Business Law and the Legal Environment Study Set 1

Business

Quiz 19 :

Discharge of Contracts

Quiz 19 :

Discharge of Contracts

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. Parc hired Glaze to remodel and furnish an office suite. Glaze submitted plans that Parc approved. After completing all the necessary construction and painting, Glaze purchased minor accessories that Parc rejected because they did not conform to the plans. Parc refused to allow Glaze to complete the project and refused to pay Glaze any part of the contract price. Glaze sued for the value of the work performed. Which of the following statements is correct? a. Glaze will lose because Glaze breached the contract by not completing performance. b. Glaze will win because Glaze substantially performed and Parc prevented complete performance. c. Glaze will lose because Glaze materially breached the contract by buying the accessories. d. Glaze will win because Parc committed anticipatory breach.
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a) False. The intention of the contract is for G to remodel P 's office. As long as G did a substantial amount of work in good faith it can recover the work done.
b) True. Substantial performance is performance satisfying the essence of the contract in this case to remodel an office. G was able to paint and do all necessary constructions. However, P refused them from continuing due to minor objects. G should be given the value of work owed to them.
c) False. Purchasing the wrong minor accessories for a remodeling job would not be a material breach. Material breach may be using non-standard wall material, wrong colored paint, etc.
d) False. See b

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Dickson contracted to build a house for Moran. When it was approximately 25 percent to 40 percent completed, Moran would not let Dickson work any more because he was not following the building plans and specifications and there were many defects. Moran hired another contractor to correct the defects and finish the building. Dickson sued Moran for breach of contract, claiming that he had substantially performed the contract up to the point where he had been discharged. Was Dickson correct? [Dickson v Moran, 344 So2d 102 (La App)]
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Refer to the case Dickson v Moran (344 So2d 102).
Facts
1) Defendant contracted with plaintiff to build a house for him.
2) After some work performed by plaintiff, defendant refused plaintiff's service any longer. Plaintiff sued for recovery of cost and placed a lien on defendant's property. Defendant counterclaimed for damages cost by plaintiff.
3) Trial court cancelled lien and denied claims. All parties appealed
Relevant Terms, Laws, and Cases
Substantial performance - states that as long as contract is performed sufficiently to a degree that satisfies the intention of the contract, it can be enforced.
Opinion
Appeals court affirmed the decision.
Plaintiff is unable to recover under substantial performance. Court argued to show substantial performance, the work completed must be "usable for the purpose which it was intended". The plaintiff had only did 25% - 40% of the work required hence the house was still unusable. The court also found that the defendant was right for terminating plaintiff due to the numerous defects found during construction; a breach of contract by plaintiff.

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Metalcrafters made a contract to design a new earth-moving vehicle for Lamar Highway Construction Co. Metalcrafters was depending on the genius of Samet, the head of its research department, to design a new product. Shortly after the contract was made between Metalcrafters and Lamar, Samet was killed in an automobile accident. Metalcrafters was not able to design the product without Samet. Lamar sued Metalcrafters for damages for breach of the contract. Metalcrafters claimed that the contract was discharged by Samet's death. Is it correct?
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The designer may not be able to discharge contract due to the event that their genius employee was killed. The contract to design may not have involved employee and designer can't completely rely on one employee to complete the design. For example, if the employee wasn't killed he may have quit, took leave to take care of family, or went to jail, etc. Even if the employee was still alive and working he may not have came up with an idea for the design, in any case, the designer can't enter in a contract with this assumption that the employee can guarantee success.

