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Recognizing Contract Risk And Opportunities Essay

1345 words - 6 pages

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 ...view middle of the document...

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....

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