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Week 4: Contracts and IP Issues - C: You Decide
Group C Project Thread
Begin answering the project questions here.
Responses
Responses are listed below in the following order: response, author and the date and time the
response is posted.
Response
412459460,412727
Author
412367303
Contracts
and IP
Issues Question #
1
Date/Time
0
Julie Hicks
11/19/2012 5:30:48 AM
I have tried to go through the case and answer the 1st question. Please feel free to add to this
thread on Question No. 1.
1) Can Big Bank's President rescind the contract?
Ans: No. Big Bank's president may not be able to rescind the contract as both the parties have
committed mistake. A mutual mistake occurs when the parties to a contract are both mistaken
about the same material fact within their contract. Also, Rescission requires that the parties
must be able to be get back to where they started when the contract was made. Here, one party
to the contract has already completed four out of the six conversions without a problem.
Therefore, rescission will not be permitted.
Under what circumstances can a contract be rescinded by either party?
Ans: Unilateral rescission is affirmatively permitted upon clear and convincing evidence of fraud,
mistake, illegality, coercion, duress, and as a defense upon a preponderance of evidence that
the contract is adhesive or unconscionable.
What facts have to be alleged and proven? What is the result of a contract that is
rescinded?
Ans: The facts that would need to be alleged and proven will fall into any of the following
categories:
Fraud: Misrepresentation occurs when a seller makes inaccurate statements about its product or
fails to disclose pertinent information about its product that would affect someone’s decision to
enter into the contract.
MIstake: material error of fact by one party, where the other party knew or reasonably should
have known of the first party's mistake.
Illegality: contract violates public policy (constitutional, statute or regulation).
Coercion: One party removes the other party's voluntary assent though actual or threatened
force or intimidation.
Duress: One party's voluntary assent is lost due to extrinsic circumstances (e.g. illness, injury).
Adhesion: contracting circumstances provide no opportunity to negotiate and the only option is
to accept or reject.
Unconscionableness: Overwhelmingly greater bargaining power combined with unreasonably
favorable terms.
If the contract is rescinded, it will affect both the parties. Systems Inc. will suffer all labor costs,
expenses, and charges incurred and Big Bank will have to redo the data conversion project and
so reduced productivity and performance.
412727819,412898
412459460
412367303
RE:
Contracts
and IP
Issues Question
#1
Conne Mcclure
11/19/2012 11:05:51 AM
Julie great answers. To add additional comments to Julie answers
The contract can be terminated at this point based on the information in the contract
item 9, paragraph 1 by Big Bank.
They would need to give "180 days written notice and pay System, Inc an amount
equal to 75% of the "estimated remaining service fee". It does not say above it Big
Bank obtain bond insurance. Big Bank could show some negligence upon the part of
System, Inc because some of the delay was the fault of System, Inc. with an
employees leaving the country and my personal problems are not Big Banks problems.
Big Banks was also suppose to comply with information in the correct format for
transfer the data. In section 3, paragraph one, " Big Bank is solely responsible for the
accuracy and delivery of all information provided to System, Inc..
412727819
412459460
RE:
Contracts
and IP
Issues - Julie Hicks
Question
#1
11/19/2012 7:49:37 PM
Good Point Conne! Yes the Contract does talk about that the contract can be
terminated at this point based on the information in the contract item 9,
paragraph 1 by Big Bank and similarly by Systems Inc in the contract item
10. What you just mentioned that Contracts can be ended by prior
agreement. The contract states that "Big Bank shall give Systems Inc. one
hundred eighty (180) days advance written notice and shall pay Systems Inc.
an amount equal to 75% of the ........ ". So, I agree that it can be ended by
either party by giving written notice to the other party.
Other ways that we can end a contract is Fraud, Mistake, Misrepresentation
or Breach of contract. Big Bank can cancel a contract if the Systems Inc does
something improper. On the ground of Fraud, Mistake, Misrepresentation or
Breach of contract, it may be tough for Big Bank to justify the cancellation of
the contract as both the parties have made some mistakes or other in this
case.
413244196,413372
412898458
412459460
RE:
Contracts
and IP
Issues - Antonia Whittler
Question
#1
11/20/2012 4:53:17 AM
Julie and Conne, Great work! I want to argue the other point. I
am going to say that the president can rescind the contract
based on misrepresentation. “When one party to a contract is
not given full or accurate information by the other party about
the contract subject matter, there is a misrepresentation. In the
case of misrepresentation in the formation of a contract, the
law allows a rescission of the contract.” (Jennings, 2012, p.
432). I will argue that Systems Inc misrepresented a fact that
Big Bank examined when determining whether or not to use
them for the conversion project. The facts that support my
point are as follows:
“During your meeting with Big Bank, you told them that you
had “never missed a conversion deadline. At the time, your
company had never missed a conversion deadline, but the
company had only done three conversions.””
Big Bank's president could easily have been led to believe that
Systems Inc. had many conversion projects from which it was
stating that it had not missed a deadline, which he relied on
during his decision to use Systems Inc for the bank’s project.
Had he known that Systems, Inc. had only performed three
projects he would have probably went with a company with
more experience.