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CIT entered into a sale/leaseback contract with Condere Tire Corporation for 11 tire presses at Condere's tire plant in Natchez, Mississippi. Condere ceased making payments on these presses owned by CIT, and Condere filed for Chapter 11 bankruptcy. CIT thereafter contracted to sell the presses to Specialty Tires Inc., for $250,000. When the contract was made, CIT, Condere, and Specialty Tire believed that CIT was the owner of the presses and was entitled to immediate possession. When CIT attempted to gain access to the presses to have them shipped, Condere changed its position and refused to allow the equipment to be removed from the plant. When the presses were not delivered, Specialty sued CIT for damages for nondelivery of the presses, and CIT asserted the defense of impracticability. Decide. [ Specialty Tires, Inc. v. CIT, 82 F. Supp. 2d 434 (W.D. Pa.)]
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A lessor leased a trailer park to a tenant. At the time, sewage was disposed of by a septic tank system that was not connected with the public sewage system. The tenant knew this, and the lease declared that the tenant had examined the premises and that the landlord made no representation or guarantee as to the condition of the premises. Some time thereafter, the septic tank system stopped working properly, and the county health department notified the tenant that he was required to connect the septic tank system with the public sewage system or else the department would close the trailer park. The tenant did not want to pay the additional cost involved in connecting with the public system. The tenant claimed that he was released from the lease and was entitled to a refund of the deposit that he had made. Was he correct? [Glen R. Sewell Street Metal v Loverde, 451 P2d 721 (Cal App)]
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American Bank loaned Koplik $50,000 to buy equipment for a restaurant about to be opened by Casual Citchen Corp. The loan was not repaid, and Fast Foods, Inc., bought out the interest of Casual Citchen. As part of the transaction, Fast Foods agreed to pay the debt owed to American Bank, and the parties agreed to a new schedule of payments to be made by Fast Foods. Fast Foods did not make the payments, and American Bank sued Koplik. He contended that his obligation to repay $50,000 had been discharged by the execution of the agreement providing for the payment of the debt by Fast Foods. Was this defense valid? [American Bank Trust Co. v Koplik, 451 NYS2d 426 (App Div)]
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Suburban Power Piping Corp., under contract to construct a building for LTV Steel Corp., made a subcontract with Power Pollution Services, Inc., to do some of the work. The subcontract provided that the subcontractor would be paid when the owner (LTV) paid the contractor. LTV went into bankruptcy before making the full payment to the contractor, who then refused to pay the subcontractor on the ground that the "pay-when-paid" provision of the subcontract made payment by the owner a condition precedent to the obligation of the contractor to pay the subcontractor. Was the contractor correct? [Power Pollution Services, Inc. v Suburban Power Piping Corp., 598 NE2d 69 (Ohio App)]
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The Tinchers signed a contract to sell land to Creasy. The contract specified that the sales transaction was to be completed in 90 days. At the end of the 90 days, Creasy requested an extension of time. The Tinchers refused to grant an extension and stated that the contract was terminated. Creasy claimed that the 90-day clause was not binding because the contract did not state that time was of the essence. Was the contract terminated? [Creasy v Tincher, 173 SE2d 332 (W Va)]
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Northwest Construction, Inc., made a contract with the state of Washington for highway construction. Part of the work was turned over under a subcontract to Yakima Asphalt Paving Co. The contract required that any claim be asserted within 180 days. Yakima brought an action for damages after the expiration of 180 days. The defense was that the claim was too late. Yakima replied that the action was brought within the time allowed by the statute of limitations and that the contractual limitation of 180 days was therefore not binding. Was Yakima correct?
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Lymon Mitchell operated a Badcock Home Furnishings dealership, under which as dealer he was paid a commission on sales and Badcock retained title to merchandise on display. Mitchell sold his dealership to another and to facilitate the sale, Badcock prepared a summary of commissions owed with certain itemized offsets it claimed that Mitchell owed Badcock. Mitchell disagreed with the calculations, but he accepted them and signed the transfer documents closing the sale on the basis of the terms set forth in the summary and was paid accordingly. After pondering the offsets taken by Badcock and verifying the correctness of his position, he brought suit for the additional funds owed. What defense would you expect Badcock to raise? How would you decide the case? Explain fully. [Mitchell v Badcock Corp., 496 SE2d 502 (Ga App)]
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Ordinarily, in an action for breach of a construction contract, the statute of limitations time period would be computed from the date the contract is: a. Negotiated B) Breached C) Begun D) Signed
