Recognizing Contract Risk and Opportunities Essay

865 Words Sep 20th, 2009 4 Pages
Recognizing Contract Risk and Opportunities For the purpose of this discussion, the following definitions will be defined by The People’s Law Dictionary (Hill, 2008):
• Contract: an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration.
• Breach of contract: failing to perform any term of a contract, written or oral, without a legitimate legal excuse. This may include not completing a job, not paying in full or on time, failure to deliver all the goods, substituting inferior or significantly different goods, not providing a bond when required, being late without excuse, or any act which shows the party will not complete
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Span claimed the changes were anything but ordinary and could not be met with the same budget and standards as previously agreed upon, but they proceeded to meet the deadlines. In their rushed effort, quality and delivery of goods suffered. Late delivery of goods could also be associated with CS’s new management teams neglecting to review the products on the schedule as agreed upon. CS threatened to rescind the contract. Span systems responded by citing breach of contract and offering proactive measures to maintain the business. Both parties eventually came to agreement without formal litigation. In both parties, management had the duty of overseeing foreseeable risk. With risks came reward when handled correctly. These risks can be controlled by contract review, and performance.
Contract preparation and review is critical in both risk and reward. Management must understand fully what it is they want or need out of the agreement well before an actual contract is drawn. The review process should start with addressing any potentially ambiguous terms. Article 2 of the Uniform Commercial Code requires definition of ambiguous terms. Ignorance is not an argument. The Supreme Court held that a contract may not be cancelled due to later dispute over meaning of key term (Go2Net v. C I Host, Inc., 2003). Opportunities arise when you take the chance to define those ambiguous terms using your light versus the judges.
Contract performance is essential

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