br />Contract Creation and Management Simulation
William
University of Cincinnati
Legal Environment of Business
Judge Jim P. Ponder
July 2, 2000
Contract Creation and Management Simulation
The simulation begins in the middle of a major dispute between a software-developing
company, Span Systems, and one of its customers, Citizen-Schwartz AG (C-S), a large
German bank. The two companies are in dispute over the quality and timeliness of
deliverables. There have been major bugs found by C-S during testing and are worried
about Span not fulfilling the one-year contract, which is worth $6 million. Span main
concern is securing a larger contract with e-CRM, which is tangent on the outcome of the
current contract. C-S has requested all code and asserted the rescission of the contract.
Future Business Opportunities
Performance of Contract
The contract states, neither party may cancel this agreement, in whole or in part,
subsequent to more than 50 percent of the consideration having been tendered by the other
(UoP Simulation). Since C-S requested all code, it is in breach of contract because more
than 50 percent of the deliverables have been delivered. By looking at the big picture, the
e-CRM contract, Span is willing to discuss and give concessions regarding the quality
issue.
Internal Escalation Procedure for Disputes
The current contract covers the internal escalation procedure for disputes. The party
believing itself aggrieved shall call for progressive management involvement in writing to
the other party (UoP Simulation). C-S requesting all finished and unfinished code is a
direct violation of the current contract. Span is willing to set this aside if C-S rescinds its
request.
Requirement Changes
Change Management. The current contract is written to cover a one-year time frame. C-S
user and system requirements have grown, especially in the software arena. The original
contract should have addressed out of the ordinary changes, but it didnt. Span Change
Management office is responsible for reviewing, approving and scheduling software
changes. When C-S began requesting major software changes, Change Management
should have escalated C-S requests to upper management for disapproval. Terms for out of
the ordinary additions and changes needed to be negotiated before C-S requests. In the
beginning, almost to a fault, Span placed more priority on meeting milestones and less on
quality control.
Resolution approach.In an effort to reduce conflict and come to amicable terms, Span will
suggest a proactive approach to resolution. Span is looking at future business opportunities
with e-CRM. C-S needs to be convinced that Span will fulfill its end of the contract.
Negotiation Possibilities
Span needs to help C-S achieve its business goals. Fighting over the contract wont help
