Contract Creation and Management
Uploaded by soheil11 on Mar 25, 2009
Contract Creation and Management
Citizen-Schwarz AG is a German based banking company with revenues over $20 billion. To increase its presence within the industry and become a formidable competitor, Citizen-Schwarz AG sought a vendor to build a Java-based transaction processing software to enter the retail financial services market in America. Citizen-Schwarz AG contracted Span Systems, a California based customer e-banking software developer to devise the program in accordance with a $6 million contract (University of Phoenix, 2009).
Ambiguous and inadequate contracts are the cause of many disputes today. The lack of written agreed terms of reference can also contribute to disputes between parties (Carmichael, 2002). According to Carmichael (2002), “Correct documentation is fundamental to a successful project, and is important as any other project item,” (p. 52). The agreement between Citizen-Schwarz AG and Span Systems lacked specificity. Span Systems had an opportunity to develop software for one of the most prestigious banks in the world with the possibility of further business contingent upon the successful execution of the current contract. The company had difficulty keeping up with the project’s timelines because of staffing changes at Citizen-Schwarz AG. Poor communication, poor quality and lack of detail in the contract caused several issues culminating with Citizen-Schwarz AG calling for the rescission of the contract (University of Phoenix, 2009). The paper aims to address five contract provisions; performance, change control, communications and reporting, project structure, and dispute resolution. The revised provisions aim to ensure the needs of each party are met and that the corresponding risks are minimized.
Contract Law
Span Systems and Citizen-Schwarz AG needed a form of contract law before they started business with each other. Contract law has many different types. Contract law “enables private agreements to be legally enforceable. Enforceability of agreements is desirable because it gives people the certainty they need to rely on promises contained in agreements,” (Reed, Shedd, Morehead & Corley, 2004, p. 5-6). If the two companies were able to work out a contract that was agreeable by both parties then perhaps the reputation of both companies and the money invested into the project would not have been lost.
Citizen-Schwarz AG relied on Span Systems to complete the project in a timely fashion which was agreed upon from the beginning. As the project continued, deadlines were missed and problems arose when the companies met. Promises were broken from the beginning and even though...