Contract Creation and Management Assignment Patrice DavisLAW/531 Business LawJuly 16, 2012Bradley RomigAbstractContractual conflicts are one of the most unpleasant things a business can go through. They can add substantially to the cost of a contract, as well as nullifying some or all of its benefits or advantages.
When conflict arises between a client, and supplier a relationship that has been built up over a painstaking amount of time can be ruined very quickly, and have a negative impact on the supply chain. Resulting in a time-consuming and expensive ordeal that in everyone??™s interest should be avoided. This week??™s assignment is to analyze the Hotels presented in the Contract Creation and Management simulation.Contract Creations and ManagementIn the simulation a problem arises between Span Systems and Citizen-Schwartz AG (C-S) a software-developing company and large German bank. The problem is level of quality and schedule of deliverables Over Eight months into the project Span Systems is behind schedule for deliverables. Along with that during the user testing stage it was discovered that there are major bugs in the deliverables which is unacceptable.
Considering there is six million dollars at stake making these findings a possible hindrance for Span Systems delivering on time and up to code. Leon Ther a tough negotiator conveys in a letter to Grant director of projects for Span Systems that he feels it best to have all the unfinished code transferred back and, asserted rescission of the contract. However, this would be in breach of contract. A contract that states ??? that neither party may cancel this agreement, in whole or in part, subsequent to more than 50 percent of the consideration having been tendered by the other???(UOP Simulation). More than half of the deliverables have already been delivered. On the other hand if it is determined that most if not all of the deliverables have been deficient they would not be in breach of contract. C-S is not the only one having issues, there are problems on both sides. Span has to deal with growing user and system requirements.
It is not uncommon to have regular requirement changes. However, in this case nothing has been regular which may make it impossible to accommodate within the agreed upon timeline and cost of the original contract. To add to it their has been a structure change within the project management at C-S. Span may have a strong case. The rescission orders have come at a time when eight months have already elapsed (UOP Simulation). We have kept up with most change requirements that have been anything but ordinary (UOP Simulation).
Also there has definitely been a breakdown of internal escalation of processes at C-S??™s end, and that can be our defense (UOP Simulation). Negotiations can now start with C-S. However, before negotiations can start it is discovered that C-S is talking to an overseas software developer in India. C-S may have possibly shared code with the India developer to get them started.
This is a clear violation of the contract in reference to the copyright fronts, and the substantial performance. A metrics dashboard shows that the schedule slips currently are at plus two days for deliverables as opposed to the planned five days. There are five defects per deliverable and the size (in function points) is currently 1015 instead of the planned 940.
Ther finally replies Span systems breach of contract claims under substantial performance of contract (UOP Simulation). He feels only 40% of the project is complete as opposed to the 60% being claimed. Also the recent deliverables quality has been deficient and on a constant decline in quality. The overall performance has been substantial. Grant thinks Ther has a valid point about the percentage of completion, and that efforts need to be put in place to help C-S achieve its target. Ther admits to not following the escalation provisions in reference to the internal escalation procedure for disputes, but feels the schedule slips and quality issues urgently need to be addressed. Grant sees the larger issue as the schedule slippage, and quality and does not think the breach of internal escalation clause will gain any ground. Last under the requirements changes Ther doesn??™t see a major increase in scope, also sees the claim as unacceptable, and is adhering to the signed-off system study report.
To this Grants response is this is immensely unfair, and sees the requirements change as the strongest argument. Span systems propose to Ther to upload daily project updates for C-S to personally view. Which Ther thinks will be good although Ther wants to be in the loop.
Another suggestion made is for C-S project management to serve in a quality control capacity a Span. Ther also likes this suggestion even though it will cost C-S more money, but will eliminate delays and increase the flow of communication (UOP Simulation). Grants see this suggestion as a help to both sides with direct contact. Last all parties are in grievance that scaling up the team will increase productivity and help meet future deadlines. Ther has reconsiders his decisions to rescind the contract and agreed to renegotiate the contract as per agreed terms (UOP Simulation). This means the existing contract needs to be amended.
However, it gives them the opportunity to work together again on more contracts. Conclusion In conclusion Contracts should have a clause that covers any changes that are out of the ordinary. In the case of Span Systems and Citizen-Schwartz AG (C-S) they did not have anything in the original contract that covered any changes that happen to be out of the ordinary.