Span Systems: Contract Creation and Management - Assignment Example

Contract Creation and Management Span Systems is a software company developing a banking software program for C-S bank. Both parties signed a one year contract which is worth $6 million. C-S has stated to Span Systems that there is a bigger e-CRM order, and chances of Span getting the order bring about problems on the performance of the signed contract. The project encountered serious issues that could lead to breach of contract. Legal issues presented in the simulation include claims and counter claims which concern delivery schedule slips, quality of deliverables and major bugs identified in the user testing stage. C-S claims quality of deliverables from Span has been unacceptable and behind schedule. C-S has demanded immediate transfer of all unfinished codes as it cannot afford to reschedule slips. C-S has also asserted the recession of the contract. Span, on the other hand, claims user requirements have grown disproportionately. Additionally, span claims C-S’s review time and approval was affected due to change in the structure of project management. In the simulation between Span Systems and C-S, both parties had a valid contract. C-S offered Span Systems a contract to create banking software to market within one year. Span accepted the legal offer and promised to deliver the software on time. However, there was a breach of contract between the two parties, and the contract required restructuring and clarification. When creating the contract, every clause should be fiercely negotiated as this will help both parties reach a consensus easily. Each party did not have a clear understanding of the specific requirements of the project. The final contract did not clearly define the roles and it was also ambiguous. There are various principles that apply to such issues. In this case, the contract should clearly define each party’s role as this will help in understanding roles. A successful business partnership can be achieved only if a contract is carefully reviewed before sign-off. Clarity of purpose is an essential aspect that ensures successful contracts. C-S asserted the recession of the contract with Span, but Span developed some negotiation points that could help save the project. There are contract clauses that can be used to start negotiations between C-S and Span. It is essential to analyze the pros and cons of each contract clause in consideration for the termination of the contract: requirements change which refers to changes in the user and system requirements since originally determined in the system study stage, substantial performance where by Span had done a large percentage of the work, communication and reporting and internal escalation procedure of disputes. This clauses show that Span System highly values product delivery, communication and product value. Span is aware that problems occurred due to the fault of both parties. It also wanted to prove that issues were legitimate and they had to be addressed to enable both parties act reasonably regarding contract performance. Breach of contract under substantial performance contract clause is essential as that portion of the contract would be difficult to interpret what is considered as substantial performance. C-S wanted to address quality issues and schedule slips with Span System. Simulation provides business partners with an opportunity to develop negotiating positions, amend contracts or argue performances of the contract in order to prevent business disputes from occurring. A simulation, therefore, highlights the importance of reviewing a business contract as this help in cases of disputes between business partners (Cheeseman, 2010). C-S has the legal right to go to court and sue Span Systems for wrong specifications or late deliveries. Span Systems can face a huge loss of resources when it is sued. Breach of promises in business contracts is a serious matter before the law court; therefore, high penalties could be expected from the court in case C-S decides to sue. It would be wise to deal with a client in a smart way and ensure products are delivered on time with proper specifications Methods for contract dispute resolution Business relationships can be damaged when a breach of contract occurs. A number of alternatives can be used for contract dispute resolution so as to prevent additional harm to ongoing business relations. Span System and C-S used negotiations to clarify and resolve differences that came up in order to avoid the act of rescission (Cheeseman, 2010). Negotiation ensured both business partners showed a great commitment of the transaction software. Focus on commitment enabled Span System to stay on schedule and improve quality of its product at the same time. Negotiation also brought about an improved change in process control and this allowed team members to focus on creating the optimal transaction software product. Additionally, negotiation ensured there is a more open process of communication between both parties, and this provided a greater access to project information (Aresty, et.al, 2009). Span System and C-S have learned the importance of carefully reviewing and studying contracts before coming to an agreement. Ambiguity of business contracts can lead to different interpretations of responsibilities and business needs. Negotiation will provide clarity to performance, project structure, change control, communication and reporting so that product delivery, product quality and communication can be improved. Both parties that have signed a contract owe a duty to perform obligations outlined in a contract. Other methods for contract dispute resolution include mediation, arbitration, mock trial and mini trial. Mediation settlement is the least expensive and it is also an unbiased approach where a third party assists to resolve conflicting differences that arise between parties. Concepts of contract law are a promise made between two or more parties that have signed a contract. The contract signed is an enforceable agreement where each party has to meet his or her duties as required. Business parties that would like to work together should be able to create a valid contract. Misunderstandings in contract agreements will arise due to lack of essential elements. A valid contract should, therefore, have essential elements which include an offer, acceptance, legal purpose, capacity of purpose as well as consideration. Before entering into an agreement, a party should understand how the contract has been formed (Aresty, et. al, 2009). Conclusion Business dealings may involve a number of business contracts that may make it difficult for the involved parties to effectively handle issues associated with these business contracts. However, it is the legal obligation of each party in a contract to study and discuss details involved in the contract. This will prevent issues from coming up as each party will be able to fulfill duties accordingly. In case contracting parties encounter any legal issues, the best way to resolve issues would be to negotiate over deliverables, deadline and product quality. Restricting and clarification of a contract may act as a suitable option as it will provide clarity to project structure and performance. References Aresty, J. M, Klosek, J. and Silkenat, J. R. (2009). The ABA Guide to International Business Negotiations: A Comparison of Cross-cultural Issues and Successful Approaches. American Bar Association: Chicago. Cheeseman, H. R. (2010). Business Law: Legal Environment, Online Commerce, Business Ethics and International Issues (7th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. Read More