After reading the contract Big Bank could also argue
unconscionability because this contract does seem to
overwhelmingly favor Systems Inc., which is another way that
a contract can be rescinded. For example, if Big Bank
terminates the contract it has to pay Systems Inc., but if
Systems Inc. terminates the contract it does not have to pay
Big Bank. Systems Inc.’s limitation of liability is beyond great, it
does not have to be liable for most anything in this contract. It
leaves Big Bank very vulnerable. Section 8(f) limits liability and
warranties. Really? I can’t believe that Big Bank agreed to
these terms. Section 8(f) provides:
IN NO EVENT WILL SYSTEMS INC. BE RESPONSIBLE FOR
SPECIAL, RELIANCE, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES ARISING OUT OF ANY ACT
OR OMISSION BY SYSTEMS INC. IN CONNECTION WITH
THIS AGREEMENT. EVEN IF SYSTEMS INC. HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
WHETHER SUCH DAMAGES ARISE IN AN ACTION AT LAW
OR IN EQUITY, FOR BREACH OF CONTRACT, BREACH OF
WARRANTY, PRODUCT LIABILITY, BREACH OF UCC
PROVISIONS, NEGLIGENCE OR INTENTIONAL TORT.
FURTHERMORE, SYSTEMS INC. SHALL NOT BE LIABLE
FOR PARTICIPATING BANK’S LOST PROFITS, LOSS OF
BUSINESS OPPORTUNITIES, OR FOR EXEMPLARY
DAMAGES. THE PROVISIONS HEREOF ARE IN LIEU OF
ALL WARRANTIES, EXPRESS OR IMPLIED, WHETHER OF
MERCHANTABILITY, FITNESS OR OTHERWISE.
Team C, is this a common clause in most contracts?
413372710,413861
413244196
412898458
RE:
Contracts
and IP
Issues - Anthony Fletcher
Question
#1
11/20/2012 8:54:43 PM
I actually agree with Antonia on this one regarding
misrepresentation and unconscionability. While Systems
Inc. didn't lie to Big Bank and say they have done many
conversions, they were misleading in stating that they
had never missed a conversion deadline without
disclosing further information regarding Systems Inc.
only performing three conversions total. I also agree that
Big Bank could argue unconscionability because of
Antonia's argument that the contract overwhelmingly
favors Systems Inc. Systems Inc. will basically incur no
penalty for not completing all 6 conversions, while Big
Bank is liable for the work that does get completed.
I think in this case Big Bank's president could actually
rescind the contract based on Misrepresentation and
Unconscionability. However, Julie and Conne you both
make good points regarding both parties making
mistakes here. Big Bank didn't provide the correct
formatting for the 5th conversion data and also didn't
provide Systems Inc. with the appropriate approval by
the 4th person because of a vacation, which has pushed
back the conversion deadline. Systems Inc. asked for a
deadline extension because of personal issues.
413861115
413372710
413244196
RE:
Contracts
and IP
Issues - Julie Hicks
Question
#1
11/21/2012 8:52:29 AM
Antonia and Conne, you brought up the point
about the misrepresentation and
unconscionability and I do agree that based on
the facts stated that Systems Inc. led Big Bank to
believe that they had done many projects and
also they completed on time. But at the same
time, each of the project example can have
different circumstances so we can give Systems
Inc some benefit of doubt only with respect to
their claim about timely completion of past
conversion projects but of course they
misrepresented facts with regard to the nos. of
conversion projects that they had completed.
Coming to the point about determination of
unconscionability, we need to see if the contract
performance resulted in oppression and unfair
surprise to the disadvantaged party. If I were to
look at both the companies, I would say that Big
Bank had superior bargaining power (as they
being the customer/client), why would they
knowingly accept terms like what you mentioned
- "Section 8(f) limits liability and warranties". My
question here is that isn't this type of clause part
of service contract where the service provider
should have the maximum liability arising out of
the contract not exceeding the contract value
amount. Though, high-pressure sales tactics and
misrepresentation on the part of Systems Inc.
can surely be considered as points that can
render this contract unconscionable.
413861115
413372710
RE:
Contracts
and IP
Issues - Conne Mcclure
Question
#1
11/23/2012 6:18:15
AM
Great post Team.
Antonia to answer your question in the previous
post, it can be a common clause in service
contracts.System, Inc. was able to get Big Bank
to agree to contract. Most companies the size of
Big Bank would of had there attorneys look at
the contract prior to signing by an
Administrator; Big Bank did agree and sign the
contract terms. In my experience when I have
seen clauses in the contract similar to one in
your post we have been able to get it removed.
Julie to answer the question in your post, you
would think that System, Inc. should take on the
majority of the liability but in most of the service
contracts I have seen prior to revision. One of
the problems I had with the contracts in future
questions is I find the contract unethical, it
weighs heavenly to the service provider. All
service contract weigh to the service providers
benefits (read a cell phone contract) but this one
put 90% of the liability on Big Bank. System,
Inc. will have a difficult time building their
businnes with unethical clauses in their
contracts.
413713179
413354273
413244196
RE:
Contracts
and IP
Issues - Bryan Anderson
Question
#1
11/21/2012 7:41:13 AM
Absolutely, Anthony I agree. Maybe most importantly, if
Big Bank had provided the correct formatting for the fifth
conversion data, then maybe much of this could have
been avoided. If the conversion could have taken place
without the issue of conversion, then the ice storm that
halted operations could have avoided. I also like your
point regarding Big Bank not supplying a “back-up”
person for changes while the employee was away from
the office. In my opinion this is certainly the fault of Big
Bank and they need to realize their error. I would also
state that if Big Bank chooses to rescind the contract they
would be looking at even longer delays but the time a new
company comes in to convert the data.
