HRM-531 Week 1 - Law/531 Jean-Raymond Alexandre University...

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Law/531 Jean-Raymond Alexandre University of Phoenix November 16, 2010 1
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Span System Memo To: Management Staff From: Jean Raymond Alexandre Date: 12/4/2010 Re: Abstract Contracts are legal binding documents that are essential part of our business processes. Due to the legalities involved in contracts, it is necessary to ensure they are accurately written and reviewed before a commitment is made. Identifying the risks and opportunities in our contracts is fundamental in preventing breach of contract, which may lead to costly legal litigation. The contract creation and management simulation illustrated the significance of contracts in dealing with customers. This memo will categorize the legal risks and opportunities present in the simulation. Furthermore, it will identify specific measures managers can take to avoid risks, minimize liabilities and benefit from opportunities. This memo will describe legal principles related to risks and opportunities identified as well as evaluate alternatives business managers can take as presented in the simulation. Citizen-Schwarz (C-S) entered into a legal binding contract with our company Span System. The contract was for the duration of one-year where our company agreed to develop a banking software system for C-S. The software system was of great significance to C-S 2
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business processes. During the course of the year, C-S expressed major dissatisfaction and desire to terminate the deal. Thanks to our swift reaction, we were able to modify certain clauses in the contract and reach an agreement. Neither one of us wanted to end the contract, or involve the court system to resolve our issues. The first contractual breach is the fundamental principle of Span Systems performance of the contract. C-S claims that our deliverables in the past few months are progressing slowly and the quality of the deliverables are poor with major bugs detected during the user testing stage. The contractual agreement on performance stated that “ neither party can cancel the agreement when more than 50% of the promised specifications are completed” (University of Phoenix). At the eighth month point, the risk of rescission was on the table by C-S with Span Systems completing over half of the software requirements, which would breach the 50% completion clause of the contract. This particular aspect of the contract is favorable toward our company, except for the quality of the software containing five errors per deliverable, which is contrary to the baseline of zero errors required through the agreed measurable metrics. Our software developers on the project continually met C-S requirement changes and schedule demands, which, unfortunately for the task quality, took a beating in the period allotted. C-S is completely in its rights to complain the contract performance is substantial, due to the amount of work performed below
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HRM-531 Week 1 - Law/531 Jean-Raymond Alexandre University...

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