Recognizing Contract Risk and Opportunities
Amy Dhaliwal
LAW/531
Professor Paul Davis
May 16, 2011
Recognizing Contract Risk and Opportunities
In the simulation entitled, “Contract Creation and Management Simulation”, there are two companies involved in the contractual conflicts that took place. The two companies are InfoBuild, a software developer, and Majestic Hotels, a brand of hotel accommodations. InfoBuild was to create and install the electronic reservation system for Majestic Hotels, as well as to maintain the hotel chain’s software programs based on their contract. Unfortunately, before the reservation system was even programmed, both companies ended up in court, both filing claims against each other. There were claims and counter-claims regarding the quality of the software, the timeliness of delivery, as well as the constantly-increasing end user requirements of Majestic Hotels (University of Phoenix, 2011).
Conflicts of this severity are usually not seen during the beginning stages of a business partnership, which led many, including the jury, to wonder why these two companies ever entered into contract with one another in the first place. The case was ongoing for several years, but finally reached a settlement of over $100 million plus in Majestic Hotels’ favor. The hotel chain’s reservation system never went into fruition and the loss to each company was significant (University of Phoenix, 2011).
Once the court case was over with, both companies realized that red flags had been present in the very beginning, when the contract was being created. The two companies could not agree on many terms of the contract and much negotiation was required between the two companies in order to reach a consensus on many items within the contract. Furthermore, the specific needs of the hotel chain in terms of the software package were never quite clear to either company. The legal issue present here is clarity of purpose, which is the “hallmark...