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Failure to meet contract terms leads to lawsuit for Oracle

5/26/2011

Montclair State University in New Jersey recently filed for a lawsuit against Oracle, claiming the company failed to successfully follow through on the terms of use in its contract.

The school had previously reached an agreement with Oracle to have it provide enterprise resource planning software. However, after several alleged missteps and delays, the school was out $20 million more than it had originally agreed upon.

Contracts between the two parties were first reached in 2009. The first was for Oracle to install its PeopleSoft suite in the school's system and replace its previous 25-year-old software system. The second was for implementation services. Oracle stated that its installation would be conducted in pillars with specific completion dates, at which the school would issue another payment.

While the whole process was to be done over the course of 25 months, Oracle took much longer, as it "failed to deliver key implementation services, caused critical deadlines to be missed, refused to make available computer resources that it had promised, failed to deliver properly tested software, and overall, failed to manage properly the project," the school wrote in its complaint against the company.

Oracle had asked for more money last September to complete the job, however, the school refused, which prompted Oracle to threaten to pull its workers unless a new agreement was reached. Montclair then filed its lawsuit claiming breach of contract.

The event highlights the importance of both parties adhering to clauses and terms included in contracts, and making sure those goals are reachable.