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Small business law: Software company alleges contract violation

On Behalf of | May 20, 2019 | Small Business Law |

Contracts are essential for protecting small businesses, customers, employees and many others. Whether for employment purposes or for detailing business transactions, contracts should protect everyone involved. Unfortunately, contracts are sometimes called into question. This aspect of small business law can be extremely frustrating.

An out-of-state software company claims that the Wisconsin Department of Employee Trust Funds — ETF — violated a $27 million contract between the two parties. The software company had been hired to overhaul a system that the ETF uses to track retirement benefits. However, ETF allegedly repeatedly asked for the company to provide services not covered by the contract. The ETF reportedly also had so many people assigned to the project that they could never quite commit to a decision regarding design.

ETF denies that these events ever occurred. Instead, they claim that the software company simply stopped working on the project even after it had shelled out $14.3 million. The department says despite paying millions and waiting four years, the system was only 7% functional when the software company halted work. ETF terminated the contract in April 2018. The other company says it was never provided with adequate notice of this action.

The software company has since filed a breach of contract lawsuit in an effort to recover its losses. In these types of situations, it is important that Wisconsin businesses can properly demonstrate that another party violated a contract. Since this can sometimes be difficult, speaking with an attorney who has experience in small business law can be extremely helpful.