Contract Risk

The contract between Span Systems and Citizen Schwarz AG (C-S) has many flaws that must be addressed. There are many kinds of contracts including unilateral and bilateral, which base the agreement upon either completion or acceptance of a task or job. Regardless of what kind of contract exists they all have some things in common. Contracts can involve multiple parties but must have a minimum of two parties. Of these two parties there must be an offeror and an offeree. “The offeror is the part who makes an offer to enter into a contract” (Cheeseman, 2010). Citizen Schwarz AG (C-S) would be the offeror of this contract because it has hired Span Systems to create software to improve their banking endeavors. This makes Span Systems the offeree of the contract. “The offeree is the party to whom the offer is made. In making an offer the offeror promises to do-or refrain from doing-something” (Cheeseman, 2010). The only way a contract can be created is through the acceptance of an offer from another party. In this case it is Span Systems has accepted to offer to create banking software for C-S, in exchange for six million dollars. The project was designed to be completed within one year. The most important thing about this contract is that there may be upcoming contacts that could be offered to Span Systems as long as they satisfy the current contract within the timeframe allotted.
C-S is not satisfied with the progress made on the project and the amount of glitches in the completed software and is threatening to cancel the contract. C-S cannot afford to be behind schedule and is demanding that all the completed software be handed over for another software development company to finish. Span Systems recognizes the possible slips in quality but they have been made in order to meet the constant changes in the C-S management structure. The contract does allow for “ordinary” requirement changes, but the changes made so far by C-S have been numerous and not good for...