Thesis on "Contract Risks"

Thesis 4 pages (1159 words) Sources: 2 Style: MLA

[EXCERPT] . . . .

Contract Disputes and the Benefits of Keeping Up Negotiations

Contract negotiations are very tricky, and can become overly chaotic very quickly. Tensions can rise and things can go from bad to worse in a second, with increasing legal fees and financial instability. Thus, litigation may not be the best way to go for many parties within a given set of a variety of contracts. It can then sometimes be more mutually beneficial for both parties to merely adjust the terms of the contract and work within its guidelines to remedy specific points of conflicting interest within the context of the contract itself. This would then keep the validity of the relationship, allowing for the successful completion of the project and the awarding of the revenue as planned, with merely minor adjustments.

Within the context of the specific situation between Span Systems and Citizen Schwartz AG, there are several prominent legal issues that rule over the constraints of the contract dispute. First of all, at the very heart of the dispute itself, it involves ambiguous contract, which causes initial points of conflict between the views of both parties. According to research, "Contracts are the private law of business: both parties develop their own private set of laws through their contracts," (Jennings 496). With such ambiguous laws governing the relationship between these two parties, it was constant source of conflict that could potentially extend litigation if and when it got that far. As a unilateral contract in that there is "one party issuing a promise and the other party simply performing," (Jennings 503). Thus, the two parties are working separate from each other, which is augmented the ambiguous nature of the contract itself. Additionally, it is potentially a voidable contract, "that can be unenforceable at the election of one of the parties," (Jennings 504). Thus, if it was claimed a void contract, it could be potentially be open for legal dissolution.

With this particular case, there are both prominent legal risks, as well as potential opportunities. Span Systems has a 6 million contract with Citizen Schwartz AG, the German Bank. Thus, the risk of loosing those six million dollars of expected revenue is then much to present of a reality. This could have severe negative aftereffects on the financial stability of Span Systems itself. Yet, if this case went to litigation, there is the risk of loosing out 6 millions, plus additional legal fees incurred through the litigation process. Months, and possibly years, of legal dispute could signal the end of the company itself. Yet, there is an opportunity to keep the sanctity of the contract and actually retain the initially allocated fee for Span's services. With the dispute not yet reaching a critical breaking points, there is still the chance of negotiating within the terms of the contract to keep the expected revenue stream flowing.

In order to capitalize on these opportunities, and minimize potential financial risks, there are several negotiating strategies which can be implanted within the specific context on behalf of Span Systems. First, the specific contractual elements being questioned need to be examined and highlighted as the essential problem areas. Obviously, performance is an issue, and the specific arguments of each party should be addressed in order to properly improve them. Thus, this shows that in some cases "businesses are willing to go beyond signed agreements and proactively remedy situations that would otherwise end up in court," (University of Phoenix). In order to prevent the injury of… READ MORE

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