...Contract Risk and Opportunities LAW/531 Jonathan Jamieson April 19, 2010 CERTIFICATE OF ORIGINALITY: I certify that the attached paper is my original work. I affirm that I have not submitted any portion of this paper to any previous course, and neither has anyone else. I confirm that I have cited all sources from which I used language, ideas, and information, whether quoted verbatim or paraphrased. Any assistance I received while producing this paper has been acknowledged in the References section. I have obtained written permission from the copyright holder for any trademarked material, logos, images from the Internet, or other sources. I further agree that my name typed on the line below is intended to have, and shall have, the same validity as my handwritten signature. Student's signature (name typed here is equivalent to a signature): Allison L. Sutton . Contract Risk and Opportunities A contract has been created between Span Systems, a custom e-banking software developer, and Citizen-Schwartz (C-S), a German bank attempting to enter the fiercely competitive U.S. banking market. The legal risks presented during the contract performance causes both companies to disagree on principle points leading to renegotiation efforts by Span Systems to salvage the contract (University of Phoenix, 2010). Differences in contract term interpretation and disputes over contract management can lead to a decrease in production, severance of business...
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...CONCERNING THE QUALITY AND TIMELY DELIVERY OF THE PROMISED CODE HAS BEEN AN ISSUE FOR SOME TIME BETWEEN CITIZEN-SCHWARZ AG (C-S) AND SPAN SYSTEMS. BY PINPOINTING THESE ISSUES I BELIEVE A SATISFACTORY AGREEMENT CAN BE WORKER OUT BETWEEN US TO GET EVERYTHING BACK ON TRACK. LOOKING BACK AND USING AS A GUIDE THE CONTRACT FIRST ESTABLISHED BETWEEN C-S AND SPAN SYSTEM WILL BE A GOOD STARTING POINT. Contract By definition a contract is an agreement that is enforceable by a court of law or equity (Cheeseman, pp153, 2010). The Restatement (Second) of Contracts gives a simpler and wider definition: “A contract is a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty” (Cheeseman, pp153, 2010). Contracts involve two parties. In the simulation those two parties are Citizen-Schwarz AG (C-S) the offeror, and Span Systems the offeree (Cheeseman, pp153, 2010). A contract is made up of four elements: agreement, consideration, contractual capacity, and lawful object (Cheeseman, pp154, 2010) all which are in place between C-S and Span Systems which creates a bilateral contract between the two “promise for a promise” (Cheeseman, pp157, 2010). Agreement – a manifestation between the parties (Cheeseman, pp167, 2010) having been instituted when Span accepted the offer from C-S. Consideration is defined as something of legal value given in exchange for a promise (Cheeseman, pp181...
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...Contract Risk and Opportunities Memo University of Phoenix MEMO TO: Citizen-Schwarz AG FROM: Michael R. Dillon, Span System DATE: December 2, 2009 SUBJECT: Contract Creation and Management This memo is regarding a contract between Span Systems, a company that creates software, and Citizen-Schwarz AG, a large German bank. This memo will examine the contract issues in the Contract Creation and Management Simulation (Contract Creation, 2009). The memo will examine steps managers can take to decrease risks, resolve conflicts between the two parties, and take advantages of business opportunities. A contract is formed when two parities make an agreement to do certain acts in exchange for the other person’s acts. Each person makes a promise in exchange for the promise of another person. A contract can be verbal or written. It can be formal or non-formal. A contract must have the following three elements: offer, acceptance, and consideration (Jennings, 2006). One of the leading causes of business disagreements is the interpretations of contract terms. A contract is binding on the parties and can force the parties to perform. Disputes over a contract can lead to decrease production and expensive legal fees. To avoid these issues, it is important for both parties to make sure all contract terms are addressed, read the contract carefully, and make necessary changes before signing (Goldberg, 2008). The contract is for Span Systems to create custom e-banking software...
