Contract Creation and Management
Creations and Management simulation gives one the learning experience as a project manager the opportunity to analyze, interpret, negotiate, amend an existing formal contract in resolving a disputes between two global networking organization’s. Span Systems is an American software company and Citizen-Schwartz (AG) (C-S) one of the largest and prestigious German banks. The organizations enter into a one-year contract worth six million dollars. As the project manager for largest software project Span project manager substantial performance is detrimental in ensuring the contract software project is deliverable according the obligations agreed to with minor changes, exact terms or minor defects.
Problem at Both Ends A contract is a “legal enforce promise which obligates each party to do or not to do certain things. Technically it requires a acceptance and offer and a valuable benefit known” (Cheeseman, 2010, p. 174). As with any contractual disputes both parties have legitimate points of pros and cons in defense of their stance of a breach of contract. In the simulation Leon Ther is known as a tough negotiator for C-S. He is upset and claims that Span systems deliveries are behind schedule and the quality of the products are undeliverable. C-S quality control manager over the last couple of months continue to find major bugs in the software program. Although the claim is true Span claims because the original contract user and systems have increased making it difficult to complete the number of orders, deadlines, and quality products as agreed upon in the original agreement. The following discussions will highlight the contract clauses entered into agreement between Span Systems and C-S (AG). The following are the breach of contract clauses: Substantial Performance Clause, Escalation Procedures for Disputes, Requirements Change, Communications and Reporting, and Intellectual Property Rights.
Substantial Performance Clause C-S claim that Span is not producing the number of deliverables according to the schedule slip as well as a number of defects that costs time and money that was agreed upon in the negotiations of the contract. A breach in contract is known as substantial performance. Substantial performance occurs when there have been a minor breach of contract. In other words, it occurs when a party to a contract renders performance that deviates slightly from complete performance” (Cheeseman, 2010, p. 258). A breach in contact has to occur between both parties. However, either party at this point is making legal claims. Both company’s agreed to update the contract with a change clauses. The clause is also known as a force majeure clause that states, “A clause in a contract in which the parties specify certain events that will excuse nonperformance” (Cheeseman, 2010, p. 243). The change clause states that Span will receive payments for completion of work if the contract terminates.
Escalations Procedures for Disputes C-S agrees they have breached the escalations provisions and will address that issue but their primary concern is with the schedule slips and deliverables. However, the deadlines to release the software to market is imperative to benchmarking its products against the industry top sellers. Although Span continue to move the product as quickly as possible, error has been inevitable causing C-S to rethink their contract negotiation. “C-S may not rescind the contract at this stage since more that 50% of the project schedule has elapsed” (UOP Simulation). In fact C-S is requesting unfinished codes be turned over to the company. There has been talk that C-S has been in negotiations with an