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Contract Creation

Abstract
At present, it is difficult to think of any relevant business transaction without a contract. For many years now, it seems that a contract is the only way to run a business without the inconvenience of misunderstandings and as a direct consequence of high litigation costs. “The purpose of a contract is to formalize an agreement between two or more parties, in relation to a particular subject” (Larson, 2003, para.1). The creation and management of a contract, involves many risks and opportunities. Each of them is governed by particular legal principles, such as Consensus Ad Idem. According to Dunhaime.Org (n.d.) “Consensus Ad Idem is a Latin term meaning an agreement, a meeting of the minds between the parties where all understand the commitments made by each” (para.1).


Contract Creation – Legal Risks and Opportunities
Spam Systems (S.S.) a California-based custom e-banking software developer is an $85 million spam systems corporation. However, as many other corporations, S.S. is suffering the consequences of having a signed contract shrouded in ambiguities. The particular case in the matter is the one involving a year’s $6 million dollar contract with Citizen-Schwarz AG (C-S).
S.S / C-S Original Agreement
Spam Systems agrees to build a big-ticket Java-based transaction processing software (University of Phoenix: Business Simulation Regulation, 2008). The agreement was sealed with a contract signed by both parties. However during the process of the transaction some disagreements arise.
Contract Disagreements
The contract between S.S. and C-S was formed according to the bases explained by Jennings, “A contract is formed when two parties with the correct mental intent, under the correct circumstances, within the boundaries of the law, and with some detriment to each of them agree to do certain acts in exchange for the other’s acts” Jennings, 2006, p. 505). However, during the evolution of the program requested by C-S, both parties...