Project 2

 

University of Maryland University College

 

BMGT 380

 

 

July 19, 2016

 

Part One

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. 

Contracts related to sales agreements between businesses and consumers are covered primarily under the Uniform Commercial Code (UCC), state statutory law, common law, and federal law.  As the monetary amount regarding this case is over $500, the contract must also be in writing to be deemed enforceable(Advanced Business Law and the Legal Environment, 2014, p. 182).  The case between College (consumer) and Contractors, Inc. (business) falls in this category.

First and foremost, it must be verified that the contract in question is, in fact, a valid contract.  For the contract to be valid, these elements must be present: offer, acceptance, and consideration, the parties have the capacity to enter into the agreement/contract, and the subject matter is a legal purpose, and most importantly, with the UCC the more relevant type of law in this matter, the quantity amount is stated in the contract (Advanced Business Law and the Legal Environment, 2014, p. 328).  The information presented in this project verifies that all elements of the contract are present.

The contract between College and Contractors Inc. was an express contract, a contract in which the terms of the agreement were specified; most importantly the date of completion.  The basis in which College is able to claim breach of contract against Contractors Inc. is failure to meet the completion deadline of August 1.  Due to the unexpected increase in materials cost, modifications were made to accommodate the increase in costs while all other stipulations in the original agreement remained the same, as expressed in the Contract Addendum. 

College specified for the completion deadline of August 1 on both the original contract and the Contract Addendum.  This was important since classes would begin on the August 14.  Contractors Inc. did not complete the project until August 21.  As a result of their failure to meet the deadline, College had to lease space for the classes and had incurred costs of $15,000.  These costs are in direct correlation to Contractors failure to adhere to a strict performance standard expressed in the contract(The Legal and Ethical Environment of Business, 2014, p. 191).

Since Contractors Inc. substantially performed, but not strictly performed on the terms of the agreement.  Although they had missed the deadline, it can be assumed that Contractors Inc. acted in good faith as the College can use the project for what is was originally intended for; to house students.  As a result, College could claim monetary damages, in the amount of $15,000 and other expenses incurred as a direct result of Contractors Inc. failure to meet the deadline.  The amount of $15,000 would place College back in the same position as if a breach had not occurred. 

Part Two

Discuss the basis of a breach of contract claim by Contractors Inc. against College, any potential damages Contractors Inc. could claim and the likely outcome of a lawsuit. 

The basis in which Contractors Inc. is able to claim breach of contract against College is failure to pay the agreed upon amount as stated in the Contract Addendum.  Per the Contract Addendum, payment of $5,250,000 to Contractors Inc. by College would be made upon completion of the project.  College, however, only paid $5,000,000, thus breaching the contract. 

            Contractors Inc., however, also breached their agreed upon terms stated in the original contract and the Contract Addendum; they missed their completion deadline.  As a result of missing their deadline, College had incurred $15,000 worth of fees.  Contractors Inc. should be held liable for the expenses College incurred as a result of their breach and allow $15,000 to be deducted from the agreed upon total, making the new total to $5,235,000. 

            However, College could also claim that there was no consideration in the Contract Addendum.  Although both parties had agreed to the terms listed in the Contract Addendum, there was no required detriment present for Contractors Inc.; they had received additional funding without giving up anything.  Consideration provides objective evidence It provides objective evidence stating that a contract exists.  (The Legal and Ethical Environment of Business, 2014, p. 191)

            If it’s proven that there in fact was no consideration, liability of the $250,000 fees for the increase in materials cost could be transferred to Contractors Inc. in addition to the $15,000 to College in monetary damages for missing their deadline.   This would make the total owed by College to Contractors Inc. $4,985,000 instead of the $5,235,000.

 

 

 

 

References

Advanced Business Law and the Legal Environment (2014). Washington, D.C.: The Saylor Foundation

The Legal and Ethical Environment of Business (2014).  Washington, D.C: The Saylor Foundation

 

 

Attachments:

• 1501855203-Project 2-Baker.docx