Barbara
Barbara’s Suit against Alfred: Damages Determination
Instructions:
Note: This is a two-part assignment that consists of two different contract analysis scenarios. Please answer both scenarios on one document.
Contract analysis scenario one—damages determination: Alfred and Barbara own adjoining farms in Dry County, an area where all agriculture requires irrigation. Alfred bought a well-drilling rig and drilled a 400-foot well from which he drew drinking water. Barbara needed no additional irrigation water, but in January 1985, she asked Alfred on what terms he would drill a well near her house to supply better-tasting drinking water than the county water she has been using for years. Alfred said that because he had never before drilled a well for hire, he would charge Barbara only $10 per foot, about one dollar more than his expected cost. Alfred said that he would drill to a maximum depth of 600 feet, which is the deepest his rig could reach. Barbara said, \”OK—as long as you can guarantee completion by June 1, we have a deal.\” Alfred agreed, and he asked for $3,500 in advance, with any further payment or refund to be made on completion. Barbara said, \”OK,\” and she paid Alfred $3,500.
Alfred started to drill on May 1. He had reached a depth of 200 feet on May 10 when his drill struck rock and broke, plugging the hole. The accident was unavoidable. It had cost Alfred $12 per foot to drill this 200 feet. Alfred said he would not charge Barbara for drilling the useless hole in the ground, but he would have to start a new well close by and could not promise its completion before July 1.
Barbara, annoyed by Alfred’s failure, refused to let him start another well. On June 1, she contracted with Carl to drill a well. Carl agreed to drill to a maximum depth of 350 feet for $4,500, which Barbara also paid in advance, but Carl could not start drilling until October 1. He completed drilling and struck water at 300 feet on October 30.
In July, Barbara sued Alfred, seeking to recover her $3,500 paid to Alfred, plus the $4,500 paid to Carl.
On August 1, Dry County\’s dam failed, thus reducing the amount of water available for irrigation. Barbara lost her apple crop worth $15,000. The loss could have been avoided by pumping from Barbara’s well if it had been operational by August 1. Barbara amended her complaint to add the $15,000 loss.
In a minimum of a 1,000-word contract analysis, discuss Barbara’s suit against Alfred. What are Barbara’s rights, and what damages, if any, will she recover?
Cite any direct quotes or paraphrased material from outside sources. Use APA format.
Contract analysis scenario two—remedies determination: Mundo manufactures printing presses. Extra, a publisher of a local newspaper, had decided to purchase new presses. Rep, a representative of Mundo, met with Boss, the president of Extra, to describe the advantages of Mundo\’s new press. Rep also drew rough plans of the alterations that would be required in Extra’s pressroom to accommodate the new presses, including additional floor space and new electrical installations, and Rep left the plans with Boss.
On December 1, Boss received a letter signed by Seller, a member of Mundo\’s sales staff, offering to sell the required number of presses at a cost of $2.4 million. The offer contained provisions relating to the delivery schedule, warranties, and payment terms but did not specify a particular mode of acceptance of the offer. Boss immediately decided to accept the offer and telephoned Seller\’s office. Seller was out of town, and Boss left the following message: \”Looks good. I\’m sold. Call me when you get back so we can discuss details.\”
Using the rough plans drawn by Rep, Boss also directed that work begin on the necessary pressroom renovations. By December 4, a wall had been demolished in the pressroom, and a contract had been signed for the new electrical installations.
Using the rough plans drawn by Rep, Boss also directed that work begin on the necessary pressroom renovations. By December 4, a wall had been demolished in the pressroom, and a contract had been signed for the new electrical installations.
On December 5, the President of the United States announced a ban on foreign imports of computerized heavy equipment. The ban removed—from the American market—a foreign manufacturer that had been the only competitor of Mundo. That afternoon, Boss received an email from Mundo stating, \”All outstanding offers are withdrawn.\” In a subsequent telephone conversation, Seller told Boss that Mundo would not deliver the presses for less than $2.9 million.
In a minimum of a 1,000-word contract analysis, discuss the following questions: Was Mundo obligated to sell the presses to Extra for $2.4 million? Assume Mundo was so obligated. What are Extra’s rights and remedies against Mundo?
Cite any direct quotes or paraphrased material from outside sources. Use APA format.
