Recognizing_Contract_Risk_and_Opportunities

Abstract The contract would be considered as an oral or formal written way to exchange promises between at least two parties or refrain from doing an act, which is enforceable in a court of law. (Wikipedia). The parties of the contract must read and fully understand what is written in the contract before agreeing to its term and sign. The contract parties are allowed during the negotiation process to make any kind of changes or add new terms but once the parties agreed and signed the contract upon the deal is sealed, the contract management simulation and creation serves to ensure and highlight the importance of reviewing on the existing contract or the new business contract to keep away any misunderstanding. It is [Expletive construction--"there is," "there are," "there was," "there were," "it is," or "it was" are phrases that mean nothing. Unless "there" or "it" is a place or a thing, the composition will be much more concise if rewritten to eliminate such phrases.] ["It" must refer to a specific word in the sentence or the reader can become confused by the vague pronoun reference. Example – It demonstrated his recent achievement. (This usage is incorrect because "it" does not refer to a specific element in the sentence.) When Victoria received her diploma, she put it in a frame. ("It" clearly refers to the diploma.)] very vital for the parties to study and review the contract before they reach an agreement in order to make sure that the contract is beneficial for all parties and for the success of the contract. Recognizing Contract Risk and Opportunities MEMO TO: Citizen-Schwarz AG FROM: Project manager, Span System DATE: July 31, 2009 SUBJECT: Contract Creation and Management Span System and Citizen-Schwarz AG (C-S) agreed to a one year contract and signed it, it worth six million dollars; however, the agreement for this contract has not been going as both parties expected. Leon Ther, Citizen-Schwarz AG biggest influential negotiator threatened the rescission of our contract based on what he considered to be unacceptable quality of deliverables and schedule slips. Span System has not been delivering as scheduled and their quality is poor. Thankfully, after too much negotiating Span System was able to refine some of the contract clauses and come to terms of agreement. Neither Citizen-Schwarz AG nor Span system willing to see the rescission of the contract nor did they willing to settle the issue in court. Both companies are willing to get away from the expensive cost of settling the dispute in court. So Span’s project manager decided to write a memo and send it to Citizen-Schwarz AG to discuss the risks that came out from this issue and to address the best ways to avoid and resolve or minimize liabilities in the future. [usage -- "in the future." is redundant] The part that creates the most critical issue in the contract is where one party makes an offer for an arrangement and the other accepts, under the terms. This agreement is called a concurrence of wills. Citizen-Schwarz AG and Span came to this agreement by ambiguities still present in the contract. For the future, [usage -- "For the future," is redundant] the contract wording must be reviewed and revised in order to avoid ambiguous language, like the one found on the current contract and this should be done by all the contract negotiators. Regarding the issue that both companies are facing, both organizations have realized the importance of having a clear contract and understanding it. Understanding the contract is a very essential part in order for it to be successful. In the original contract there were several clauses which laid out what would constitute a breach. The Contract first breach was under substantial performance of contract. Mainly, neither Citizen-Schwarz AG nor Span system could cancel the contract after 50% of the work was done. So that when Ther threatened rescission Span system had already completed more than 50% of the programming, the threat was invalid. However, Span system organization realized that the focus supposes to help Citizen-Schwarz AG achieve its target, and so the improvement will be available and exist. The contract’s second breach was under international Escalation Procedure for disputes. Ther approved and agreed not to follow the escalation provisions and apologized. However, Span system needs to improve their quality and schedule issues. While the company agreed and they are going to work on a plan in order to have a high delivery quality and a better schedule. The last contract’s breach is under reporting and communication. Ther does not agree on the breach. Span system agreed to concentrate on addressing delivery quality and the schedule slips in becoming effective. Citizen-Schwarz AG and Span system agreed to take the following measures in order to minimize the liability. Citizen-Schwarz AG Project Manager is going to be appointed to manage the quality control. And the project manager will be responsible to monitor defect and participate in determine remedies. The second measure that Span system will upload daily project update for authorized Citizen-Schwarz AG personnel to view. This step should maintain Citizen-Schwarz AG in the loop and Span’s progress. Third measure and last that Span system will invite the Citizen-Schwarz AG Project Manager to serve a quality control capacity in order to improve the communication between both organizations. This step will expedite the flow of communication. This Direct client contact will improve the communication and help both companies. By the end of the contract clause changes were as followed. In the performance area Citizen-Schwarz AG might terminate this agreement in whole or in part, for reason upon 7 days prior to a written notice. Span system should be entitled to payment for the percent of a completed service satisfactorily. As of the date of cancellation or termination, Citizen-Schwarz AG should be entitled to get all the work products in progress or completed as of the date of cancellation or termination, subject to clearance of all payments due to Span Systems; the acceptance testing period should be thirty [Numbers higher than 9 are expressed in numerals] days starting from the day after Span software is installed and Span system should certifies that the Software is ready for acceptance testing. Citizen-Schwarz AG suppose to maintain appropriate daily records to ascertain whether the standard of performance has been met or not and they should review all pertinent data. And Citizen-Schwarz AG is going to monitor the defect removal efficiency of Span System in one moth starting from the date of renegotiation. Moreover, a change control board comprised of managers from both Span systems and Citizen-Schwarz AG and going to determine the impact of change. Moreover, in order to maintain updated reporting and the communication Citizen-Schwarz AG is going to pay the Project Manager to track all the projects. And finally, in order to meet software delivery schedule Span System Company is going to scale up the team members by adding at least 10 programmers within ten [Numbers higher than 9 are expressed in numerals] days of the effective date of this contract. All the mentioned changes are expectedly will resolve all the problems and maintain both Span systems and Citizen-Schwarz AG at peace and working successfully together. As a result, by understanding and reviewing a contract before making an agreement is critical for the success of the contract. Citizen-Schwarz AG and Span System were extremely lucky and able to settle their dispute without going to court, had they not come to an agreement much money and time might have been wasted on this problem. The contracts are very important and essential and it makes things more clear and easy. However, if any organization is not careful with the contracts, that will cause a lot [use "great deal" or "great many" instead of "a lot"] of loss and damage to the organization.