When two businesses negotiate and agree to a contract, many parts of their businesses depend on the contract moving forward as planned. Employees, suppliers and consumers can all be affected when a contract dispute arises. When a term of a contract is not carried out by one party then a breach of contract has occurred. In these situations, the company that has been damaged by the breach may be eligible for damages.
On Nov. 8, a lawsuit was filed in federal court in New Jersey between IBM and Avantor Performance Materials, a chemical manufacturer. Avantor has sued IBM for breach of contract as well as fraud.
In this case, Avantor claims that IBM was supposed to develop and install an SAP software program for its business that would provide electronic signatures, electronic data histories and real-time cost information. However, Avantor claims that instead IBM violated the contract by providing an inferior system. The manufacturer’s lawsuit states that IBM did not provide the IT support required by the contract, that the program was full of errors and that it did not fit the needs of Avantor or its customers.
IBM, on the other hand, maintains that no breach occurred. Business executives expressed their surprise that a lawsuit was filed.
In breach of contract cases like this one, the parties often differ on what they believe is required of them by the contract. These situations can be avoided from the very beginning if contracts are drafted clearly. When contracts clearly state the intentions of both parties then fewer disputes arise. An experienced counsel can be invaluable when negotiating and drafting contract terms.
Source: CIO, “IBM Faces Lawsuit Over Failed SAP Implementation,” Sophie Curtis, Nov. 13, 2012