Remedies Flashcards
A contractor agreed in writing to build a house for a man for $200,000. The contract stated that the man would pay the contractor $60,000 when the foundation was laid, $60,000 when the house was framed, $60,000 when the walls were completed, and $20,000 when the house was finished. After the contractor laid the foundation and expended $50,000, but before the man paid the contractor anything, the contractor quit the project to take a higher-paying job.
Subject to the man’s claim for damages for breach, how much is the contractor likely to recover for the work he performed?
The value of the benefit conferred, on a theory of restitution.
A party that materially breaches a contract is nevertheless entitled to recover, under a theory of restitution, the value of the benefit that the breaching party’s part performance conferred on the victim of the breach. Here, the contractor is entitled to receive the benefit conferred on the man for the completed foundation, but in light of the breach of the remaining parts of the contract.
A breaching party cannot recover on a theory of reliance. Reliance damages are awarded to an innocent party for losses suffered due to reasonable reliance on a promise.
An engineering firm submitted a bid to a municipality for the construction of a new wastewater treatment plant. The firm’s bid included a subcontractor’s bid to complete the electrical work on the plant for $100,000.
The municipality awarded the construction contract to the firm. Later that day, before the firm told the subcontractor of the award, the subcontractor told the firm that it was withdrawing its bid because it had recently undertaken a new project that would absorb all its capacity for the next 18 months. The firm nevertheless accepted the subcontractor’s bid and demanded that it perform the electrical work on the plant, but the subcontractor refused. The firm had to hire another subcontractor to perform the electrical work, at a cost of $115,000. The firm completed the construction of the plant at a profit.
Which of the following statements correctly describes the firm’s legal rights, if any, against the first subcontractor?
The firm is entitled to recover expectation damages, because the first subcontractor’s bid was irrevocable for a reasonable time and the firm timely accepted it.
An offeror may generally revoke an offer up until the moment of acceptance, however, detrimental reliance by the offeree can transform an offer into an option contract. When the offeror could reasonably expect that the offeree would rely to their detriment on the offer, and the offeree does so rely, the offer will be held irrevocable as an option for a reasonable length of time.
Although generally, an offeror may revoke an offer up until the moment of acceptance, detrimental reliance by the offeree can transform the offer into an option contract, meaning it is irrevocable for a limited time. Here, the firm’s reliance on the subcontractor’s bid meant that the subcontractor could not revoke its bid for a reasonable time.
A company agreed to provide regular facilities-maintenance services for a landlord’s apartment buildings for $150 per hour. The parties also orally agreed that if the services required in any given month exceeded 100 hours, the landlord would pay the company a discounted hourly rate of $125 per hour for those extra services. When the parties put their agreement in writing, however, neither party noticed that the contract did not include the discounted-rate provision.
In a recent month, because of several snowstorms, the services needed by the landlord exceeded 100 hours. The landlord has reminded the company that services in excess of 100 hours are to be paid at the discounted rate, but the company insists that it be paid at the contract rate of $150 per hour.
Which of the following best describes the legal relationship between the parties at this point?
The parties have a valid, enforceable contract that will be reformed to reflect the discounted rate of $125 per hour for services in excess of 100 hours.
If a written agreement fails to include a term of the agreement due to a mistake by both parties, the writing may be reformed to express the actual agreement. Restatement (Second) of Contracts § 155. Here, the landlord is entitled to reformation to include the term that was mistakenly omitted by both parties.
