Assignment 3: Contract Risk and Opportunities
University of Phoenix
David I. Hammond, J.D.
February 17, 2009
Date: February 15, 2009
To: Kevin Grant and Harold Smith
Cc: Leon Ther
From: Project Manager
Re: Contract Risks and Opportunities
Priority: Urgent and Confidential
Gentleman, the main rationale for this memo is to provide some guidance during the contract negotiations with Span Systems and Citizen-Schwarz AG. I believe as manager of this banking software project, part of my responsibility is to advise both companies regarding my assessment of the contract at hand. In this memorandum, I will explain the legal risks and opportunities both companies face regarding the contract made. Afterward, I will identify what our organizations can do to avoid those risks, minimize the liabilities, and benefit from the opportunities. Finally, I will evaluate the alternatives presented to resolve the issues identified in order to smooth relations between both corporations; but more important to save the contract by making the necessary amendments to satisfy both of our organizations.
Legal Risks and Opportunities
Any time when two companies enter into a bilateral contract, there are always legal risks involved from both ends. In this particular case, the main dispute between our companies is regarding quality and the schedule of deliverables. Evidently, legal risks arise from the original contract between Span Systems ad Citizen-Schwarz. The following contract clauses are identified as breaches of the contract: Substantial Performance of Contract, Internal Escalation Procedure for Disputes, Requirements Change, and Communication and Reporting. As with all contract clauses, each representing party will have pros and cons. Substantial Performance has been identified because Span Systems is behind schedule of deliverables and its quality is substandard....