Contract Creation and Management
Span Systems is one of the leading and most prestigious banking software companies
located in California. Span Systems develops custom e-banking software. The company is
valued at $85 million. Kevin Grant is the Director with Harold Smith being the Transaction
Attorney. Span Systems was approached by Citizen-Schwarz AG (C-S) to develop a
Java-based transaction processing software program. C-S is a German bank located in
Stuttgart and has revenues in excess of $20 billion. Leon Ther is the Outsourcing Director
for C-S. Span Systems and C-S signed a one year contract in which Span Systems is to
develop a Java-based transaction processing software program for $6 million. C-S has
stated to Span Systems that there is a bigger e-CRM order hinging on the performance of
the Java-based transaction processing software and Span Systems is hopeful to receive this
larger project in the future.
Eight months into the Java-based transaction software project, Leon Ther becomes furious
with Span Systems*ƒ¿*ƒ‘”€”*ƒ”€¦ deliverables being behind schedule along with the
quality of the deliverables being unacceptable. Leon Ther asked Kevin Grant to transfer all
unfinished code to C-S to find another company to complete the job. Leon Ther also
asserted a rescission of the signed contract. Span Systems has heard rumors that Leon Ther
has approached another software company to complete the work Span Systems was under
contract to finish.
At this point, both companies are livid and seek changes to the contract. Leon Ther wants
to rescind the contract and find another company to complete the task or start fresh with
the code Span Systems has completed thus far. Span Systems wants to work with C-S to
compromise in order for both parties to continue to work together.
There were five original contract provisions signed by both parties. The five provisions
were: Intellectual Property Rights, Requirements Change, and Performance, Internal
Escalation procedure for disputes and Communications and Reporting. When the
objectives were not being met, both parties realized the five original contract provisions
were not sufficient to cover all unforeseen requirements.
Basic Concepts of Contract Law
Basic concepts of contract law are merely a promise between two or more parties. The
promise made is an enforceable agreement, which will allow or should allow each party to
meet his or her needs (Reed et al., 2004). According to Reed, Shedd, Morehead and Corley
(2004) who state that the enforcement of contracts is crucial in a property-oriented system
of operation. *ƒ¿*ƒ‘”€”*ƒ”€¦A contract need not be formal, written document, and those