Solution
Scenario One
Barbara’s Suit against Alfred: Damages Determination
The lawsuit involving Barbara and Alfred was brought about due to the losses Barbara incurred during her contract with Alfred. The contract involved Alfred drilling a well for Barbara near her house so that she could access better-tasting drinking water compared to the Dry County’s water which she had used for several years. According to their agreement, Alfred was expected to drill a 600 foot well where he charged her $10 per foot and had to complete the drilling by June 1st. Barbara paid him $3,500 in advance where the rest of the payments would be made when the job was completed. Alfred began the work on the 1st of May where he drilled to a depth of 200 feet by 10th May when he experienced challenges with his drill. The drill had struck a rock and broke; hence, abandoning the hole and opting to start drilling a new hole where he would not charge Barbara for the abandoned hole. By starting to work on a new well on that date, Alfred could not guarantee of its completion by June 1st and this angered Barbara where she refused the drilling of a new well. Barbara’s lawsuit against Alfred was to seek for the refund of the $3,500 paid in advance since the job was not completed. Barbara also went ahead to add the additional amount of $15,000 to the suit due to the losses incurred from the failure of Dry County’s dam. The reason why she included the figure in the suit is because the failure of the dam led to her losing her apple crop worth that amount arguing that if Alfred had completed the drilling of the well, she would not have suffered the loss. Therefore, this case involves a breach of contract where Alfred is accused of not honoring the deal with Barbara; hence, leading to damages.
Barbara’s Rights
According to the law regarding breach of contracts, the plaintiff who in this case is Barbara has several rights, which must be administered by the court through the complaint or lawsuit. This means that her needs should be met by the court to enable her to recover from the loss incurred due to the failed agreement with Alfred. In this case, Barbara’s rights include;
Right to Provide Evidence
This is the first right Barbara has when filing the lawsuit against Alfred. She has the right to provide information to the court indicating the occurrence of the breach and the losses she underwent due to the breach (Slater & Even-Shoshan, 2004). In this case, she can provide the receipt of the payment of the $3,500 to Alfred where it indicates the date of payment. The court may also visit her premises to view the abandoned hole where Alfred had begun the drilling of the well. This right is crucial for it enables Barbara to express her grievances by providing supporting information with the aim of persuading the court to act on her behalf.
Right to Compensation
The right to compensation involves paying or refunding Barbara her money since the job was not completed. Barbara had paid Alfred $3,500 in advance where she was expected to complete the payments when the work was fully done. But in this case, Alfred failed to complete the drilling due to the breaking down of the drill machine; hence, Barbara has a right to be refunded the $3,500. She also has a right to be compensated for the losses of her apple crop, which amounted to $15,000. According to the lawsuit, she would not have experienced the loss if Alfred had completed drilling the well within the stipulated timeframe. The loss occurred on 1st August due to the failure of the county’s dam. On the other hand, the agreement was to ensure the drilling is complete by 1 June. Therefore, she has the right to add the $15,000 loss to the initial $3,500 and be compensated in full.
Right to Specific Performance
This right involves the court ordering the party that failed to honor the contract to perform the duties that they failed to do. In this case, Barbara has the right to ask the court to ensure Alfred completes the initial task of drilling the well. This right complements the right to compensation where Alfred compensates Barbara for the losses incurred and still completes the drilling of the well. But in this case, this right may not be applicable since Barbara had already hired Carl who drilled a well and struck water on October 30th.
The Damages to Recover
The breach of contracts is associated with several damages since it involves failing to perform specific duties which lead to the incurring of losses. Since Barbara has the right to provide evidence to the court indicating the losses she has experienced due to the breach of contract, this is the first step to damage determination. The information she provides to the court indicates the damages suffered where she is expected to recover from them. The damages include money and property damages.
Monetary Damages
From the lawsuit, Barbara is expected to recover the money damages experienced from her contract with Alfred. The money damages include the $3,500 she had paid in advance for the drilling of the well to commence and the $15,000 apple crop losses she suffered due to the failure of the Dry County’s dam. The court is expected to make a ruling on the case where it will require Alfred to compensate Barbara since he is the one responsible for the money damages at hand.
Property Damages
The property damages, in this case, involve the destruction of assets such as land and stock. Alfred commenced the drilling of the well, but when the machine was affected by the rock, he abandoned the hole and opted to begin drilling a new well. Therefore, abandoning the initial hole indicates destruction of land where the hole is associated with several risks. Therefore, the court may require him to either complete the drilling or ensure he takes care of the hole by refilling it. The stock damages, on the other hand, include the apple crop that was lost by Barbara. The court may require Alfred to compensate her with new apple crop worth $15,000 or give her the money.
