NO Plaguarism
CHAPIEn $lContracf Pcilotmooce, Brcoch, ond Remedles
;i. What is substantial performance?
;, What is the standard measure of compensatory damages when a con[ract is breached?
li, What equitable remedies can a court grant, and in u,hat circumstances will a coLlrl consider granting them?
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ffi Or.rtions and Gase Problems
. ./ Substantial Performance. TI'rc Caplerns own ii reirl csrare
V lot, .rnrl thtry Lontracr u,ith Faithful Consrrucrron, Inc., ro ' build a house on ir for $360,000 The specrfications list "all plumbing borvls and fixtures . . . to be Crane brand "
The Caplans leave on r,acarron. and during their absence
Faithful is unahle to buy anci rnstall Cranc pluntbrrrg fix-
tures. lnstead, Faithlul installs Kohler brand fixrurcs. an
equivalent in the industry On completron of the building
contract, the Caplans inspect the u.ork, discover the sub-
strtution, ancl refuse to accepr the house, claiming Faithlul
has breacheci tl'ie conditions ser lorrh in the specificarrons.
l0-27o.ischarye by Agleement. Junior owes crediror lba $1,000 rvhich is due and payable on June 1. Junior has been rn a car accldent, has missed a great deal ol ri-ork, and conse-
cluently will not have the luncls on Jr-rne 1. Junior-s fathet,
Frecl, olfers to pay lba !ll.t00 in ftrr-rr equal rnstitllments rl
Iba will clischarge Jr-rnior lrom any [urther liabilitr- on the
debt. Ibaaccepts Is tlis tra"secrio
and ,.rtisla, t ion? frolain. -It-possiUiflty-olFertorm-ance.lnrhelollourngsruarion>.
certain cvents take plzrce after the lormatron of conIracts.
Discuss w,hrch ol these contracts are clischargecl because the:
evenis render the contracts rrnpossible to perform.
i. Jimenez, a famous singer, contracts to perform in i'our nightclub. He dies prior to performance. .. Raglrone conrracrs [o sell t'ou I-rer land. Just belbre title
is to be tgnslerrecl. shc dies.
.'- Oppenheim conrracts to sell you one thousand bushels
of apples from her orchard in the state ol Washington. Because of a severe frost, she ls unable to deliver the apples.
\Ltrrvt-ll contracts to leurse a servrce statlon tirr ten \,ears. His pnncipal income is lrom the sale olgasohne. Because
ol an oil embargo by foreign oil-producing naiirrns, grs- oline is rationed, cuiting sharply into lvlaxwelis gasoiine sales. He cannot make his lease payments. , , Quasi Contract. l\lrddleton Morors, Inc.. a stn_rggling Forcl
dealership ir-r Nladison, Wisconsin, sought managerial and lrnancral assistance from Lindqurst Ford, Inc., a successlul Ford dealership in Bettendorf, Iowa. While the rwo dealer- ships negotiated the terms lor the senrces and a cash rn[u-
sion, Lindqr-tisr sent Craig NIiller, irs general manager, ro assllme control o[ Ir4idclleton. Alter about a ),ear, the partrcs hacl not agreed on the terms. Lindcluist had not inr.ested an). mone)', Nliddleron had not made a profir, and Miller u,as fired wiihout being paid. Lindcluist and Miller filed a
suit in a lederal drstricr court against Midclleton based on cluasr contract, seeking to reco\/er Nlillers pay for his time. What are tire recluirements to recover on a theo$. of quasi
contract? Which ol these requiremen[s is mosr like1y ro be clispr-rted in this casel Why? [Lindqu,st Ford, Inc. y. Middle ton
Morors, hrc., 557 F3cl 469 (7th Cir. 2009)l ., y'Condilion Precedent. Just Homes. LLC 0H), hired Mike
V Buildrng tt Conrracting, Inc., to do $1.35 million worrh of ' rcnoyaLion u'ork on three homes. Communitl, Presen ation
Corp (CPC) supervised N,likes w.ork on behall olJH. The
colltract statecl that in the event o[ a dispute, JH rvould have
to obtain the project archrtects cerlihcation to.1ustilv teru-ri-
natlng Nhke. As construction progressed, relarions betu,een
Mike and CPC worsened. At a certain point in the project,
Mike requested partial papnent, and CPC recommended
that JH not make it. N4ike refused ro conrinlre r,r.ork .with-
out lllrther plvmcnr. JH cvictecl Nlrke from the prolect.
Mike sued lor breach of contract. JH contendecl that it had
the right to rerminare the contracr due ro CPCs negattve
reports and lr,likes failure to agree uith rhe projects engi- neer. N{ike mor,ed lor sumn'rary.)udgnlent for the amounts
owecl tbr utrrk perlorrtrecl, claiming that JH had not fut-
Iilled the conditron precedent-thar is, JH never obtained
the project architects certlfication for Mikes terminatton.
Which of rhe trvo parties involved breached the contract?
Exphin ) or,rr rnsu'er. IMike Btilding& Contracting,Inc. u Jusr Hontes, LLC,27 Mrsc.Sd 833, 901 N.Y S 2d 458 (2010)l
r'.* jf & Case Problem with Sample Answer. l-iquidated
EIl, Oamages and Penalties. Planned perhood plr-rs, tnc , rs a veterinarlan-owrred cllntc. lt borror,l,ed S389.000 from KevBank at an interest rate of 9.3 percent per year 1br
ien years. TI're loan had a "prepavment penalty" clause thai clearly stated that ii tl-re loan r,vas repaicl earlll a specific fonnula ri'oulcl be r:sed to assess a lump-sum pa)rment to exringuish the obligation. The sooner the loan r.as paid off, the higher the prepayment penaltlt Afier a 1,ear, rhe r.eteri-
narians decided to pa1, off t1-re loan. KevBank invoked a pre- pavment penaltl, o1 $40,525.92, rvhich u,as ecpral ro 10.7
percent ol the balance clue. The veterrnanans sued, con tendlng that the prepa)'menr reqLurement rvrrs unenforce-
able because it was a penahy The bank countered thar the amollnt $.as not a penaky but liquldated damages and that
the sum r.vas reasonable. The trial court agreed with the banl<, ancl tht- r,eterintrrians appeaied. Was the loans pre,
payment charge reasonabie, and should it har.e been enforced? Why or r.r.hv not? IPlanne d Pethood Plris, Inc. l
KeyCorp, Inc., 228 P.3d 262 (Colo.App. 2010)l
the