Text Practice Mode

Contract 2002 1 AB

created Aug 10th 2018, 04:31 by user1630415



1807 words
4 completed
. B responded, "Sure, you can count on us." There was sufficient consideration to make this a contract: B agreed to provide a service for B, in putting on the party, and A agreed to pay B for its services. One may view A's phone call as an offer, and B's response as an acceptance. Although the terms of the contract were not clearly delineated at this point, one may argue that B knew what A expected (Russian caviar and a famous quartet) from having put on the party year after year. As this case deals with a provision of services, the UCC does not govern. Also, since the contract was to be completed within a year and involved services, not a sale of goods, one may argue that the statute of frauds did not govern. Also, even if one were to argue that the statute of frauds does apply because A and B exchanged more than $500 worth of goods, the parties admit that there was a contract, and thus are barred from using the statute of frauds to get out of it. Given that there was a contract, one must next determine whether B breached that contract when it (1) changed the price of the party from $50,000 to $77,000 and (2) provided paper plates, plastic glasses, salami, cheese, and a high school jazz band instead of china, crystal, caviar, and the famous string quartet. With regard to the first issue, B will likely claim that the contract was modified when B dealt with unforeseen circumstances and that A should be held to the new price, forcing A to pay B the $77,000 instead of the $50,000. B may argue that it could not have foreseen Carol (C), its operations manager, leaving and that dealing with such a circumstance is was not something covered by the contract. However, the doctrine of unforeseen circumstances requires that a party's performance of a contract become impractical through no fault of his own and that the circumstance that made the contract less valuable was not a risk the party assumed in making the contract. Loss of profit alone is not a sufficient justification for impraciticability (Karl Wendt).A would likely counter that B's financial position was its own fault and that it was a risk that B assumed under the contract. B might also claim that A assented to the new price when it went forward with the contract. However, like the Kelsey-Hayes case, A maintained that it paid under protest and thus is in a good position to object to the changed price. A's arguments will likely be more persuasive than A's, and thus A will likely only have to pay B $50,000, not the full $77,000. To determine whether or not B breached when it used a subcontractor and supplied sub par services, one must consider the terms of the contract between the parties. There was no explicit written contract; rather, the parties entered into an oral contract whereby B agreed to provide the same product it did the year before. B may argue that terms of the contract were not specified and thus that B cannot be held liable for not living up to A's expectations. However, in light of the fact that B has done the party for the last six years, A may successfully argued that 2 the terms were implied and that B should have known what was expected of it. As such, A may argue that providing paper plates, plastic glasses, salami, cheese, and a high school jazz band instead of china, crystal, caviar, and the famous string quartet was a material breach of the contract. If a court were to find the terms implied, then it would likely agree. One must next consider the damages that A may levy on B. First, A will argue that B owes it money for the difference in market value between the services that B was hired to provide and the services that it actually did provide. These damages were caused by B's breach of the contract and are foreseeable. As such, a court will likely hold A to them. A also wants to hold B responsible for the debacle that the party caused to its reputation and the loss of its clients, who brought in $1.7 million. B, in having worked with A for the past six years, knew that A's reputation was built on this party and that the party arguably kept A within the business elite. A may argue that B's terrible party caused serious damage to its reputation and caused it to lose its top clients. Although A does not know for sure that the client's left because of the party, A may reasonably infer it from the fact that they would not give a reason other than that "it was time to move on." If a court finds that the party did cause the clients to leave, B may be held responsible for the resulting damages. However, one must also consider mitigation of damages. B may argue that A could have done something to mitigate the damages—maybe sending the clients a nice fruit basket or having a dinner party; A may counter that the damages were not mitigable and that A did everything that it could. If B fails on both causation and mitigation, it could still argue that the damages were unforeseeable. A may argue that B should have known, from having done the parties for the last six years, that serious damage could result from throwing a bad party. B may counter by saying that it had no way of knowing that the clients would leave as a result of the party or that the clients were worth $1.7 million, since it did not have access to A's books. It may also claim that damage to A's reputation is speculative and hard to manage. In weighing all of these factors, a court may likely hold B responsible for a portion of the damages resulting from A's losing the clients and the damage to A's reputation, but not for all of it because of causation, mitigation, and foreseeability limits. A is refusing to pay B any money for the services it received and B wishes to recover. From the analysis above, it is clear that there was a contract between the parties. B may argue that A breached when it refused to pay A for damages. A must argue for expectation damages since restitution damages are not available—the only thing left for A to do is pay B. Everything else has been taken care of. Given the analysis above, B likely does not have case to force A to pay the $77,000 for the party, but it may be able to require A to pay for the $50,000 of services it received. In all likelihood, a court would consider B's breach in providing an inferior product and only hold A responsible for paying B for the value of the products it actually received, not the value of the contract. Part B: One must first consider whether there is a contract between Expert (E) and Benson (B). The parties agreed that E would throw a high-end party for B for $65,000. The parties agreed to the contract orally and then supplemented it with a written confirmation, which B sent to E. The confirmation contained a warranty clause not in the original oral contract. E received the confirmation but did not read it. The contract did not contain any definite terms about the party. One may argue that there was a contract between the parties regardless of the specificity of the terms because there was consideration on both sides—E would throw a party for B and B would pay E. 3 While there may be a contract on the basis of consideration, one may also argue that there was no contract because there was no meeting of the minds under Restatement §201. E may argue that the parties attached different meanings to the term "high end." B did not explain what it meant by the term to E, and E did not clarify its understanding of the term to B. However, E should have known that E likely had a different understanding of the term than it did because it knew going in that E had had little experience working with high end parties and that E did not specialize in the advertising industry. As such, E may argue under Restatement §201 either that its understanding of the term "high end" governed because B should have known what it meant, or that there was no contract, period, because the parties attached different meanings to the term. B may counter by arguing that the warranty clause it inserted in the contract held E to its standards and that E should have been required to provide services as B wished. However, this argument will not likely be successful because the warranty did not serve to clear up any of the ambiguities in the initial contract. The fact that E did not read it is irrelevant—had E read the warranty, it still would not have known what B wanted. E would not likely be liable for damages based on the warranty. If a court were to have found that the warranty provision governed, E would be responsible only for the difference in price in the services he provided and the services that the warranty provision demanded. He could not be held responsible for B's losses for losing the contract with A or any of A's losses for which B was held responsible. E, as a contractor, had no idea about the amount of money riding on the party of the importance of the party's reputation. As such, damages will likely be limited by foreseeability. If a court found that E's understanding of high end governed, it must consider whether or not E breached that contract when it provided paper plates and salami. B may argue that even with E's limited understanding of high end, it should have known that salami and paper plates do not satisfy such a definition; however, if that was in fact E's interpretation, B does not have much of a case because it knew that E would not have known. Under these circumstances, a court would not likely find material breach, meaning that B would not be entitled to damages. Under this circumstance, B would have to pay E expectation damages—the value of its services. If the court found no contract to begin with because the parties had different meanings of the term "high end," E would not be liable for contractual damages. Even if a court found no contract, E would be entitled to recover in quantum meruit for the services it provided for p to prevent unjust enrichment.  

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