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Amicas v. GMG is a recent First Circuit case that addresses contract disputes between companies. Amicas is a publicly-traded information technology (IT) company that produces medical software. Gonzaba Medical Group (GMG) is a large company that provides medical services. GMG needed a computer program to manage GMG’s radiology services so it contracted with Amicas to develop and license two computer programs.
Amicas drafted a contract and, after negotiations, the contract was executed by the parties. The contract stated that Amicas would grant a software license to GMG in return for a payment of $1,009,548 over five years. Additionally, Amicas was to provide continuing support service to GMG with regard to the software. The contract was signed by both parties on the same date with the inclusion of an integration clause.
In order for a bilateral contract to be binding, there certain requirements must be met. There must be an offer, acceptance of the offer, and consideration. Consideration is used in contract law to describe anything of value that is being exchanged in the contract. In this case, the computer software programs and money are identified as consideration.
An integration clause is inserted into a contract to assure that the contract is the complete and final agreement as to the terms of the agreement. By inserting this clause, all previous and contemporaneous contracts, negotiations and agreements as to the terms stated in the contract are considered to be superseded by this final writing.
Additionally, the contract stated that Amicas provided a warranty that the software would conform to the product manuals. Although this warranty was included in the contract, Amicas did not warrant that the software would necessarily meet GMG’s requirements.
After several months of working together to create the necessary software, GMG began negotiations with an Amicas competitor to have substitution software developed. Amicas argued that the reason why there were problems with the software was because GMG had failed to maintain constant sets of data. GMG then sent a termination notice claiming that Amicas had failed to conform to the original guidelines and failed to deliver a functional product. Amicas met with GMG representatives to try to contain the problem but GMG had already entered into a contract with the Amicas competitor.
Amicas sued GMG for breach of contract, and GMG counter-sued. The court looked to state law to determine the legal result of this case. The contract was governed by the law of Massachusetts which states that in order for a court to find that a party breached a contract, the moving party must prove three things. The plaintiff must establish that a contract existed, the plaintiff was willing to perform the terms of the contract, and that the defendant breached the contract. Plaintiff must show that the amount of damages it is seeking are seeking is causally related to the defendant’s breach.
The court in this case noted that Amicas provided sufficient evidence to show that they worked on the product and that any inadequacies in the system were not their fault. It was also undisputed that GMG did not fulfill its obligations under the terms of the contract because GMG cancelled it.
Because GMG did not provide any factual evidence that Amicas breached the contract by failing to fulfill its obligations, the court found in favor of Amicas. Amicas was awarded damages, attorney’s fees, costs of litigation and interest. GMG’c counterclaims were rejected.
The Brown Law Firm, LLC is a Boston business law firm with offices in Belmont and Boston. For a free and confidential consultation, call Attorney Graeme Brown at 617-489-0817 or contact us through this website.