Contracting Risks and Opportunities
Span Systems and Citizen-Schwartz (C-S) are working together under a valid, express (written) contract under the common law of contracts, meeting the reasonable person standard under the objective theory of contracts; however the express terms are vague. Article two of the Uniform Commercial Code (UCC) does not need to be met as the contract is primarily for services (development) of the software C-S is purchasing. Several issues are currently challenging the working relationship of Span and C-S.
A breach of contract occurs when either or both parties fail to perform a duty owed the other under the contract. A breach may be minor (substantial) if the ...view middle of the document...
Additional legal risks and opportunities identified during the simulation include:
* Intentional Interference with Contractual Relations. This is one of the few contract-related torts and may be applicable if C-S is working with another software company and providing them with code. To minimize legal risk I would recommend trying to obtain additional information to determine if this is an issue or if it is a rumor.
* Open Terms were left in the original contract under the gap-filling rule, which have since caused confusion within the contract obligations. The representatives from both companies need to work on revisions or amendments to the contract to clarify terms and obligations.
* Perfect Tender Rule - delivered goods do not conform to contract specifications (excessive bugs). Span need to implement quality control measures and determine whether they need to upgrade prior releases.
* Installment Contract – delivery and acceptance of goods is authorized in batches rather than as a completed product. This provides both companies the opportunity to begin working with the product to determine where further changes need to be made.
* Right to Withhold Delivery; Right to Reclaim Goods; Right to Recover Damages for Non-Delivery or Repudiation; Right to Recover Damages for Accepted Non-Conforming Goods - Span may have the right to withhold further product delivery and request the return of product delivered to date. Both may have the right to pursue damages for varied contract and product issues. I would not recommend any of these actions at this point as they could further damage the relationship between the companies.
* Unfinished Goods - Span may have the right to dispose of or complete product and sell it to another company if C-S defaults on the contract. Again, this would not be a recommended course of action as it could irreparably damage the relationship between the companies.
* Right to Cancel a Contract and Right to Recover Damages for Breach of Contract - both companies have...