Alfred started to drill on May 1. He had reached a depth of 200 feet on May 10 when his drill struck rock and broke, plugging the hole. The accident was unavoidable. It had cost Alfred $12 per foot to drill this 200 feet. Alfred said he would not charge Barbara for drilling the useless hole in the ground, but he would have to start a new well close by and could not promise its completion before July 1.

QUESTION

This is a two-part assignment that consists of two different contract analysis scenarios. Please answer both scenarios on one document, and upload it to Blackboard.
Contract analysis scenario one—damages determination: Alfred and Barbara own adjoining farms in Dry County, an area where all agriculture requires irrigation. Alfred bought a well-drilling rig and drilled a 400-foot well from which he drew drinking water. Barbara needed no additional irrigation water, but in January 1985, she asked Alfred on what terms he would drill a well near her house to supply better-tasting drinking water than the county water she has been using for years. Alfred said that because he had never before drilled a well for hire, he would charge Barbara only $10 per foot, about one dollar more than his expected cost. Alfred said that he would drill to a maximum depth of 600 feet, which is the deepest his rig could reach. Barbara said, “OK—as long as you can guarantee completion by June 1, we have a deal.” Alfred agreed, and he asked for $3,500 in advance, with any further payment or refund to be made on completion. Barbara said, “OK,” and she paid Alfred $3,500.

Alfred started to drill on May 1. He had reached a depth of 200 feet on May 10 when his drill struck rock and broke, plugging the hole. The accident was unavoidable. It had cost Alfred $12 per foot to drill this 200 feet. Alfred said he would not charge Barbara for drilling the useless hole in the ground, but he would have to start a new well close by and could not promise its completion before July 1.

Barbara, annoyed by Alfred’s failure, refused to let him start another well. On June 1, she contracted with Carl to drill a well. Carl agreed to drill to a maximum depth of 350 feet for $4,500, which Barbara also paid in advance, but Carl could not start drilling until October 1. He completed drilling and struck water at 300 feet on October 30.

In July, Barbara sued Alfred, seeking to recover her $3,500 paid to Alfred, plus the $4,500 paid to Carl.

On August 1, Dry County’s dam failed, thus reducing the amount of water available for irrigation. Barbara lost her apple crop worth $15,000. The loss could have been avoided by pumping from Barbara’s well if it had been operational by August 1. Barbara amended her complaint to add the $15,000 loss.
In a minimum of a 1,000-word contract analysis, discuss Barbara’s suit against Alfred. What are Barbara’s rights, and what damages, if any, will she recover?
Cite any direct quotes or paraphrased material from outside sources. Use APA format.
Contract analysis scenario two—remedies determination: Mundo manufactures printing presses. Extra, a publisher of a local newspaper, had decided to purchase new presses. Rep, a representative of Mundo, met with Boss, the president of Extra, to describe the advantages of Mundo’s new press. Rep also drew rough plans of the alterations that would be required in Extra’s pressroom to accommodate the new presses, including additional floor space and new electrical installations, and Rep left the plans with Boss.

On December 1, Boss received a letter signed by Seller, a member of Mundo’s sales staff, offering to sell the required number of presses at a cost of $2.4 million. The offer contained provisions relating to the delivery schedule, warranties, and payment terms but did not specify a particular mode of acceptance of the offer. Boss immediately decided to accept the offer and telephoned Seller’s office. Seller was out of town, and Boss left the following message: “Looks good. I’m sold. Call me when you get back so we can discuss details.”

Using the rough plans drawn by Rep, Boss also directed that work begin on the necessary pressroom renovations. By December 4, a wall had been demolished in the pressroom, and a contract had been signed for the new electrical installations.

On December 5, the President of the United States announced a ban on foreign imports of computerized heavy equipment. The ban removed—from the American market—a foreign manufacturer that had been the only competitor of Mundo. That afternoon, Boss received an email from Mundo stating, “All outstanding offers are withdrawn.” In a subsequent telephone conversation, Seller told Boss that Mundo would not deliver the presses for less than $2.9 million.
In a minimum of a 1,000-word contract analysis, discuss the following questions: Was Mundo obligated to sell the presses to Extra for $2.4 million? Assume Mundo was so obligated. What are Extra’s rights and remedies against Mundo?
Cite any direct quotes or paraphrased material from outside sources. Use APA format.

ANSWER

Contract Analysis Scenario One—Damages Determination

In the given scenario, Barbara entered into an agreement with Alfred for the drilling of a well near her house to supply better-tasting drinking water. However, due to an accident, Alfred was unable to complete the well within the agreed timeframe. Barbara subsequently contracted with Carl to drill a well, resulting in additional expenses. Barbara filed a lawsuit against Alfred seeking to recover the amounts paid to Alfred and Carl, as well as the loss of her apple crop due to a dam failure. This contract analysis will discuss Barbara’s rights and the potential damages she may recover.

