Topic: CONTRACT ASSIGNMENT
You are a newly formed U.S. computer programming company that specializes in customized programs for the banking industry. The company has been operating for about 3 years on a steady flow of small contracts. However, you now have the opportunity to enter into a long-term, five-year contract for software and support with a Spanish bank having its principal place of business in Madrid, Spain.
The Global Bank of Madrid has expanded throughout the Europeans Union as a new global participant in international banking. The executive management of Global Bank is seeking customized software to fully automate the handling of documentary sale transactions for international commercial agreements between private parties. The required software as to be highly customized and require sophisticated programming to achieve the purpose of Global Bank. This contract would encompass the software requirements and support over. 5 years. This software is going to be critical for Global Bank to compete in the international banking market.
For your company this represents a breakthrough opportunity to do customized programming and support at a very high level. Furthermore, this contract may very well be determinative of the sustainability of your company. In other words is critical to your survival. Consequently, for both parties there is a great deal at stake in this contract.
During the first year of this contract, your company has had consistent difficulties in delivering software on schedule as a result of numerous change orders that Global Bank is insisted upon. At one point, Global Bank of Madrid informs your company that they now consider your company to be in breach of the agreement.
Please answer the following questions:
1. Are the parties subject to the CISG?
2. Can the parties make the CISG part of their contract? Should they incorporate the CISG into their contract? Please explain.
3. In view of the fact that this contract is a “make or break” opportunity for your company. How would you resolve this dispute in a way that could possibly preserve the relationship between your company and the Global Bank of Madrid.
The focus of this contract drafting exercise is to prepare a detailed alternative dispute resolution clause consistent with the template for such a clause under the CISG. Be sure to cover the location of the arbitration, the arbitration body that will be used and any other additional rules you think should be established between the parties for alternative dispute resolution.
“The focus of this contract drafting exercise is to prepare a detailed alternative dispute resolution clause consistent with the template for such a clause under the CISG. Be sure to cover the location of the arbitration, the arbitration body that will be used and any other additional rules you think should be established between the parties for alternative dispute resolution.”
Only about 1/4th of the outlines showed the drafting of an actual contract clause.
The assignment requires drafting an ADR Clause for the that should be in the contract between the parties. Use what you have learned about the CISG and other items to determine what should be in the contract. It may help to look at some examples of ADR clauses.