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Beeson Company made a contract to construct a shopping center for Sartori. Before the work was fully completed, Sartori stopped making the payments to Beeson that the contract required. The contract provided for liquidated damages of $1,000 per day if Beeson failed to substantially complete the project within 300 days of the beginning of construction. The contract also provided for a bonus of $1,000 for each day Beeson completed the project ahead of schedule. Beeson stopped working and sued Sartori for the balance due under the contract, just as though it had been fully performed. Sartori defended on the ground that Beeson had not substantially completed the work. Beeson proved that Sartori had been able to rent most of the stores in the center. Was there substantial performance of the contract? If so, what would be the measure of damages? [ J.M. Beeson Co. v. Sartori, 553 So.2d 180 (Fla. App.)]
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Ellen borrowed money from Farmers' Bank. As evidence of the loan, she signed a promissory note by which she promised to pay to the bank in installments the amount of the loan together with interest and administrative costs. She was unable to make the payments on the scheduled dates. She and the bank then executed a new agreement that gave her a longer period of time for making the payments. However, after two months, she was unable to pay on this new schedule. The bank then brought suit against her under the terms of the original agreement. She raised the defense that the original agreement had been discharged by the execution of the second agreement and could not be sued on. Decide.
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The Metropolitan Park District of Tacoma gave Griffith a concession to run the district's parks. The agreement gave the right to occupy the parks and use any improvements found therein. The district later wished to set this agreement aside because it was not making sufficient money from the transaction. While it was seeking to set the agreement aside, a boathouse and a gift shop in one of the parks were destroyed by fire. The district then claimed that the concession contract with Griffith was discharged by impossibility of performance. Was it correct? [Metropolitan Park District of Tacoma v Griffith, 723 P2d 1093 (Wash)]
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Oneal was a teacher employed by the Colton Consolidated School District. Because of a diabetic condition, his eyesight deteriorated so much that he offered to resign if he would be given pay for a specified number of "sick leave" days. The school district refused to do this and discharged Oneal for nonperformance of his contract. He appealed to remove the discharge from his record. Decide. What ethical values are involved? [Oneal v Colton Consolidated School District, 557 P2d 11 (Wash App)]
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Christopher Bloom received a medical school scholarship created by the U.S. Department of Health and Human Services to increase the number of doctors serving rural areas. In return for this assistance, Bloom agreed to practice four years in a region identified as being underserved by medical professionals. After some problem with his postgraduation assignment, Bloom requested a repayment schedule from the agency. Although no terms were offered, Bloom tendered to the agency two checks totaling $15,500 and marked "Final Payment." Neither check was cashed, and the government sued Bloom for $480,000, the value of the assistance provided. Bloom claimed that by tendering the checks to the agency, his liability had been discharged by an accord and satisfaction. Decide. [United States v Bloom, 112 F3d 200 (7th Cir)]
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Which of the following will release all original parties to a contract but will maintain a contractual relationship? img
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New Beginnings provides rehabilitation services for alcohol and drug abuse to both adults and adolescents. New Beginnings entered into negotiation with Adbar for the lease of a building in the city of St. Louis, and subsequently entered into a three-year lease. The total rent due for the three-year term was $273,000. After the lease was executed, the city denied an occupancy permit because Alderman Bosley and residents testified at a hearing in vigorous opposition to the presence of New Beginnings in the neighborhood. A court ordered the permit issued. Alderman Bosley thereafter contacted the chair of the state's appointment committee and asked her to pull the agency's funding. He received no commitment from her on this matter. After a meeting with the state director of Alcohol and Drug Abuse where it was asserted that the director said the funding would be pulled if New Beginnings moved into the Adbar location, New Beginnings's board decided not to occupy the building. Adbar brought suit for breach of the lease, and New Beginnings asserted it was excused from performance because of commercial impracticability and frustration of purpose. Do you believe the doctrine of commercial impracticability should be limited in its application so as to preserve the certainty of contracts? What rule of law applies to this case? Decide. [Adbar v New Beginnings, 103 SW2d 799 (Mo App)]
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