413713179
413354273
RE:
Contracts
and IP
Issues - Julie Hicks
Question
#1
11/22/2012 9:35:57
AM
Bryan, certainly, I would say that Big
bank has certainly committed the
mistake and fault is much more on their
side. A party's failure to perform on time
is a breach of contract that may be
serious enough to constitute a material
breach, or it may be relatively trivial
under certain circumstances. At the
outset, it is necessary to determine when
performance is due. Some contracts
specifically state the time for
performance, which makes it easy to
determine the time for performance. If
we examine this contract terms and
conditions, it states very clearly the
following terms:
Contract 2- a. Among other things, Big
Bank shall deliver conversion input
information, in its entirety, in a mutually
acceptable medium, within one week of
request of the information.....
Contract 2-b. Big Bank agrees to review
and check the information converted by
Systems Inc. within ten (10) days after
notice to Big Bank of Systems Inc.'s
completion of conversion.....
Contract 8-c. Systems Inc. will make
every reasonable effort to be available to
provide services during office hours of
the Eastern Time Zone. Accordingly,
Systems Inc.'s liability to Big Bank or any
third party for claims, notwithstanding
the form of such claims (e.g., contract,
negligence or otherwise) arising out of
the unavailability or inaccessibility of
Systems Inc.'s system, or the
interruption in or delay of Services
provided or to be provided by Systems
Inc. hereunder, shall be to use
reasonable efforts to resume the
Services as promptly as practicable......
If we analyze the terms in the contract,
Big bank has to act within the stipulted
period in the contract whereas it only
mentions that Systems Inc should
resume the services as practicable as
possible in case of delay. as per the case,
conversion was delayed for over one
week because Systems Inc. needed
approval for the same from Big Bank's
employee. Because of the change in the
timeline, the conversion schedule had to
change. This means that each party's
timely performance by a specific date is
an express condition of the other party's
duty to perform. Thus, in a contract that
contains a time is of the essence
provision, any delay by either party
normally constitutes a material breach.
Sometimes, courts will imply such a term
even when the language of the contract
does not state that time is of the
essence. In this case, though it is clearly
stated in the contract.
412898636,412920
412489949
0
Question 2 Conne Mcclure
11/19/2012 12:23:39 PM
Team please add to my answer.
Big Bank’s president also threatens legal action. What potential causes of
action could you foresee him bringing in court?
System, Inc. is under Breach of Duty in the contract, which is negligence on their
part. The claim would be upon not have suffiant workforce to control the terms
and conditions of the contract. It is not Big Banks responability to control the level
or s of skill level of workforce.
Would he be successful? Why or why not?
To quote the contract Section 8, part B and C ”Systems Inc.'s obligation to Big
Bank hereunder in performing the Services is to exercise the same degree of care
and diligence used in processing information and compiling reports for its own
use. Systems Inc.'s sole responsibility to Big Bank or any third party for any
claims, notwithstanding the form of such claims (e.g., contract, negligence or
otherwise), arising out of errors or omissions in the Services or Reports provided
or to be provided hereunder and caused by Systems Inc. (provided
that Big Bank shall have promptly notified Systems Inc. of any such
errors or omissions), shall be to furnish at Systems Inc.'s costs the
correct Services or Report and/or to correct the applicable Big Bank
files. “ System, Inc. clearly with a lack employees of trained and
skilled to provide the services stated in the contract.
What arguments could Systems Inc. raise in its defense?
System, Inc. could use the argument that they did not have access to the
computer for 3 days because of the ice storm as stated in Section 8, part A. Loss
of power, access to data and employees not being able to get to work to transfer
the data.
What are Big Bank’s potential damages?
There is civil tort since there is a voilation of the contract and would allow them
punitive damages for the Big Bank. The courts may even decide on comparative
damages since part delay was caused by the weather was not in the control of
System, Inc..
412898636
RE:
Question
2
412489949
Antonia Whittler
11/20/2012 4:55:21 AM
Conne,
To add to your response for Systems Inc. defenses, yes, they can use
the ice storm to assert the “act of God” defense. The Act of God
defense is “an event which is caused solely by the effect of nature or
natural causes and without any interference by humans whatsoever.”
The weekend the conversion was rescheduled to occur an ice storm
struck the state where the company’s data processing computers are
housed. The facility lost electricity for 3 days and the conversion was
delayed again until power could be restored. The Act of God defense
has been recognized by courts since the 1800s. In 1864 the House of
Lords set out the definition in Tennant v. Earl of Glasgow:
“Circumstances which no human foresight can provide against, and of
which human prudence is not bound to recognize the possibility, and
which when they do occur, therefore, are calamities that do not involve
the obligation of paying for the consequences that may result from
them.” Retrieved on November 19, 2012 from
www.duhaime.org/LegalDictionary/A/ActofGod.aspx. This clause is
often used in contracts, especially insurance contracts. “Insurance
contracts often exclude acts of God from the list of insurable
occurrences as a means to waive their obligations for damage caused
by the onset of permanent illness, lightning, hurricanes, floods or
earthquakes; all examples of acts of God.” Retrieved on November 19,
2012 from www.duhaime.org./LgalDictionary/A/ActofGod.aspx .
Similarly, there was a clause that limited the liability of Systems, Inc.
for acts of God. The contract provides in Section 8(f). Limitation of
Liability: Systems Inc shall not be responsible for any failure in
providing the Services, any delays in processing, or any failure or
delay in the delivery of any Reports that may be caused, in whole or in
part, by strikes…. acts of God… or any other causes beyond its
reasonable control.
