Difficult Contract II essay question

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Difficult Contract II essay question

Postby Derekj032 » Mon Mar 12, 2012 3:26 pm

I found this question while searching for sample contract II essay questions. This is the most difficult question I have found. Does anyone want to have a go at it? Kind of want to see if I approached it the same as others. This was meant to be a 90 minute open note exam.

Mary Maldonado of World Business Organization, Inc. (“WBO”) met with Jacques Chambon of Major Computer Programmers, Inc. (“MCP”), both companies located in Michigan, on August 20, 2007 to discuss MCP developing a computer program to harmonize the computer systems of WBO’s nationwide network of offices.

I. Computer Program Contract

On August 31, 2007, WBO and MCP signed an agreement under which MCP would design and develop for WBO a computer program on or before March 31, 2009. Said computer program was to be robust and able to operate 24 hours a day, seven days a week, and 365/366 days a year.

In the agreement the parties’ specified:

[Note to class: These are selected excerpts of the agreement.]

1. Design Phase: During the three months after the date of signing, the MCP programming team (“MCP Team”) is to collaborate with a WBO management team (“WBO Team”) to design the basic structure of the computer program. If MCP or WBO fail to designate their respective MCP Team or WBO Team within 15 days of the date of the contract, the contract will be considered null and void and without effect. Within three months of the date of signing of this agreement and through the collaboration of the MCP Team and the WBO Team, MCP is to present to WBO management for approval the MCP explanation of how the computer program will be structured and the plan for the MCP Team to prepare the program (“design presentation”). WBO’s approval decision of the structure and programming plan is to be made within 15 days of the date of the design presentation. Failing such WBO approval within the 15 days of the date of the design presentation or if said approval is unreasonably withheld for up to 30 days after the design presentation, MCP may provide notice of termination and seek payment from WBO of its reasonable costs for the Design Phase.

2. Programming Phase: ….[Note to Class: Omitted on purpose]
3.Testing Phase: ….[Note to Class: Omitted on purpose]
4. Delivery Phase: ….[Note to Class: Omitted on purpose]
5. Support Phase: ….[Note to Class: Omitted on purpose]

6.Compensation: MCP compensation from WBO for the work shall be:

a. Design Phase: $500 per day for each computer programmer dedicated to working on this project plus any reasonable expenses.
b. Programming Phase: $400 per day for each computer programmer dedicated to working on this project plus any reasonable expenses
c. Testing Phase: $300 per day for each computer programmer dedicated to working on this project plus any reasonable expenses
d. Delivery Phase: $200 per day for each computer programmer dedicated to working on this project plus any reasonable expenses
e. Support Phase: $100 per hour for each hour of support
f. If the project is completed prior to March 31, 2009, MCP shall be entitled to a further $ 1 000 000 early completion bonus.
g. In no manner shall the total price of this contract be greater than $5 000 000. In the event the costs reach 90 per cent of $ 5 000 000 during the life of the contract, MCP and WBO undertake to meet within 15 days of either party giving notice of this risk (“Notice of Risk”) to attempt to renegotiate in good faith relevant aspects of the contract. Failing such meeting or successful renegotiation, upon the cost reaching $ 5 000 000, either party may give notice of termination of the contract.
h. Billing for the work will be submitted at the end of the current month and payment will be made on the 15th day of the next month.

7. Summary of Work Flow
a. August 31, 2007 – Contract Starting Date
b. Up to 3 months - Design Phase
c. Up to 45 days - Approval Period for next phase
d. Up to Nine Months – Programming Phase
e. Up to 50 days – Approval period for next phase
f. Up to Two Months – Testing Phase
g. Up to One month – Delivery Phase
h. March 31, 2009 – Contract Ending Date
k. 18 months from March 31, 2009 – Support Phase

8. Any modifications of this contract shall be done in writing and the parties further agree that any waiver of a clause in this contract can only be done in writing.

II. Performance under the contract terms

9. On September 10, 2007, MCP designated its team to work with WBO and on September 12, 2007, WBO designated its management team to work with MCP.

