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Project 2: Contract Law, Elements of Contract, Consideration – 25%

Project 2: Contract Law, Elements of Contract, Consideration – 25%

Project 2: Contract Law, Elements of Contract, Consideration  –  25%

This is a very application-oriented exercise that requires you to recognize issues, assimilate concepts and knowledge about contract law and apply them  to creating valid, enforceable contracts. This exercise is illustrative of the application-oriented types of questions on the final exam.

It is a contract exercise and does not require, nor should you use, any outside resources.  You may cite to any assigned resources for any week within the classroom.  You must use in text cites for any resources;  try to avoid using direct quotes.

Fact Scenario:           Contractors, Inc. contracted with College to build a 20-room, 2 story classroom building, constructed of gray bricks, and according to architectural specifications provided by College.   The contract specified the building was to be located on campus at the corner of College Avenue and Academic Way at a contract cost of $5,000,000, and to be completed by August 1, 2014.   This August 1 deadline would give College just enough time to move into the building and prepare the inside for classes to begin August 14.  

College informed Contractors that time was of the essence and that this is a tight time line for moving into the new building. 

The valid, written contract read, in part, as follows.

CONTRACT

 

 We, the undersigned, party of the first part, hereinafter College, and party of the second part, hereinafter Contractors, Inc.  hereby agree to the following:

 

1)  Contractors, Inc. will build a 20-room, 2-story classroom building constructed of gray bricks, at the corner of College Avenue and Academic Way, in accordance with architectural specifications stipulated by College and attached hereto and in compliance with Maryland building codes and regulations for new construction; 

2)  Contractors, Inc. will complete the construction project at a total cost of $5,000,000, inclusive;

3)  Contractors, Inc. will complete the construction project not later than August 1, 2014.  Time is of the essence.

 

College will pay Contractors, Inc. for the completed project, the sum of $5,000,000 not later than August 7, 2014.

Signed:

Robert Jones

Robert Jones

President, College

Date:  January 10, 2014

 

Signed:

John Doe

John Doe

President, Contractors, Inc.

Date:   January 10, 2014

 

There are 4 parts to the analysis, parts A,B,C,D + References list below.  LABEL EACH PART A,B,C,D and References. 

 

 A.  On May 28, 2014, after the construction was more than half completed, the cost of bricks used for construction of the building increased substantially in the marketplace so that Contractors could no longer construct the building for $5,000,000.  Contractors told College that it would need an additional $250,000 to complete the building using gray bricks on the exterior.

This situation is common in construction contracts.

What legal contract law doctrine/defense could Contractors use to justify its request for additional money to complete the project?  Explain in 1-2 paragraphs, minimum.

 

B.   College agreed to pay Contractors the additional $250,000 to complete the project, bringing the total cost of the project to $5,250,000.  Thus, the original contract between the parties had to be modified by an additional new contract addendum to reflect the new additional agreement between the two parties.   

College and Contractors drew up the following additional new contract addendum to the original contract:

CONTRACT ADDENDUM

We, the undersigned, party of the first part, hereinafter College, and party of the second part, hereinafter Contractors, Inc.  hereby agree to the following modification to the original agreement:

1)  In addition to the contractual agreed cost of $5,000,000, College will pay Contractors, Inc. an additional $250,000 to build a 20-room,  2-story classroom building constructed of gray bricks, at the corner of College Avenue and Academic Way; 

2)  College will pay Contractors, Inc. for the completed project, the sum of $5,250,000 not later than August 7, 2014;

3)  This modification does not in any way change any other terms of the original contract (attached hereto).

 

Signed:

Robert Jones

Robert Jones

President, College

Date:  June 1, 2014

Signed:

John Doe

John Doe

President, Contractors, Inc.

 Date:    June 1, 2014

 

Consider this addendum is a new contract that becomes attached to the original contract.  Do not be mislead by the word “addendum”.  An addendum is new agreement that must meet all the elements of any contract.  If the new contract/addendum does not meet all elements of a contract, then it will  not be valid and enforceable.  

Does this additional, new contract addendum meet all the elements required for a valid enforceable contract on the part of both parties?  Why or why not?  Be very specific.   Explain 2-4 paragraphs, minimum.

 

fter the new additional contract addendum, Contractors continued to work on the building but did not meet the August 1 completion deadline.  The building was completed on August 21, 2014.

If College sues Contractors for breach of contract, on what contract law basis could College sue Contractors for breach of contract? Explain in 1-2 paragraphs, minimum.  

 

C.  In the meantime, fall semester classes began at College on August 14, making it necessary for College to lease classroom space from August 14-September 4, 2014.  College necessarily had to hold classes in the leased space for 3 weeks until September 4 because it took 2 weeks (from August 21) for College to move into the new building and prepare it for classes. The lease costs were $5,000 per week, for a total of $15,000 for 3 weeks. Refer also to facts in C. above. 

If College sues Contractors for breach of contract and seeks to recover damages from Contractors, what specific type of damages should College request?  

And what specific amount of damages might College be entitled to collect from Contractors and why?  Explain specifically, how damages might be calculated.  Discuss in 2-3 paragraphs, minimum. 

 

D.   College paid Contractors $5,000,000 on September 4, but refused to pay the additional $250,000. 

If Contractors sues College for breach of contract for non payment of the additional $250,000, what will be the likely outcome of this lawsuit and why?  Explain in 2-4 paragraphs, minimum 


REFERENCES:  must include list of references to which you referred in in text cites

BE CAREFUL!  This is not meant to be tricky but it is a very detailed analysis requiring in depth analysis and close scrutiny of every detailed fact.  You do not need any information not provided.

 


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