413249779,413313
412920048
RE:
Question
2
412489949
Julie Hicks
11/20/2012 7:23:50 AM
Ans: Conne, I would like to add to the points that you made.
2. Big Bank's President also threatens legal action. What potential causes of action
could you foresee him bringing in court?
The potential causes of acation that Big Bank could bring in court:
1) Big Bank can claim Breach of contract for failure to perform the express contract
terms under Contract - 8C where it says that Systems Inc. will make every reasonable
effort to be available to provide services. As there were personnel issues on the part of
Systems Inc and also the case states that issue resulted when the conversion was
delayed for over one week.
2) Under Contract - 8B clause, Systems Inc. is obligated to perform the Services with
proper degree of care and due diligence. But, the data to be converted were formatted
differently than the bank’s previous specifications provided. For that reason, the data
conversion fields needed to be changed.
Would he be successful? Why or why not? What arguments could Systems Inc. raises
in its defense?
A: I don't think that Big Bank would be successful. In the first place, bank prevented
Systems Inc. from obtaining a good faith modification necessary to performance by not
having a key person available to approve the change. Systems suffered an
unforeseeable external delay because of Force Majeure and as per contract terms
clause 8A, Systems Inc can't be held liable for the same. Systems Inc. was unable to
completely perform portion of the contract requirements due to Big Bank’s negligence
in formatting acceptable data to Systems Inc. and for requiring approvals before
changes could be made to data fields.
What are Big Bank's potential damages?
A: In this case, Big Bank's potential damages would lost profits due to the delay in the
execution of the contract or any punitive damage awared by the court.
413313307,413328
413249779
412920048
RE:
Question Anthony Fletcher
2
11/20/2012 9:04:46 PM
To add to Systems Inc.’s defense, they could reference Section 2.A. which
states:
“Systems Inc. reserves the right to postpone conversion of Big
Bank's information files if Big Bank is late in delivering its conversion
input information or if any other circumstances arise that might
jeopardize the successful completion of Big Bank's information
conversion or the processing of the Big Bank's following day's
transactions for any other customers of Systems Inc.”
Julie mentioned that Systems Inc. was unable to perform the 5th
conversion due to formatting issues, which Big Bank stated they
would be sure all correct formatting would be provided for Systems
Inc. to accurately complete the conversion. A provision in the
contract stated that Systems Inc. needed four people’s approval
prior to making any conversion data changes. That 4th person was
out of the country, thus causing a further delay.
413328914,413356
413313307
413249779
RE:
Question Edwin Scales
2
11/20/2012 11:57:43 PM
I would like to remind ourselves that the President of System's Inc
would like to eshablish an amicle relationship with the Big Bank.
The Act of God Defense is the best road to travel while speaking to
the Big Company President. We have been ordered to create an
amicable relationship with the Big Company President and
ameliorate any concerns at the bank. System’s Inc should call-in a
special team of experts while the weather is inclement and design a
strategy and presentation of the climate delay, Big Company’s
failure to produce documents, and the conversion process for steps
5 and 6.
System’s Inc is small and needs the help of a multi-year client that
will enjoy the benefits of their service. An endorsement from Big
Bank would clearly help promote the young company. System’s Inc
may consider whether they can afford a lower fee for the breach in
duty on the part of Big Bank.
413356713,413862
413328914
413313307
RE:
Question Conne Mcclure
2
11/21/2012 4:20:42 AM
Good point Edwin regarding a re-negotiation of terms in
order to keep the contract. I believe System, Inc. took on
too large of company like Big Bank, this could be an
excellent learning experience for System, Inc., maybe
installing generators and statelite internet. In doing so we
may of been able to keep on running after the ice storm.
If we renegotiated the terms of the contract it would show
good faith to Big Bank that we want to work with them
instead of against them. In the long run if would pay off
for System, Inc. giving us an excellent reputation in our
industry, giving us increase of business.
413862404,414426
413356713
413328914
RE:
Question Bryan Anderson
2
11/21/2012 7:51:25
AM
Well, Big Bank could certainly bring up the clear
fact that the company said that they could
complete the conversion in a specified time and
they did not. However I think a court would
have a tough time finding fault in Systems Inc.
because of the delays that were not their fault.
One was on the Big Bank not supplying a backup
decision maker and the other was an act of god.
I don’t think Big Bank would be successful and
knowing that the bank’s president is a known
hot head, I believe that once somebody had an
opportunity to speak with him once he calmed
down he would realize this. Big bank could
potentially face damages from long delays in the
conversion of the data because of having to find
another company to finish the job.
414426675
413862404
413356713
RE:
Question Conne Mcclure
2
11/23/2012 6:31:43
AM
Bryan I agree we could work with the
bank's president to continue on with
the contract but I am not sure that
would happen. Some of the fault of the
delay is caused by System, Inc. they
that they had employees who went on
mission trip in the middle of the
project and personal issues. Not to
harsh but it is not Big Bank problem
that System,Inc. is have problems with
their staff. I do agree that all the fault
is System, Inc. there was an ice storm
which they do not have control. In my
opinion fault needs to be shared
between the two companies. Big Bank
does not need to know that System,
Inc. is having employee issues.
414426675
413862404
RE:
Question Edwin Scales
2
11/24/2012
5:17:27 PM
Big Bank may take legal
action against Systems
Inc because the project
was incomplete and
desired on a predetermined date.
