Contract Creation and Management Simulation
In completing the Contract Creation and Management Solution it was found that it is extremely important parties involved in a contract to understand all of the elements that fall within the contract. It was noted that Span Systems and Citizen-Schwartz were not on the same page in regard to the software contract that was set forth. Each company risks the cost of litigation because of alleged breaches of contract. In an effort to remedy the situation, Span Systems amended the contracts to work for both company’s and to ensure that no litigation proceedings would have to take place.
Span Systems and its customer Citizen-Schwartz AG (C-S), a large ...view middle of the document...
Many issues are presented between the two companies. In regard to Span Systems the legal issues that arise are that neither company is upholding their end of the contract because the company is constantly sending in deliverables in an untimely manner. Also the quality of the product is ideal. The software that the company is sending out is inferior and has bugs in it upon inspection from C-S. Although the company has been through some management changes since the contract was signed, they are still dealing with the issues three months later.
In regard to Citizen-Schwartz the breach of contract comes into play when the company allegedly went to another company to continue the contract that Span Systems neglected. In the contract it states that states “that neither party may cancel this agreement, in whole or part, subsequent to more than 50 percent of the consideration having been tendered by the other” (UoP Simulation). In doing this the company risks litigation.
In order to remedy the situation the two companies decided to form an alternative dispute resolution plan. The ADR that the companies decided to use were to reinstate the contract and make changes to it. According to M.P. Furmston:
“Rescission is essentially an action to undo, or terminate a contract to return the contracting parties to the positions they occupied prior to the transaction. When fraud, a mistake, undue influence, misrepresentation, or lack of capacity to contract is present, unilateral rescission is available. The failure of one party to perform entitles the other party to rescind the contract” (Furmston, 2008).
Span Systems amended the contract to make it suitable for both parties. The amended contract clauses are in regard to performance, change control, communications and reporting, and project structure. The new contract heavily involves both parties of each company so the breach of contracts will not insult the professional relationship again.
In order for both companies to come to the agreement of not going through litigation, Span Systems decided to amend certain portions of the contract in an attempt for both parties to uphold each end of the contract....