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RCRO_Final - Running head RECOGNIZING CONTRACT RISK AND...

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Running head: RECOGNIZING CONTRACT RISK AND OPPORTUNITIES 1 Recognizing Contract Risk and Opportunities Nick Blodgett LAW/531 December 07, 2010
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RECOGNIZING CONTRACT RISK AND OPPORTUNITIES 2 Recognizing Contract Risk and Opportunities Creating a contract is an extremely complicated process that needs to be checked and re- checked before any decisions are made. The biggest mistake that can be made in any contract negotiations is having ambiguous terms and intentions. If both parties do not fully understand every word of the contract they are about to sign then trouble lies ahead. After careful review of the recognizing contract risk and opportunities simulation where a contract between Span Systems, a California based e-banking software company, and Citizen-Schwarz AG (C-S), a German bank trying to break into the US market, it was clear that their contract was shrouded in ambiguity and doubt. Over the course of the project Span System’s deliveries have slipped further and further off schedule and the product they are delivering is far below acceptable standards. With the fast paced world we live in C-S quickly demanded all unfinished code to be delivered to them and a recession of the original contract. Span Systems has some quick thinking to do. They can’t afford to lose this contract with C-S and possibly alienate themselves in their own market. There only option is to assess any breaches of contract that may have clout with C-S’s recession demand. The first is a breach of contract under substantial performance of contract this clause states, “neither party may cancel this agreement, in whole or in part, subsequent to more than fifty percent of the consideration having been tendered by the other.” (University of Phoenix, 2010) At first glance this clause looks like a promising defense for Span Systems to try and salvage the contract, because while 60% of the goods have been delivered Span Systems has not received payment yet for the last few shipments. Looking deeper attempting to use this as a suitable defense is not possible. If C-S decides to pay those last few shipments the breach is then void and the defense would have a rather large hole. Also C-S could argue that because the last
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