System’s Inc proposed
on-time execution of the
new conversion. This
would make a strong
argument in court for Big
Bank President to bring
the case to court. The
case depends on three:
1) Are the terms
material? 2) Was the
offer limited? 3) Does
one side object?
The Bank made a selection
from a series of requests.
System’s Inc stood out and
their impressive record help
them win the deal. Now the
schedule has been
interrupted and the Bank can
make a strong case.
System’s Inc wants this
relation to be successful and
become the basis for a long
maintenance. Perhaps
System Inc can keep their
initial installments the Bank
chose another contractor for
the last two points. System’s
makes a case for at least
some compensation for
services rendered. This might
be answered in court but Big
Bank has a stronger case
without knowing the specifics
of the contract. This would be
a highly awkward relationship
between the companies.
These points need to be clear
before System’s Inc can
compel the case of the court
or settlement behind closed
doors.
413980851,413992
412505414
0
CONTRACTS
AND IP
Antonia Whittler
ISSUES QUESTION #3
11/19/2012 1:03:26 PM
Prof. Devine and Team C,
The provisions of the contract that I would cite to support an argument that it is
not in Big Banks best interest to rescind the contract are as follows:
Sections:
2. CONVERSION OF BIG BANK’S INFORMATION - Parts A, B, and C
3. INPUT AND OUTPUT DATA
8. LIMITATION OF LIABILITY - Parts A and D
Specifically,
2(a). Big Bank agrees to cooperate with Systems, Inc. in this endeavor and to
provide all information and assistance required for Systems Inc. to
successfully convert Big Bank’s information files to a form compatible with
Systems Inc.’s systems and equipment so that Systems Inc. can provide the
Services.
2(b). Systems Inc. reserves the right to postpone conversion of Big Bank’s
information files if Big Bank is late in delivering its conversion input information
or if any other circumstances arise that might jeopardize the successful
completion of Big Bank’s following day’s transactions for any other customers
of Systems Inc.
2(c). In the event the conversion process is stopped, cancelled, or suspended
by Big Bank, Big Bank agrees to pay Systems Inc. all labor costs, expenses,
and charges incurred by Systems Inc. in preparing to perform under this
Agreement.
3. Big Bank shall be responsible for providing to Systems Inc . all input data
and other information necessary for Systems Inc. to perform the Services and
to prepare those reports described on attached Exhibit “C” (the “Reports”).
8(a). Systems Inc. shall not be responsible for any failure in providing the
Services, any delays in processing, or any failure or delay in the delivery of
any Reports that may be caused, in whole or in part, by….acts of God….
8(d). Systems Inc. shall not be liable to Big Bank for errors resulting from
defects in, or malfunctions of, the mechanical or electronic equipment used by
Big Bank or Systems Inc. In performing the duties and obligations
contemplated in and covered by this Agreement.
Systems Inc. had issues when the employee was out of the country so that
was our error, but when the ice storm struck leaving us with no electricity that
was an act of GOD. At this point we have one failure for the lateness of
conversion #5 and so does Big Bank so we are even and need to move on
from here. If not, Big Bank will be losing out with all of the money that they will
have to pay us for all of our work performed to date
The facts that I would cite to support an argument that Big Bank be
responsible for some of these issues and/or not in compliance with the
contract are as follows:


413992229
Some problems with conversion #5 have been due to the Bank’s failure
to provide our company with necessary information
The data to be converted were formatted differently than the bank’s
previous specifications provided. For this reason, the data conversion
fields needed to be changed.
413980851
RE:
CONTRACTS
AND IP
ISSUES QUESTION
#3
412505414
Antonia Whittler
11/23/2012 2:52:51 PM
Team C,
It is well known in the corporate world that amicable resolutions of
business disputes is a win-win alternative than if the parties involve a
third party to resolve the issue. Reviewing the web I located an article
that provided ways to legally resolve a business dispute, which
included for the parties to always check the dispute resolution clause,
the governing law, or find an amicable resolution. The amicable
resolution “is always preferred and [is the] cheapest way of resolving a
business dispute. It is always commercially viable to have an amicable
resolution because




(1) Parties will save legal costs in fighting it out in court or
arbitration;
(2) The business relationship will be preserved and not
damaged;
(3) It’s just faster depending on parties’ cooperation; and
(4) No bad publicity will arise from the dispute”
Retrieved on November 23, 2012 from
business-disputes-legal-advice-contract
www.helium.com/items/1917984-
413992229
413980851
RE:
CONTRACTS
AND IP
Bryan Anderson
ISSUES QUESTION
#3
11/23/2012 3:33:07 PM
The is a portion of the contract the reads "systems inc reserves the right to
postpone conversion of big banks information files if big bank is late in
delivering its conversion input information.". It was already stated that big
bank did in fact have delays in getting systems inc the information needed to
convert the data. I believe a cou would also see this information in the
contract and side with systems inc rather than big bank. I believe it would be
in the best interest of big bank to attempt to come to common terms with
systems inc rather than take their low chances in court.
414008950
RE:
CONTRACTS
AND IP
ISSUES QUESTION
#3
412505414
Anthony Fletcher
11/23/2012 4:30:27 PM
In addition to what Antonia has stated and provided about the contract
provisions above, Big Bank must also think of the additional repercussions
of rescinding this contract at the current stage of the process. If Big Bank
were to rescind, not only would they be liable to pay Systems Inc. for the
work already completed, but they would then need to hire another
services company to convert the remaining work. This would be in
addition to all the time and effort already put forth throughout this
process. Furthermore, if Big Bank does find an additional service provider,
that service provider may operated using different formatting than
Systems Inc., thus pushing the process back to square one AND costing
Big Bank additional money other than what they have already paid
Systems Inc.
