Recognizing Contract Risk and Opportunities

A contract is an exchange of promises between two or more parties to do or refrain from doing an act, which is enforceable in a court of law. (Wikipedia) Before a contract is sign or agreed to it, both parties must understand its term. For the period of the negotiation process changes can be made to add or delete anything but when the contact is sign and agreed to it the contract is sealed. The Contract Creation and Management simulation serves to emphasize the significance of reviewing on existing or new business contract in order to avoid misunderstanding. It is imperative to evaluate and revise the contract previous to getting an agreement to be confident that the contract is favorable for both parties and for the success of the contract.

Citizen-Schwarz AG (C-S) and Span System agreed and signed to a one year contract wroth six million dollars; however, the contract agreement has not been going as expected. Span System has not been delivering as scheduled and their quality is poor. Leon Ther, Citizen-Schwarz AG biggest influential negotiator threatened the rescission of our contract based on what he considered to be unacceptable quality of deliverables and schedule slips. Thankfully, after much negotiating Span System was able to amend some of the contract clauses and come to terms of agreement. Neither Span nor Citizen-Schwarz AG wanted to see rescission of the contract nor did they want to settle the issue in court. Both organizations wanted to avoid the high cost of settling the dispute in court. Therefore, Span’s manager decided to write this memo to Citizen-Schwarz AG in order to discuss the risks that arose from this issue and address ways the issue can be resolved and avoid or minimize liabilities in the future.

The most critical part of a contract is the part where one party makes an offer for an arrangement and the other accepts, under the terms. This agreement is called a concurrence of wills. Span and...