth six million dollars.

In December, Leon Ther, who is one of the toughest negotiators at Citizen-Schwartz, is furious with Span’s deliverables over the past few months. The deliverables have behind schedule and the quality has not been acceptable. Leon Ther has requested for an immediate transfer of all unfinished code and asserted the rescission of the contract by Citizen-Schwartz because the company can no longer afford schedule slips (University of Phoenix, 2010).

The problem lies of both ends. The user and system requirements have increased because of the system study stage. This makes it difficult to complete the tasks within the agreed upon cost and time. Citizen-Schwartz’s approval and review times have not been the same since a change in its project management structure. Span has done everything possible to make sure that the deadlines are still meant. The quality may not be up to par because the company is trying to make the deadlines (University of Phoenix, 2010).

Span can’t afford to lose Citizen-Scwartz. The company has to settle the dispute amicably. The first step is that the company needs to look at the clauses in the contract that are in our favor and prepare our negotiations. Five negotiation points that were found in the contract are the following: Breach of contract under substantial performance of contract, breach of contract under internal escalation procedure for disputes, breach of contract under requirement changes, breach of contract under communications and reporting, and breach of contract under intellectual property rights (University of Phoenix, 2010).

The first negation point the company has chosen...