It is in Big Bank's best interest to resolve this issue and push forward with
Systems Inc. until the process is complete.
413130876,414011
412511813
0
CONTRACTS
AND IP
Antonia Whittler
ISSUES QUESTION #4
11/19/2012 1:20:08 PM
Prof. Devine and Team C,
It is in the best interest of our company to always resolve our problems
amicably if it can do so because with the company only working on its fourth
conversion contract it would not be good to get a bad reputation in the industry
this early. Bad reputations, including litigation involving contract disputes,
could lead to the destruction of a company. Most people steer clear of doing
business with companies and individuals that have negative reputations within
the industry, labor market, or just in general. It can be quite harmful for a
company to recover from such negative publicity. With bad reputations people
do not want to do business with you, consumers do not want to purchase your
goods and services, and potential employees will not want to come and work
at the company if it has a bad name.
Just an interesting side note of some companies that have been renamed
after they received a bad reputation so that their businesses could survive.
Some of them include:







 Cingular to AT&T
 WWF to WWE
 Blackwater to Xe
 Philip Morris to Altria
 ValuJet to AirTran
 WorldCom to MCI
 Andersen Consulting to Accenture
Retrieved on November 19, 2012 from
www.neatorama.com/2009/09/10/companies-
renamed-to-hide-from-bad-reputations
There are times where the contract dispute cannot be worked out amicably
and must be resolved in litigation. I would move to litigation in the following
types of situations:




414011720
 Where the other party was not performing its end of the bargain and
was being difficult to resolve the issue;
 Where the other party was playing hardball and was the side that was
in the wrong;
 Where it would be in the best interests of my company to resolve the
matter in a court of law; and
 Where it was a case that I know that my company would win and be
shed in a positive light after the case was completed.
413130876
RE:
CONTRACTS
AND IP
ISSUES QUESTION
#4
412511813
Conne Mcclure
11/20/2012 5:32:45 PM
Modified:11/21/2012 4:12 AM
Great answer Antonia. To add some addition information and comments.
I have realized that sometimes you get into a contract and you realize it not turning
out the way you had wanted. Some times the problems have nothing to due with the
law but ethical reasons. You may find out that the company does work legally but not
ethically or mistreating their employees, using cheaper parts, reusing used parts or
sloppy with paperwork. Some times you just do not like the person you are working
with in the contract. These types of disputes are often difficult to work out because it is
not part of the contract.
414011720
413130876
RE:
CONTRACTS
AND IP
Anthony Fletcher
ISSUES QUESTION
#4
11/23/2012 4:39:28 PM
When considering litigation, some additional questions could be
considered as well as what Antonia has presented.
-Does this conversion contract affect current and possible future
business with customers?
-How would litigation, in the public's eyes, affect the Brand Image
established by Big Bank?
-How would this situation affect future conversion contracts?
From a marketing standpoint, these are two vital questions Big
Bank must ask itself. Customer Service to current and future
customers should always come first, and this must be considered
when dealing with possible litigation. Will this litigation affect
business? Will it affect how consumers view Big Bank's image?
What kind of potential profit loss could result from negative
exposure from the lack of performance during the conversion?
Will future service companies shy away from working with Big
Bank after hearing about the current problems Systems Inc. is
having?
414005247,414195
413376249
RE:
CONTRACTS
AND IP
ISSUES QUESTION
#4
412511813
Julie Hicks
11/21/2012 9:05:11 AM
Yes Antonia, All contracts imply a covenant of good faith by each party.
Parties that fail to negotiate in good faith can be assessed damages for
preventing the other party from obtaining the benefit of the bargain.
Litigation is necessary where negotiation would be futile, or where the
other party's actions represent a fraud or intentional disablement or
preventing successful completion.
414195187
414005247
413376249
RE:
CONTRACTS
AND IP
Bryan Anderson
ISSUES QUESTION
#4
11/23/2012 4:17:40 PM
Modified:11/23/2012 4:22 PM
A contract that i would not prefer to remedy would be a contract in which the
relationship with the client could not be remedied. If a good working
relationship or at least a civil relationship could ot be established, then i
would choose to let the contract end as long as it would not financially cripple
the company. Another contract that i would not choose to continue would be
one in which the financial reward is to great. If the company needed the
contract to stay in business or if the revenue earned from this contract could
put the company in a better position to hiring more employees or invest in
better equipment.
414195187
414005247
RE:
CONTRACTS
AND IP
Conne Mcclure
ISSUES QUESTION
#4
11/24/2012 7:40:50 AM
Bryan well said. I it difficult on a personal level and on a business
level to fight for a contract that in long term is not worth keeping.It
come down to weighing the benefits against problems with the
people involved with the contract. As Antonia points out there are
cases that have worked out the problems of contract were the
benefits can work with both parties involved.
413726899,414676
412927226
Contracts
and IP
Issues Question #
5
Julie Hicks
0
11/20/2012 7:50:57 AM
Contracts and IP Issues - Question # 5 ( Please add to this thread with reference to question #
5)
5. There are 3 types of contract performance: complete, substantial and material
breach. Describe the differences (and similarities) among the three, and explain some
of the legal ramifications for one or more of these types of performances. (For
example, what happens if one party performs completely but the other party performs
only substantially?) Give examples from outside readings or experiences in your
career or personal business life.
