Recognizing_Opportunites

Recognizing Contract Risk and Opportunities When there is a promise exchanged between two or more individuals they enter into a contract, weather it is to refrain from doing an act or enter into an agreement that can be enforceable in a court of law. Before agreeing to the terms of a contract it is extremely important to read and understand the literature that is in the contract. While the two or more parties are negotiating on the contract they are able to add or change anything that is pertaining to the contract, but once it is agreed upon and signed the deal is sealed. The Contact Creation and Management simulation shows how important it is to review the existing contract or a new business contract to avoid any misunderstanding. The best philosophy is for both parties to study and review the contract, so that there can be success with the contract, and it can turn beneficial for both parties. There was a contract that was signed and agreed upon between Span System and Citizen-Schwarz AG that is worth six million dollars, but the agreement that was signed has not been going the way it was expected. One of the reasons why it has not been working is do to Span System not delivering there end of the bargain, and the poor quality. The Citizen-Schwarz AG most influential negotiator Leon Ther had threatened the rescission of the contract do the poor quality of deliverables and schedule slips. After negotiating Span System was able to modify parts of the contract clauses and were able to come to terms of the agreement. Both parties did not want to rescission the contract or want to settle the problems in court. Both Span System and Citizen-Schwarz AG did not want to spend the high cost to settle the dispute in court. That is why Span’s manager came to a decision to write this memo to Citizen-Schwarz AG, so he can discuss the risks that came up and address ways that the issue would be able to get resolved and avoid or limit future liabilities. The most important part of the contract is when the offer is made by one party, and under the terms the other party accepts. This contract is named concurrence of wills. Citizen-Schwarz AG and Span System entered this agreement when the ambiguities are still present in the contract. For future reference all negotiators are going to have to revise and review the wording of the contract so they can avoid the ambiguous language, as the example found in the current contract. With the current issue at hand, the two organizations came to the realization of how important it is to understand the contract, and have a clear meaning of it. So, the contract can be successful it is important to make sure that both parties clearly understand the contract. The original contract that was agreed upon by both Span Systems and Citizen-Schwarz AG had a few of the clauses laid out that would show a breach of contract. The first clause that was laid out that would constitute a breach would be the substantial performance. If fifty percent of the contract was completed neither Citizen-Schwarz AG nor Span Systems would be able to cancel the contract. The threat of a rescission by Ther was invalid since Span Systems had already completed more than fifty percent of the programming. Span Systems realized that improvement was needed so that Citizen-Schwarz AG is able to achieve its target. The second clause that was laid out that would constitute a breach would be the Internal Escalation Procedure for disputes. Leon Ther agreed to not following the escalations provisions and apologized. But, Span Systems needed to make improvements to their quality issues and schedule. Span Systems agreed, and that they will come up with a better plan to improve the delivery quality and schedules. Finally, a Breach of Contract under Communication and Reporting. Leon Ther does not agree on the breach to become more effective Span systems agreed that they needed to address the delivery quality and schedule slips. Citizen-Schwarz AG and Span Systems came to an agreement to take the following measures to limit liability. The Project Manager of Citizen-Schwarz AG has been assigned to manage the quality control. The Project Manager is in charge of monitoring defects and will be participating to help determine remedies. Span Systems is going to upload the updates for daily projects, so that the authorized personnel of Citizen-Schwarz AG can view. By uploading daily updates will keep Citizen-Schwarz AG aware of what is going on, and help Span Systems progress. Finally, Span Systems decided that they are going to improve communication and that they are going to invite Citizen-Schwarz AG Project Manager to serve and help with quality control capacity; this will expedite the flow of communication. By using direct client contact it improve the communication and help both parties. At the end the contract clause changes were as followed. In the performance section Citizen-Schwarz AG can terminate this contract in part or whole, for any reason upon seven days prior to written notice, Span Systems will be entitled to payment for the percentage of services that were completed satisfactorily as of the date of termination or cancellation, Citizen-Schwarz AG will be entitled as of the date of cancellation or termination to receive all work products in progress or completed, all subject to payment clearance due to Span Systems, there shall be a thirty calendar day testing period that starts the day after the installation of software and Span Systems has to certify that the software is ready for acceptance testing. All data that is pertinent will be reviewed daily by Citizen-Schwarz AG and this data will be maintained appropriately to make sure that the standard of performance has been met, and the defect removal efficiency of Span Systems will be monitored closely by Citizen-Schwarz AG a month from the renegotiation date. In addition, a change to the control board that will be comprised of both Citizen-Schwarz, AG and Span Systems managers will be the ones to determine the impact of change. Citizen-Schwarz AG will be paying a Project Manager, that the Project Manager is able to track all projects to maintain communication and updated reporting. Within ten days of this contract effective date Span Systems will increase its size of the team by minimum of ten programmers so that they can meet the software delivery schedule. The changes that were made above will help resolve any problems and maintain both parties in peace and working successfully. In conclusion, it is critical to understand and review the contract before making the agreement, so that the contract can be a success. The two parties, Citizen-Schwarz AG and Span Systems were lucky to be able to take care of the dispute without having to go to court, because if they could not have taken care of the agreement outside of court a lot of money and time would have been thrown away on this issue. Contracts are in place to make it easy and clear; but if the organization is not careful it can cause damage.