Contracts Essay

3142 words - 13 pages

Contracts Essay Three

Homer sues Bilda for breach of contract. What issues are raised by this suit? Discuss. [1]

If the court determines that Bilda breached the Homer/Bilda contract, will Bilda be entitled to any recovery? Discuss.

I. Applicable Law. The contract is for the building of a cabin, not a sale of goods, and is therefore covered by common law rather than the UCC. [2]

[3]
II. Breach. A breach of contract occurs when a party’s duty to perform under a contract is absolute, and that party fails to perform. The duty can be absolute because it was not conditional in the first place; any conditions were either excused or fulfilled; or the duty was not discharged.

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The only exception to this would be where one of the parties has performed and the other has not. Bilda has completed one-half of the construction, although he did not comply to the express conditions of the contract.

IV. Missing terms. In the original contract, it was not expressly stated whether floor and window coverings would be included. Homer later claims that these were included through an oral agreement between the parties. Bilda disputes this. Homer obtains estimates and the reasonable cost for the materials and installation is $15,000.

Because of the nature of the contract, with all the other specifications being expressly covered, Homer may have trouble convincing the court that the windows and floor covering plus their installation were a part of the contract. The facts state that everything else, even the exterior decking and painting were included.

Even though Bilda has breached the contract by walking off the job, this area may end up costing Homer more money, unless he can prove that Bilda did agree to the windows and floor covering in the original contract. [5]

V. Mitigation. Mitigation is the non-breaching party’s attempt to lessen his damages due to the breach by finding substitute performance. The facts show that Homer did try to mitigate his damages by calling in another contractor to complete the construction.

VI. Damages. The aim of damages is to place the non-breacher in as good a position as he would have been had the contract been fully performed. Money damages are the most common type of recovery.

Here, if the court determines that Bilda breached the Homer/Bilda contract, Bilda may be able to recover some money damages. At the time construction stopped Bilda had expended $100,000 for labor and materials. However, he had also done the fireplaces incorrectly, which would cost Homer $20,000 to rebuild.

(100,000 – 20,000) = $80,000 The amount of damages Bilda is entitled to (less any incidental damages incurred by Homer.) Homer’s incidental damages will include the cost of finding a new contractor, but most likely not include the $1000 cost to book another place for the family reunion, or the $15,000 cost for the window and floor coverings. [6] [7]

COMMENTS:

[1] I know this may be review, but it is still good practice to start your reading of the fact pattern with the call of the question at the end of the fact pattern. In this case, the call of the question appears to be open ended by asking for a discussion of “the issues raised” by these facts. However, it also asks for a specific discussion of Bilda’s potential recovery. Therefore, the answer will have to discuss the entire breach of contract claim elements as to the contract at issue and be sure to include a discussion of Bilda’s recovery.

In reading the facts, remember to keep in mind the sequence of the elements: applicable law (UCC/common law), formation (offer, revocation, acceptance, consideration, defenses to...

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