Ans:
Complete: Performance to the letter of the contract, results in the parties being satisfied and
thus having no claims against the other. Example: vendor sell TV for $200. Customer pays the
money and takes the delivery fo the TV and satisfied with product performance.
Substantial performance: If performance is not complete, however, a question arises as to
whether it satisfies the contract. Performance that is not complete but that provides the other
party with the important and essential benefits of the contract is "substantial performance.
Example:A utility contractor installs brand Y instead of brand X iron pipe. Brand X was required
in the contract specifications. Despite the fact that both brand X and Y iron pipe function equally
well, the contractor has nevertheless breached its contract by failing to comply with the material
specifications of the contract. In this example, the utility contractor’s breach is a “Substantial
performance” of the contract, and the owner’s remedy would be to recover damages it suffered.
Breach: absolute failure to perform material contract term. Anything less than substantial
performance is a material breach of contract.
The legal ramifications for one or more of these types of performances are:
Compensatory Damages—compensate an injured party for injuries or damages actually
sustained by the party. The injured party must prove that the actual damages arose directly by
the breach of contract.
Consequential Damages—are foreseeable damages that result from a party’s breach of contract.
Consequential damages are caused by special circumstances beyond the contract itself.
Punitive Damages—are designed to punish the wrongdoer and set an example to deter similar
conduct in the future and are not usually recoverable in an action for breach of contract.
Nominal Damages—are awarded to an innocent party when only a technical injury is involved
and no actual damager has been suffered. Nominal damages are often small, but are awarded to
establish that the defendant acted wrongfully.
In most situations, when a breach of contract occurs, the injured party is held to a duty to
mitigate or reduce the damages that he or she suffers. In case, one party performs completely
but the other party performs only substantially, the first party’s remedy would be to recover
damages it suffered because it did not receive the full “benefit of its bargain”.
414676183,414954
413726899
RE:
Contracts
and IP
Issues Question
#5
412927226
Antonia Whittler
11/22/2012 10:59:25 AM
What happens if one party performs completely but the
other party performs only substantially? (Give examples
from outside readings or experiences in your career or
personal business life).
Julie and Team C,
A career experience that I was involved in is as follows: I
was representing a young woman in a divorce action and I
gave her a discount of $500.00 that was an oral contract.
I performed all of the research, had several conferences
with her, and prepared her brief for filing. Prior to filing
the brief we got into a controversy and I withdrew from
her case and provided her with $350.00 of her money
back and her brief in case she wanted to act in pro per.
She thought that I should return all of her money and
decided to go to the Board of Bar Examiners on me with a
disciplinary grievance against me. I had fulfilled all of my
obligations per the Board of Bar Examiners, who also
informed her that I did not have to provide her with any of
the money back because I had performed enough work
that went beyond $500.00. She was informed by the
Board that it was a fee disagreement that should be
pursued in a court of law and not appropriate for their
forum because I had not performed any violations of the
Rules of Professional Responsibility. In my opinion, she
should have been glad I gave her most of the money back
because a lot of my colleagues said that I should not have
given her any of the money back because I had performed
more than $500.00 of work and that she was already
getting a discount, and they were all mad that I gave her
the brief because that was my work, but I was trying to be
nice. That’s what I get for being nice! My only grievance to
the Bar and it was nonsense! I’m just glad that the Board
sided with me.
Anyone else have any experiences that they would like to
share?
414954826,414685
414676183
413726899
RE:
Contracts
and IP
Issues - Julie Hicks
Question
#5
11/25/2012 3:33:09 AM
Antonia, I haven't had any such experinec. But, the good part is that Board
of Bar Examiners took side with you. But this kind of cases are quite
prevalent and the fact that you shared the brief with her should indicate hat
you satisfied the contract performance to a great extent. The fact that she
accepted the brief means that it provided her benefits and I would bracket
this type of contract under "Substantial Performance". Also, the fact that you
returned the money was a good unman gesture but if you look at the facts
and since you already had given her a discount of USD 500, I would say that
returning the money was not required. Coming back to the case, I would say
that this would fall under "Performance is not complete but it provides the
other party with the important and essential benefits of the contract"
414954826
414676183
RE:
Contracts
and IP
Anthony Fletcher
Issues Question
#5
11/25/2012 5:57:00 PM
Antonia and Group C,
Unfortunately I cannot think of any example myself, but
it was a great example by Antonia to put it all into
perspective. I would agree that this contract would fall
under the "Substantial Performance" bracket. I also really
liked Julie's example of the utility contractor completing a
contract, but used brand Y of the iron pipe instead of
brand X. Both worked equally well and worked for the
purpose, but wasn't exactly followed because the contract
called for one brand instead of the other. While it doesn't
seem like a big deal in the example, I try to think of how
it could have affected the business or consumer that
wanted brand X instead of brand Y. If it was a business,
what if the business had a business relationship with
brand X and wanted that brand to be used? This could
create a negative relationship with that brand X because
the wrong type of iron pipe was used. It is very important
to think about the repercussions of any breach of
contract, because it could turn out to be a bigger deal
than one may realize.
