Contract Creation and Management Memo
Span Systems is based in California and is a custom e-banking software development company that has entered into a $ 6million contract with Citizen Schwartz (C-S) to develop new banking software. A contract is defined as a promise for which the law gives a remedy. All parties must agree and understand the terms and conditions before a contract is signed. The companies are eight months into the contract and have experience poor performance, organizational changes, poor communication and reporting and lack of project structure. All of the previous listed items have the possibility of resulting in a breach of contract. This memo examines the legal risks, ...view middle of the document...
The risk of rescinding the contract was there by C-S with Span Systems completing over half of the requirements. This would cause a breach of 50 percent completion clause. Span Systems is favorable in this aspect of the contract. Although there are scheduling conflicts and defects, Span Systems may not be 100 percent to blame. Span Systems has an increase in ability and the delivery team who is eager to alleviate any issue possible. Increased scope and the delivery team’s desire to appease an important client have caused resource drainage – in time and quality – to the project. Metrics of the project target slippage at give or take five days and zero defects; the current status is two days delay and five defects per deliverable respectively. Function point metrics – a measure of software functionality- are higher than anticipated at the current stage of the project. The higher function point metric indicates additional functionality has been added to the project – supporting Span Systems’ claim.
Avoiding Risk and Minimizing Liabilities
The issues between Span Systems and C-S could have been avoided or notably minimized from the beginning. The simulation provides an example of common disputes formulating from an imperfect contract. The contract between the two parties was penetrated with uncertainty leaving room for misunderstanding, miscommunication, and disputes. An example discussed previously was the issue of what constitutes ordinary system changes.
Managers should be mindful of the instruction in this simulation. “Contracts are the largest cause of business disputes and ensuring a contract is detailed and unambiguous from the offset will significantly reduce the likelihood of disputes” (Jennings, 2006). An effective contract involves thorough reading of the contract, revising as necessary, and seeking the advice of professionals.
The dominant legal issues fall under contract performance in this simulation. Standards or performance and completing in a timely manner were the two main disputes. According to C-S, Span Systems was behind on their deliverables and were not of any quality. “Span Systems was not meeting their deadlines, which they claimed was partly due...