Recommendations for additional contract dispute strategies


Date: 01/17/04

To: Negotiator

From: Law 529 Team B

RE: Recommendations for additional contract dispute strategies

Having recently settled the contract dispute with Citizen-Schwarz AG, we would like to review the events and decisions made to resolve this contract dispute, and propose recommendations for dealing with similar contract disputes in the future.

Review: This project ran into trouble at about eight months, when we were confronted with serious customer issues relating to the quality of our deliverables and our ability to keep on schedule. In trying to fulfill client requests beyond the original agreed upon project, we had introduced scope creep and our quality had fallen off. By reviewing the contract clauses that favored us, we obtained enough proof of performance evidence to convince C-S of our performance. We then suggested a few proactive measures to help C-S achieve its business goals. Through contract negotiations we were able to settle this contract dispute. C-S has reconsidered their decision to rescind the contract and agreed to renegotiate the contract as per agreed terms. There’s a chance that we might get the e-CRM project as well.

We feel that the outcome of this case was a positive one. While we could have litigated for a resolution of the issues we first ran into, doing so would have been a losing situation for both parties for two main reasons:

1. Our business relationship would have been destroyed.

2. The costs of litigation, and the time involved would have left this project unfinished for a long time.

Instead of litigation, we chose to implement some proactive measures to resolve these issues, and to renegotiate the contract to include these provisions. The more specific language of the contract should help us avoid future conflicts.

Recommendations: In future contract negotiations, we would recommend taking more care in negotiating and reviewing some of the finer points. While negotiations need to start at a high level, the details of the contract can make or break the project. Some of the specific areas which changed in this project illustrate some of the provisions of the contract which should have received more attention:

· Increased Functionality = Increased Cost

Change requested should be reviewed in regards to cost Vs benefit impact, the magnitude of change, and those changes that significantly increases the scope will result in additional costs to the customer.

· Quality Review

Standards for quality need to be established, and a resolution process needs to be specified.

· Communications Expectations
The contract needs to specify responsibilities and timelines for communications. It is especially important that we have established standards for the customer to report up scaling requirements and software errors to Span, and for Span to communicate project deliverable status and defect resolution status to the customer via a mechanized medium.

In addition, we should avoid using ambiguously worded terms. The phrasing of contracts and the use of certain words often are the reason for disagreement. Thus the interpretation of contracts becomes necessary in times of dispute between contracting parties.

These actions may have helped maintain our production and quality, avoiding re- negotiations, and showing our customer that we care about them.