414765031
414685231
414676183
RE:
Contracts
and IP
Antonia Whittler
Issues Question
#5
11/25/2012 6:11:26 AM
Julie,
Great comparison to the contract case in our
You Decide Project! Nice new way to examine
the issue by examining it from a contract
perspective. I provided the professional
responsibility aspect, you built on with the
contract perspective. Can anyone else in Team
C build upon this by examining it in a new way?
414765031
414685231
RE:
Contracts
and IP
Bryan Anderson
Issues Question
#5
11/25/2012 11:18:58
AM
Complete breach of contract is when someone has
completly failed to perorm the terms of a particular
contract. A material breach is when someone fails to
complete one of the obligations und e contract that is so
significant that it allows the other party to seek legal
action against the other party. A substantial breach is
when the pay being accused of the material breach states
that the portion of the contract that was bached is only
materrial and not substantial.
413380294,413981
413127026
0
Question 6 Conne Mcclure
11/20/2012 5:24:36 PM
What are the two most important concepts from this exercise that will help you in
future contract negotiations?
First, would be the details of what is going into the contract; how the money
would be exchanged and time line of the contract and what could be used if the
contract is prolonged.
Second, would be cancelation and termination of the contract. The cost to me or
my company for termination of the contract.
413981288,413727
413380294
413127026
RE:
Question
6
Julie Hicks
11/21/2012 9:19:05 AM
Conne, to add to your points. Some of the other concepts that we can take away from
this exercise would be:
1. In contract law, rescission should be strongly disfavored and should be discouraged
as far as possible until and unless the other party's actions represent a palpable fraud
or intentional disablement or prevention making performance or completion impossible
or in case of breach of contract.
2. One should not enter into a contract unless they are reasonably certain that all
parties are prepared to act in good faith to complete the contract.
3. Before entering into contract agreement, due diligence should be carried out by both
the parties about the facts submitted by another party. In this case, the Big Bank
hurried into the contract without looking into all the facts about the other party.
413981288
413380294
RE:
Question Antonia Whittler
6
11/23/2012 2:54:29 PM
Julie,
To examine further your #2. - “One should not enter into a
contract unless they are reasonably certain that all parties are
prepared to act in good faith to complete the contract.”
This is a good suggestion and one that I believe that most
businesses already try to adhere to, but even if both sides
attempt their best to act in good faith to complete the contract,
things still can occur that are beyond the control of the parties.
What I located interesting was the Contracts Dispute Act,
which was recently revised in 2011. Under the old Act
established in 1978, procedures and requirements for
asserting and resolving claims subject to the Act was provided.
https://www.acquisition.gov/far/htmlbpart33_2.html. The Act covers
disputes that involve United States federal government
contracts. However, located within this new comprehensive
Act are several smaller acts, including but not limited to, the
Anti-Kickback Act, Buy American Act, Competition in
Contracting Act, Contract Disputes Act, Service Contract Act.
Retrieved on November 23, 2012 from
www.contractorsperspective.com/claims-and-disputes/where-did-thecontract-disputes-act-go/
Team C, are there any other Acts similar to this in other
countries that you could find?
414414667,414776
413727159
413380294
RE:
Question Antonia Whittler
6
11/22/2012 11:01:05 AM
Conne and Julie, Both of you provide excellent points.
The two most important concepts from this exercise
that will help me in future contract negotiations would
be
(1) Rescission – Rescission and the ways that a party
can rescind a contract is very important if an attorney
is representing a party in a contract negotiation and
how the party should engage in a rescission if it
becomes necessary during the time that the contract
is being performed by the parties. There are several
ways that a contract can be rescinded and it will be
necessary to provide a client with these ways if it
becomes an issue.
(2) Substantial Performance – Substantial performance
is very important in contracts because if a party
substantially performs its duties under the contract
and there is a problem that will necessitate the parties
to suspend the contract prior to completion parties will
want to know what all they are entitled to receive after
they have substantially performed.
414776826
414414667
413727159
RE:
Question Edwin Scales
6
11/24/2012 4:53:58 PM
Big Bank is upset because they have been without power and work
load has slowed to a crawl. This is the exact moment for System’s
Inc to step into game and use their previous work groups that
helped prove successful in the first three exercises. Big Bank wants
to rescind and at this point but the companies may have an
executory contract because some of the work has been completed
but two major sections that need supervision from team a member
out of the country. Big Bank is in a prime position end business with
our company so we should send out a revised project completion
schedule.
414776826
414414667
RE:
Question Bryan Anderson
6
11/25/2012 11:49:56
AM
For one, i understand that i may have clients similiar to
Big Banks President who can certainly overreact to certain
situations. To defend myself against these kinds of clients
i will have to ensure that i am properly educationed on
allof the aspects of the contract and ensure that i properly
document all of the variable that can appear over e life of
the contract. Also, afteer participating in this exercise i
undstand that i will have to fully communicate with the
client what possible setbacks we are experiencing and
what they could do better to ensure the contract is fully
completed.
414957035
RE:
Question
6
413127026
Anthony Fletcher
11/25/2012 6:00:20 PM
Modified:11/25/2012 6:00 PM
To me, the most important concepts from this exercise that I will take
into any future contract negotiation are the following:
1) the importance of knowing ALL details of a contract, and the
importance of knowing how to accommodate for any circumstances that
may be either "controlled" or "uncontrolled" that may derail the contract
from being fully completed.
2) the importance of knowing how a contract could affect all parties if the
contract is completed as well as if it is breached.
_u=8678735;_dt=6
80-71-59-3C-40-88