The focus of this project is on Contract Law, Elements of Contract, Modification of Contracts, and Consideration
This is a very application-oriented exercise that requires identifying issues, assimilating concepts and knowledge about contract law and applying them to create valid and enforceable contracts.
This is a contract exercise and does not require, any outside resources, other than what you've learned during this class prior to the project due date, and outside resources should not be used.
Fact Scenario: Contractors, Inc. contracted with College to build a 20-room, 2 story classroom building, constructed of gray bricks, according to architectural specifications provided by College. The building is to be located on campus at the corner of Campus Way and Academic Avenue, at a contract cost of $5,000,000, and to be completed by August 1, 2015. The August 1 deadline would give College just enough time to move into the building and prepare the inside for classes to begin on August 14, 2015. College informed Contractors that time was of the essence and that this is a tight timeline 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 Campus Way and Academic Avenue, in accordance with the 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 no later than August 1, 2015. Time is of the essence.
College will pay Contractors, Inc. for the completed project, the sum of $5,000,000, no later than August 7, 2015.
Signed:
Robert Jones
Robert Jones
President, College
Date: January 10, 2015
Signed:
John Doe
John Doe
President, Contractors, Inc.
Date: January 10, 2015
On May 28, 2015, 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. College agreed to modify the original contract to increase the construction costs by $250,000, bringing the total cost of the project to $5,250,000.
College and Contractors drew up the following contract modification as an 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 upon 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 Campus Way and Academic Avenue;
2) College will pay Contractors, Inc. for the completed project, the sum of $5,250,000 not later than August 7, 2015;
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, 2015
Signed:
John Doe
John Doe
President, Contractors, Inc.
Date: June 1, 2015
After the contract modification, Contractors continued to work on the building but did not meet the August 1 completion deadline. The building was completed on August 21, 2015.
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, 2015. College necessarily had to hold classes in the leased space for 3 weeks until September 4, 2015, 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.
College paid Contractors $5,000,000 on September 4, but refused to pay the additional $250,000. College filed suit against Contractors for breach of contract.
Contractors countersued College for breach of contract.
Please label each part of your assignment as listed below.
Part I: Discuss the basis of a breach of contract claim by College against Contractors, any potential damages College could claim and the likely outcome of a lawsuit.
5-6 paragraphs minimum with in text cites; in depth, comprehensive; outside resources not necessary as all classroom resources will be sufficient.
Part II: Discuss the basis of a breach of contract claim of Contractors against College, any potential damages Contractors could claim and the likely outcome of a lawsuit.
5-6 paragraphs minimum with in text cites; in depth, comprehensive; outside resources not necessary as all classroom resources will be sufficient.
BE CAREFUL! This is not meant to be tricky but it is a very detailed analysis requiring an in depth review and close scrutiny of every detailed fact. No information, other than what is provided here and in classroom resources to be reviewed prior to the project due date, is needed for this project.
This project requires you to identify and analyze legal issues and to make recommendations based on one or more fact patterns. The issues will relate to the concepts covered in weeks 1, 2, and 3 about the legal environment of business and business organizations.