Scenario Two
Mundo’s Obligation to Sell the Presses for $2.4 Million: Remedies Determination
This case analysis involves two parties; that is, Mundo and Extra. Mundo is a manufacturing company dealing with printing presses while Extra, on the other hand, is a publishing company associated with a local newspaper. Mundo had scheduled to sell several presses to Extra at $2.4 million, where this offer included some properties such as warranties, payment terms, and provisions associated with the delivery schedule. This offer, however, failed to indicate a specification regarding the mode of accepting the offer. Therefore, the omission of this component enables the company not to be compelled to sell the presses at $2.4 million. This is because according to the laws governing contracts, offer and acceptance are the key components of a contract where they enable it to be legally binding; hence, stating on the obligations of each party. This law was formulated due to the complex business practices in the society where the business environment has been changing at an accelerated pace (Kubasek, Browne, Herron, Dhooge & Barkacs, 2016). Since the contract issued by Mundo failed to indicate on these two elements, then it is an indication that the deal was yet to be done; hence, Mundo was not obligated to transact with that price. The reason for analyzing whether the company was obligated to sell Extra the presses for $2.4 million is because, from the case, Extra had accepted the offer and began making office renovations. This is because of the earlier meeting between Rep and Boss, where Rep was a representative of Mundo Company while Boss is the president of Extra. During the meeting, Rep explained to Boss about Mundo’s products where he drew a rough plan indicating on the renovations to be made to ensure Extra’s office accommodates the new presses from Mundo. On December 1st, Boss received a letter from Mundo indicating the offer to sell the presses at $2.4 million, but the offer failed to indicate the mode of acceptance. Extra, on the other hand, accepted the offer and began making the specified renovations as advised by Rep. On 5th December, the US government banned a foreign manufacturer company where it was the only competitor for Mundo. This enabled Mundo to take advantage of the situation and withdrew all outstanding offers it had with Extra. The company changed the offer price for the presses where it provided the product for not less than $2.9 million. Therefore, since the initial offer of $2.4 million was outstanding; that is, Mundo had not accepted, the company was not compelled to transact the offer using that amount; hence, the change in the market situation enabled it to raise the offer price to $2.9 million.
Extra’s Rights and Remedies if Mundo was Obligated
Assuming that Mundo was obligated to sell the presses at $2.4 million to Extra, then it means changing the price to $2.9 million was a breach of contract. This means that Extra had the right to sue the company for altering the agreements in the offer price (Rowan, 2012). Therefore, there are several remedies and rights the company has over Mundo if this case is settled in court. One of the remedies includes, Extra refusing the new offer provided by Mundo. This means that if the original price was part of the legally binding contract, Extra should pay it; that is, the $2.4 million and ignore the new price. Therefore, if Mundo was obligated to sell at $2.4 million, Extra should sue the company for increasing the price. Extra can also file a suit against Mundo to ensure compensation for the damages caused. The damages were because of the demolitions made in Extra’s pressroom to allow for the installation of the new electrical equipment. The reason for this demolition is due to the meeting Boss held with Rep, where he was advised on the renovations to conduct. Therefore, Mundo should compensate the charges met by Extra; that is, the demolition and renovation charges. This remedy is crucial for it ensures the company to complete the renovation process and get back to its normal operations. Obtaining an injunction is also another remedy the company can take against Mundo. An injunction involves Extra obtaining a court order meant to restrict Mundo from repeating the wrongful act. This means that the company is restrained from raising its offer prices during the current and future contracts. In the case where Mundo repeats the same mistake, then the company would be liable to face the law. This remedy is important to Extra since it can acquire the presses from Mundo using the initial price of $2.4 million due to the court order. Another remedy is that Extra can sue the company for specific performance; that is, obtaining a court order instructing Mundo to perform and complete the tasks assigned. The tasks include supplying the presses and other equipment at the stipulated price, delivering the products, and installing them in Extra’s pressroom. This remedy is crucial since it ensures the defaulting party in a contract performs its obligations. Another remedy is that Extra may choose to walk out of the contract if Mundo was obligated to sell using the initial price. Since Mundo violated the contract, Extra may opt to leave it and find another presses manufacturing company in the market. Lastly, Extra had a right to continue with the contract despite the rise in price. This is also a remedy where the company could understand the changes in the market situation and consider the new offer price being handed by Mundo. This is despite the company knowing that Mundo was obligated in selling the presses at $2.4 million. Therefore, the rights and remedies are crucial regarding any case involving a breach of contract by any party (August, Mayer & Bixby, 2009). The remedies in this case, are beneficial to Extra assuming that Mundo was obligated to sell the presses at the initial offer price. The benefits of the remedies to the company include enabling the business’s operations to go on, the company is compensated for damages, the defaulting party; that is, Mundo faces the law, and the tasks initially assigned are performed.
References
August, R., Mayer, D., & Bixby, M. (2009). International Business Law: text, case, and readings. Pearson education.
Kubasek, N., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. (2016). Dynamic business law: The essentials (3rd ed.). New York, NY: McGraw-Hill Education.
Rowan, S. (2012). Remedies for Breach of Contract: A Comparative Analysis of the Protection of Performance. Oxford University Press on Demand.
Slater, D., & Even-Shoshan, G. (2004). Study on the Conditions of Claims for Damages in case of Infringement of EC Competition Rules.