10. The MCP and WBO teams met on September 15 for the first time. In a casual conversation between a MCP Team Member and a WBO Team Member it was found out that one WBO Team Member who is a young computer whiz would be celebrating his 18th birthday on October 1. As a team building event, the two teams held a birthday party for the young man (named “Learned Hand”) on September 15, 2007.

11. In the ensuing days, MCP and WBO Team Members discussed the way information is shared in the WBO organization. WBO Team Members led by Learned presented diagrams of the information flow in the WBO organization to the MCP team during the month of September.

12. Around the beginning of October 2007, Learned had a falling out with his boss (named “Johnny Paycheck”) over the candy wrappers at his work station. His boss reminded Learned that, like all WBO Team Members, he was on a two year fixed contract to work on the computer project and Learned needed to settle down. That same day, Learned responded that WBO could forget about this work and walked off the job never to be seen again.

13. Appraised of the Learned situation, the MCP Team Leader met with the WBO Team Leader to see how to move forward. The MCP Team Leader mentioned that several of his team were from an outsourced company in India by the name of Delhi Tech and that there was one particular young computer whiz named Fali Nariman that might be able to replace Learned on the WBO team. The WBO Team Leader thanked the WBO Team Leader for the suggestion, but the WBO Team Leader looked in the ranks of WBO and found a manager (“Sarah Smart”) to step in. Sarah Smart started immediately leading the WBO Team.

14. Towards the middle of October 2007, the MCP Team and the WBO Team met to look at some preliminary designs and structures for the system. As they sat down for the meeting in the conference room where the television was on, the national news channel announced that Google Tech had just developed a new computer approach that would change the computing world in much the same way that Microsoft Windows had changed the computing world when it first came out. It became apparent after the discussions between the two teams that the design on which they were working would rapidly become obsolete in a world where the Google Tech computer approach was likely to dominate.

15. The MCP Team and the WBO Team met and decided that the Google Tech idea would substantially change the dimension of the design task as the computer system would also have to be compatible with the Google Tech development. MCP then contacted WBO to have an extension of one month on the design phase. This extension request came in just after the first bill by MCP to WBO in the amount of $800 000 had come in and been paid by WBO. WBO management raised concerns about the price tag of the extension. MCP assured that while there would be more work for the WBO and MCP teams, at these daily rates the price of the whole project for MCP’s work would stay under the $5 000 000 maximum even with the extension. WBO signed off on the extension on October 30, 2007 but the WBO general counsel insisted that the language “reserve our rights” be added to the signature. When MCP saw that language their general counsel insisted that the “reserve our rights” language be deleted from the extension or else MCP would stop the job. WBO relented and took out the “reserve our rights” language from the written extension for a month. As a result of the extension, the Design Phase was scheduled to be completed on December 31, 2007.

16. As it turned out, on November 12, 2007, in India there was an announcement of a flu epidemic and the Indian government ordered all companies closed. As a result the Delhi Tech workers on the MCP team were unable to reach their corporate offices until the lifting of the government ban on working. Unable to work from home, these important members of the MCP team awaited the lifting of the government ban in order to continue the project.

17. On November 15, MCP was paid by WBO a further $900 000 for the design phase. WBO expressed nervousness about the Indian situation to MCP and was assured by MCP that they could “work around” the Indian situation to stay on track for December 31, 2007.

18. Work proceeded smoothly in the rest of the month until around the fourth week of November when the members of the WBO team sought to take the traditional four day Thanksgiving holiday. MCP explained that its workers came from other countries in which Thanksgiving was not a holiday and so the lack of presence of the WBO team was going to affect the ability to get the designs done. The disgruntled WBO team were prevailed upon to stay and work over the four day holiday.

19. The Indian government lifted its ban on workers going to workplaces on December 1, 2007.

20. On December 10, 2007, WBO made an announcement in the press that it had been bought by Very Big International Corporation (“VBIC”). As a result, WBO informed MCP and all other suppliers that their business with WBO had been assigned to VBIC. VBIC is the parent company also of Google Tech. On December 15, 2007, a further $ 1 000 000 check was sent by VBIC to MCP for the expenses of the month of November.