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...Eight months ago, Span Systems signed a $6 million bi-lateral contract with Citizen-Schwarz AG (C-S) to develop the new software for their electronic banking system. The basis of the contract is Span System’s promise to provide C-S with new banking software that meets their needs and expectations while meeting key deadlines (University of Phoenix, 2002). C-S has agreed to pay Span System for their services, and to provide timely feedback, response, and representation to assist Span Systems in meeting the agreed-upon deadlines. Recent schedule slips and concern over the quality of deliverables are an issue. Span Systems is on the verge of losing the contract, as today, Leon Ther, the C-S negotiator requested an immediate transfer of all unfinished code, and asserted the rescission of the contract (University of Phoenix, 2002). The situation is very critical, and the company needs to formulate a plan to convince C-S to reverse their position. As the result of a full review of the contract, several risks and opportunities for the company are identified below: Several major legal issues exist (University of Phoenix, 2002), brought on by C-S’s declaration that they require the immediate transfer of all unfinished code, their decision to rescind the contract, and the possibility that they have hired another IT firm to complete the project. This event raises several issues including intellectual property rights, changes to the end-user system and functional requirements, quality...
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...Recognizing Contract Risk and Opportunities LAW/531 Introduction Contracts are a binding, critical part of any business deal between two or more parties. Because of the binding promise between these parties it is important that the contract is clearly worded, negotiated if-need-be, and reviewed before they are signed by all applicable parties. Cheeseman (2010) stated “A contract is a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty” (Chpt 9, Para 2). The following Memo will identify the legal issues presented in the Contract Creation and Management Simulation as well as identify what a manager may do to avoid theses risks and minimize liabilities. Business Memo -- Confidential TO: Project Leadership Team Span Systems – Kevin Grant, Harold Smith FROM: Mike Myers, Project Manager Span Systems DATE: 03/20/2011 SUBJECT: Contract Risk and Opportunities between Span Systems and Citizen-Schwarz AG CC: Board directors The one-year contract written between Span Systems (Span) and Citizen-Schwarz AG (C-S) to develop banking software has recently met with some serious concern regarding if it can remain intact as it currently stands. Recently Leon Ther: the IT outsourcing director of C-S sent a letter stating that “C-S cannot afford scheduled slips because of its deadlines for the release of transaction software in...
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...Recognizing Contract Risks and Opportunities Jennifer Breeden Law/531 Business Law March 6, 2011 Monica Cosentino-Benedict Recognizing Contract Risks and Opportunities MEMO To: Span Systems Management From: Jennifer Breeden Date: March 6, 2011 ------------------------------------------------- Subject: Recognizing Contract Risks and Opportunities The purpose of this memo will be to analyze the recent contract between Span Systems (Span) and Citizen – Schwarz AG Bank (C-S). This contract’s purpose was to have Span build a transaction processing-based software system for C-S and in return C-S would pay $6 million dollars (University of Phoenix, 2002). These two companies come up against many disagreements about the language and meanings of the contract. In the end, Span worked very hard to renegotiate the clauses of the contract to continue a positive working relationship with C-S. This memo reviews the legal risks, liabilities, and opportunities that occurred during this process to make future business with C-S and other companies to come more enjoyable for both sides. Risks and Liabilities A breach of contract is the first accusation C-S made of Span, which starts the list of risks and liabilities. C-S said that the deliverables were below the standards agreed upon and were not delivered on time. C-S claimed that Span was producing deliverables of substantial performance, meaning that they were below standards set up in the contract. Span could have...
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...LAW/531 Recognizing Contract Risk and Opportunities A contract has been written, negotiated, and agreed upon by Spam Systems and Citizen Schwarz AG for the delivery and implementation of a banking software program. Span Systems (SS) is a highly reputable software company and Citizen Schwarz AG (C-S) is a large German bank. Harold Anteau is the project manager for Span Systems. He is backed by the Director Kevin Grant, and the company attorney Harold Smith. Leon Ther is the chief negotiator for C-S, and he is assigned to oversee the project for C-S. Eight months into the contract problems arise between the two companies pertaining to the terms of the contract. Leon Ther threatens to rescind the contract because of poor quality and not meeting agreed upon timelines. Harold Anteau and Harold Smith review the contract to determine SS’s standing. Three legal issues arise under the contract clause of breach of contract. They are substantial performance of contract, requirements change, and communications and reporting. Breach of contract is a common defense raised to elicit negotiations (Cheeseman, 2010). It is only effective against an ordinary holder of the contract (Cheeseman, 2010). Under the Uniform Commercial Code (UCC) [UCC 2-301], tender of delivery is the most basic obligation. It requires the seller to transfer or deliver goods to the buyer in accordance to the terms of the contract (Cheeseman, 2010). Leon Ther is right when he states the product...
