Business Law – Project

Project 

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 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, 2013.   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 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 not later than August 1, 2013. 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, 2013.

Signed:

Robert Jones

Robert Jones

President, College

Date: January 10, 2013

Signed:

John Doe

John Doe

President, Contractors, Inc.

Date:   January 10, 2013

A. On May 28, 2013, 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, 2013;

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, 2013

Signed:

John Doe

John Doe

President, Contractors, Inc.

Date:   June 1, 2013

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, 2013.

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, 2013. 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.

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 paper 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.

3-4 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.

3-4 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 in depth analysis and close scrutiny of every detailed fact. You do not need any information not provided.