21. On December 24, 2007, the MCP Team Leader sent a written notice seeking that the design presentation be done on January 10, 2008. To the MCP Team Leader’s surprise, that same day he was informed by VBIC that since the merger on December 10, 2007, the entire WBO team working on the project had been fired and replaced by a new team who VBIC had selected from its Google Tech subsidiary. VBIC insisted that the design presentation be done on December 31, 2007.

22. VBIC’s new team and the MCP team met on December 31, 2007 for the design presentation. VBIC’s new team were without mercy in criticizing the work done by MCP and the previous WBO team that had worked on the project. They came in the meeting with a list of 400 problems with the design of the computer system based on their review over the weekend. The telling comment by the VBIC person was, “In a Google World, MCP is providing a computer system only fit for dinosaurs.” MCP responded that it had worked in good faith with the former WBO team and that this was unfair. MCP insisted that the design proposed was robust and would fit the needs of WBO as had been presented by the WBO team over the months since the signing of the contract.

23. On January 15, 2008, VBIC sent a check for $ 1 500 000 for the December billing of MCP for its work. Enclosed with that check was a notice of termination by VBIC to MCP of the August 31, 2007 contract. VBIC stated that MCP’s work was poor, that its design was archaic, and that, with the January 2008 expenses, the over $ 4 000 000 in expenses in just this poorly done design phase meant that this project would cost more than the $ 5 000 000 estimate.

24. On February 1, 2008, MCP objected in writing to the VBIC notice of termination, stating that MCP had worked in a professional manner. In that same letter, MCP gave notice of termination of the contract and sought payment of the remaining sums due for the design phase that it estimated at $500 000 and return of all MCP intellectual property within 15 days of the notice.

25. On February 10, 2008, VBIC wrote MCP rejecting the MCP notice of termination and reserved their rights. They also requested that MCP return all VBIC intellectual property within 15 days of the notice.

26. Negotiations ensued between VBIC and MCP over the next year or so but to no avail.

27. In the meantime, on February 20, 2008 VBIC brought in Google Tech to complete the WBO computer system. By April 30, 2009, the Google Tech team completed the WBO computer system at a total cost in internal accounting of $ 15 000 000. The Google Tech Team Leader said they had had to redo completely the design work for the Google Tech environment. Upon completion, Google Tech proceeded to the 18 month Support Phase at billings of $200 per hour for each hour of computer support.

28. On May 1, 2009, the VBIC General Counsel received a package from Michigan District Court in which Delhi Tech was bringing suit against MCP and VBIC for unpaid sums under the August 25, 2007 MCP-Delhi Tech contract for works for the then anticipated MCP-WBO computer system project. In a second pile of filings from the Michigan District Court are the complaints filed against VBIC by some former WBO team members for violation of the Employee Handbook three step termination process and for lack of cause for their termination with regard to their two year fixed contracts to perform the work on this project.

29. Returning from lunch on May 4, 2009, you have a note on your desk from the Chair of VBIC with regard to this matter with the words, “Fix it.” on it.

30. From the point of view of VBIC analyze the contractual rights of VBIC, WBO team members, MCP, and Delhi Tech with regard to all matters.

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Re: Difficult Contract II essay question

Postby carbolicsmokeball » Mon Mar 12, 2012 7:54 pm


User avatar
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Re: Difficult Contract II essay question

Postby Stonewall » Mon Mar 12, 2012 7:58 pm

No. Just no.

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Re: Difficult Contract II essay question

Postby Derekj032 » Tue Mar 13, 2012 10:11 am

Is this question on par with other contract II essay questions? It seems rather complex for a 90 minute question.

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Re: Difficult Contract II essay question

Postby highlander1 » Tue Mar 13, 2012 10:16 am


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Re: Difficult Contract II essay question

Postby apl6783 » Thu Mar 15, 2012 10:49 am

Dude, that exam was probably an absolute bloodbath.

That's the most outrageous question I've ever seen.

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