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...Recognizing Contract Risk and Opportunities Memo Cliff Brown Business Law 531 April 6, 2011, 2011 Chris Phan Memo To: Span Systems Management From: Manager Date: April 06, 2010 Subject: Recognizing Contract Risk and Opportunities Management Team: There is grave concern with respect to the contract between Span Systems and Citizen-Schwarz and its ability to remain unharmed. The organization has made the decision to guarantee that this project gets done promptly and with first-rate quality of the outcome to enable Span’s opportunity of getting C-S’s e-CRM order. The accomplishment of acquiring the next contract with C-S is relies heavily on the current project’s status. The company is committed to getting this project finished affably between each party. The performance within the contract is one of the issues within the project. C-S’s position is we are late on schedule and our product deliverable is not the best of in quality as forecasted by C-S. The language of the contract maintains that C-S may not repeal the contract if greater than 50% of the project schedule has passed; however, C-S is demonstrating that the performance within this period has indicated the quality of product deliverables is inadequate and consequently it is within their rights to assert that we have not significantly executed. The project management team at Span will argue against this claim due to the amplified change of end user obligations. To rectify this, we have...
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...Recognizing Contract Risk and Opportunities Memo Law 531 Charles Cook January 31, 2011 Recognizing Contract Risk and Opportunities Memo DATE: January 31, 2011 TO: Kevin Grant Harold Smith Leon Ther FROM: Michelle Boldt RE: Banking Software Contract Issues Due to recent negotiations with the binding contract between Span Systems and Citizen-Schwarz AG (C-S), necessary changes have come to light. After thorough discussions between myself , Span Systems legal team, and CS's negotiator, Leon Ther, three major amendments within the contract have been agreed upon. Contract clause breaches Performance While performance has been under par in relationship to C-S's requirements, debate over the additional changes within the product specifications have clouded efforts. Communications and Reporting The change in project management disrupted the flow of work in respect to communication and project expectations. While it was a deficiency on Span's ability to work continuously through the changes, with the weakness identified and addressed, this issue can be corrected and avoided in the future. Requirements Changes In the recent past, C-S presented numerous changes in specifications, time requirements placed additional hardships on the production and design team. Thus, disrupting the agreed upon time frame. Legal principles The majority of clause issues within the contract revolve around a lack of communication. While Span addresses...
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...Recognize Contract Risk and Opportunity Erica D. Thomas LAW/531 June 7, 2010 Craige Harrison Recognize Contract Risk and Opportunity Contracts, no matter how large or complex, are promises negotiated between parties and should be written to ensure business agreements are fulfilled by both parties. Clarity of purpose is the hallmark of successful contracts because contracts are never free of interpretation (University of Phoenix, 2010) and poorly written contracts can ultimately result in breach of said contracts. In today’s market, businesses need ways to ensure that contract risk and liabilities are minimized and remedies to these risks are maximized and beneficial to all parties involved. In this memo, I will identify the legal risk and opportunities of Span Systems and Citizens-Schwarz (C-S), address how managers can avoid risk with contract issues, minimize liabilities, and benefit from additional opportunities identified. Span Systems and Citizen-Schwarz AG (C-S) entered into a 1 year contract worth $6 million and if Span Systems can deliver on this contract our company stands to gain an even bigger contract for C-S’s e-CRM order, which is coming down the pipeline, however, in order for us to secure this contract our company must meet and exceed performance standards with the current contract. Currently our proceedings concerning our contract with Citizen-Schwarz (C-S) has not gone as planned and Leon Ther, C-S’s lead negotiator has demanded immediate transfer...
