Citizen-Schwarz AG (C-S) is our biggest and most prestigious banking software project that Span System (Span) has. It is unfortunate C-S claims that Span’s deliverables are low on quality and behind schedule. The problem lies at both ends. The IT Outsourcing Director of C-S, Leon Ther’s request that we immediately transfer all unfinished codes and assert the rescission of the contract by C-S will result in costly litigation. The contract went into effect eight months ago and it is critical that we secure the project and preserve the relationship with C-S for commercial reasons. Span System wants to secure C-S’s bigger e-CRM order and the chances of securing this order hinges on the performance of this contract. This dispute needs to be settled amicably before C-S pursues legal action (University of Phoenix, 2010).

I reviewed the signed contract between Span Systems and C-S and identified five contract provisions: * substantial performance of the contract * internal escalation procedure for disputes * changes in the software requirements * communication and reporting * intellectual property rights (University of Phoenix, 2010)

Mr. Ther has threatened Span with breach of contract. The breach of contract centers on performance. Neither party can cancel the agreement in whole, nor in part, if more than 50% of the work completed. This clause lacks clarity as it does not define what 50% completion means. C-S claims that only 40% of the project has actually been completed and that performance has been far from substantial. The contract’s leaves both parties at risk and one might argue those eight months into the contract can be considered meeting the 50% criteria and that in canceling the contract, C-S is in violation of the performance clause. I suggest that in the future, we identify the potential risks by suggesting that both parties review the