Alesia M. Garafola
LAW 531 – Business Law
University of Phoenix
Mr. Stephen Cleary
January 19, 2009
Span Systems is an $85 million California based e banking software developer with a few large regional banks as its current clients. Citizen Schwartz (C-S) is a $20 billion dollar bank located in Stuttgart. C-S has proposed moving into the $640 billion financial space in the US. Through C-S regional offices in the US, Span Systems was contacted to develop a Java-based transaction processing software program. Span Systems and C-S enter into a one year contract for $6 million C-S has a larger project in the pipeline for e-CRM and winning this additional order hinges upon the performance of this project.
To date, the companies were communicating between project managers when a dispute over quality and schedule of deliverables surfaces. Eight months into the project, Leon Ther, top negotiator at C-S becomes furious because Spans deliverables in the last couple of months are behind schedule along with the quality of the deliverables being unacceptable with bugs found in testing. C-S communicated to Span that they cannot afford schedule slips and requested Span to transfer all unfinished code to C-S and asserted the rescission of the contract by C-S.
Problems lie on both ends of the issues. According to Jennings, Business: It's Legal, Ethical, and Global Environment,
“A contract is a promise or set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty (Chpt. 7 Pg. 497). A contract is formed when two parties with the correct mental intent, under the correct circumstances, within the boundaries of the law, and with some detriment to each of them agree to do certain acts in exchange for the other’s acts. The elements for a successful formation of a valid contract are offer, acceptance, consideration, capacity of parties to...