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...Effective risk response can help prevent a project failing or at least reduce the negative impacts of risks that affect it. Discuss the risk response strategies that could be used for this project Risk response is the process of developing strategic options, and determining actions, to enhance opportunities and reduce threats to the project’s objectives. A project team member is assigned to take responsibility for each risk response. This process ensures that each risk requiring a response has an owner monitoring the responses, although the owner may delegate implementation of a response to someone else. There are several risk response strategies that can be discussed however; each of the strategies requires specific actions to be developed to implement the strategy and the idea of assigning a team member is to increase accountability and making sure nothing falls off unattended. The project identified risks that are a threat to the project and only procurement providing opportunities too. The strategies applied for threats in many of the cases vary from those applied for opportunities. For threats the strategies that employed are avoid, mitigate, and transfer while for opportunities, exploit, share and enhance are used and acceptance which is used when it is not possible to respond to the risk. 7.1 Avoid. Risk can be avoided by removing the cause of the risk or executing the project in a different way while still aiming to achieve project objectives. Not all risks...
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...The Importance of Risk Management BUS 697 The Importance of Risk Management Altex Corporation has an interesting scenario before them; Altex proposed delivery of a missile program to the Army and won the contract for research and development. The interesting component is that the proposal states that Altex can exceed Army expectations and the PM has doubts to meet this factor. Moreover, the project sponsor is assuming that the Army will accept as low as 60% of the deliverable. Proper risk management can be the point of success or failure depending on the customer expectations. Altex Corporation has to manage expectations accordingly and highlight areas of concern to benefit the most from this defense contract award. Assumed Practices During this era of post WWII defense contracting, contractors who were not primarily qualified received government obligations to deliver products for the “sole purpose of increasing competition” (Kerzner, 2005, p.253). Project sponsors held assumptions that once a contract was awarded and after much money was spent, the Department of Defense will continue to fund projects at whatever costs necessary. The issue with this is that project sponsors are risking the assumption of their customer without consulting the customer’s intentions and expectations. “A firm’s perception of risks may be significantly different than the customer’s perceptions” (Kerzner, 2005, p. 24). The assumed practice must be properly analyzed. Case Study Questions ...
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...other countries. Microsoft©, Windows©, and Windows NT© are registered trademarks of Microsoft Corporation in the United States and/or other countries. All other company and product names are trademarks or registered trademarks of their respective companies. Use of these marks is not intended to imply endorsement, sponsorship, or affiliation. Edited in accordance with University of Phoenix© editorial standards and practices. Course Description This course prepares students to evaluate the legal risks associated with business activity. Students create proposals to manage an organization’s legal exposure. Other topics include the legal system, alternative dispute resolution, enterprise liability, product liability, international law, business risks, intellectual property, legal forms of business, and governance. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies:...
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...Risk mitigation techniques Risk management involves the process of continuous identification of the risk factors and devising way and methods of dealing with them. The identification process can be done using different types of models depending on the type of organization being analyzed (Chapman, 1996). Dr. Kallman a professor of risk management, has several techniques which he has discussed regarding the risk management which will be compared with other techniques recommended by other authors like Victoria Duff. Understand the risk According to Dr. Kallman on risk management, he has given the following techniques to be used. Dr. Kallman says that before giving the mitigation techniques to the risk, there must be identification of the risks. A risk manager should understand the type of risks which are likely to face a firm and list them down. This is what we call risk identification. For one to know this, there must be clear understanding of the companies’ goals, mission and objective. From these factors, the risk that is likely to face an organization can be identified easily. When the risks have been identified, they can be categorized to three distinct groups such as, operational, strategic and economic. Strategic risks include those risks with long term varied effects on the firm and they are composed of factors like, the reputational risk, quality risk and brand risk. The next set of risk is operational risks which include things like the hazards which expose the business...
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...and miscellaneous distributors. Groceries increased or remained constant during the 5-year period. Long term debt experienced a decrease each year. Exhibit 1 shows that operating revenues have increased from $503.4M in 2003 to $680.7M in 2007. During this time, gross operating profit increased by $23.4M. This illustrates that the company is not sacrificing profits for top level growth. One disadvantage is that the company is operating at 90% of capacity and addition of more accounts will necessitate investment in expansion. After reviewing the case a number of risks need to be considered. These risks would fall into two main categories, namely, financial and non-financial risks. The non-financial risks to be examined are market related. For example, entering into this contract would cause a dependency on only one customer and this current investment is not in keeping with HPL’s history of minimizing risk through conservative expansion, a diverse customer base, and minimal debt. Additionally, the commitment requirement of the...
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