Apex Ventures LLC engaged ByteStream Solutions Inc. for custom enterprise software development under a $485,000 fixed-price contract executed March 15, 2025. The project involved building a proprietary inventory management system with AI-powered forecasting capabilities.
After multiple missed milestones and delivery of a product that failed acceptance testing, Apex withheld the final payment of $127,000. ByteStream has threatened litigation claiming the deliverables met specifications, while Apex maintains the software fails critical performance benchmarks outlined in the SOW.
Resolution deadline: January 15, 2026 (contractual dispute resolution period expires)
ByteStream failed to deliver software meeting SOW specifications by the agreed deadline.
Delivered software fails to meet contractual performance benchmarks.
Dispute over ownership of custom code and derivative works.
Contract requires mediation before litigation.
| Priority | Action | Purpose |
|---|---|---|
| 1 | Send formal breach notice | Trigger cure period under Section 8.2 of the Agreement |
| 2 | Document all deficiencies | Create detailed technical report of specification failures |
| 3 | Engage technical expert | Independent assessment of software quality and specification compliance |
| 4 | Calculate actual damages | Include delay costs, remediation expenses, lost business opportunity |
| Specification | Required | Actual | Status |
|---|---|---|---|
| API Response Time | < 200ms | 580ms average | FAIL |
| Concurrent Users | 500+ | ~150 before timeout | FAIL |
| Uptime SLA | 99.9% | 94.2% (test period) | FAIL |
| Data Export | All formats | CSV only | PARTIAL |
The documented performance failures likely constitute material breach under California law. The specifications were expressly bargained-for terms, and ByteStream's failure to meet them goes to the essence of the agreement. The cure period under Section 8.2 (30 days from written notice) should be triggered immediately to preserve all remedies.
| Damage Category | Amount | Notes |
|---|---|---|
| Withheld Payment | $127,000 | Final milestone payment |
| Remediation Costs | $45,000 (est.) | Third-party developer quote to fix issues |
| Delay Damages | $28,000 | 3-month delay at $9,333/mo operational cost |
| Lost Business | $85,000 (est.) | Delayed product launch revenue |
| TOTAL POTENTIAL DAMAGES | $285,000 | Subject to limitation of liability clause review |
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| Document | Sent To | Status | Action |
|---|---|---|---|
| Software Development Agreement - Amendment #2 | Marcus Chen (ByteStream CEO) | Awaiting | |
| Mutual Release Agreement (Draft) | Not yet sent | Draft | |
| NDA - Technical Expert | Dr. Sarah Williams | Signed |
| Field | Details |
|---|---|
| Contract Type | Software Development Agreement (Fixed Price) |
| Contract Value | $485,000 |
| Execution Date | March 15, 2025 |
| Governing Law | California |
| Dispute Resolution | Mediation required before litigation (Section 12.3) |
| Venue | Los Angeles County, California |