To analyze Barbara’s suit against Alfred, we need to consider the formation of a valid contract and the applicable legal principles. A valid contract requires an offer, acceptance, consideration, capacity, and legality. In this case, Alfred made an offer to drill a well for Barbara at $10 per foot, which she accepted. The $3,500 payment made by Barbara also constitutes consideration, and both parties had the capacity to enter into the contract. Therefore, a valid contract was formed between Alfred and Barbara.

However, Alfred encountered an unavoidable accident when drilling the well, causing the drill to break and the hole to be plugged at a depth of 200 feet. Alfred offered to drill a new well nearby, but Barbara refused. As a result, Barbara engaged Carl to drill a well, incurring additional expenses. This raises the question of whether Alfred’s failure to complete the well constitutes a breach of contract.

A breach of contract occurs when one party fails to perform its obligations as outlined in the contract. In this case, Alfred’s failure to complete the well by June 1, as guaranteed, could be seen as a breach of contract. However, the extent of Alfred’s liability for the breach and the damages recoverable by Barbara depend on the concept of foreseeability and the principle of mitigation.

Foreseeability refers to the reasonable anticipation of the potential damages that may result from a breach of contract. In this scenario, it was foreseeable that Barbara would incur additional expenses if Alfred failed to complete the well on time. However, the extent of the damages may be limited to those that could have been reasonably foreseen at the time of contract formation. Barbara’s payment of $3,500 to Alfred was intended to cover the drilling costs, and she may argue that she should be reimbursed for this amount.

Additionally, the principle of mitigation requires the injured party to take reasonable steps to minimize their damages. Barbara’s refusal to allow Alfred to drill a new well nearby without justification may be viewed as a failure to mitigate her damages. As a result, her recovery of the $4,500 paid to Carl for drilling the new well may be limited or denied.

Furthermore, Barbara seeks to recover $15,000 for the loss of her apple crop, which she claims could have been avoided if the well had been operational by August 1. To determine the recoverability of these damages, we need to examine whether the loss was a direct consequence of Alfred’s breach and whether it was reasonably foreseeable at the time of contract formation.

The loss of the apple crop was caused by the failure of the county’s dam, which occurred after the breach of contract by Alfred. It is arguable that the dam failure was an intervening event that broke the chain of causation between Alfred’s breach and Barbara’s crop loss. Additionally, the loss of an apple crop may be considered a consequential or indirect loss, which is generally not recoverable unless it was within the contemplation of the parties at the time of contract formation.

Based on these considerations, Barbara’s rights and potential damages can be summarized as follows:

Reimbursement of $3,500: Barbara may be entitled to recover the amount paid to Alfred, as this represents the drilling costs that were not fulfilled due to Alfred’s breach of the contract.

Recovery of $4,500 paid to Carl: Barbara’s recovery of this amount may be limited or denied due to her failure to mitigate damages by refusing Alfred’s offer to drill a new well nearby.

$15,000 for crop loss: The recoverability of this amount is uncertain. The dam failure and the crop loss may be seen as intervening events that were not directly caused by Alfred’s breach. Additionally, the loss of an apple crop may be considered a consequential loss, which may not be recoverable unless it was reasonably foreseeable at the time of contract formation.

In conclusion, Barbara’s suit against Alfred involves various aspects of contract law, including breach of contract, foreseeability of damages, and the principle of mitigation. While Barbara may be entitled to reimbursement of the amount paid to Alfred, her recovery of the amount paid to Carl and the crop loss will depend on the specific circumstances and the court’s interpretation of these legal principles.

Contract Analysis Scenario Two—Remedies Determination

In the second scenario, Extra, a publisher of a local newspaper, decided to purchase new printing presses from Mundo. Mundo’s representative, Rep, met with Extra’s president, Boss, and presented the advantages of Mundo’s new presses. Boss expressed interest in the offer and directed pressroom renovations based on the rough plans provided by Rep. Boss then received a letter from Seller, a member of Mundo’s sales staff, offering to sell the presses for $2.4 million. Boss immediately accepted the offer and commenced the pressroom renovations. However, Mundo subsequently withdrew its offer due to external circumstances. This analysis will examine Mundo’s obligation to sell the presses, Extra’s rights, and the potential remedies available to Extra.

To determine whether Mundo was obligated to sell the presses to Extra for $2.4 million, we need to examine the elements of a contract formation, offer, acceptance, and consideration. In this case, Mundo made an offer to sell the presses to Extra for a specific price of $2.4 million. Boss accepted this offer by promptly communicating acceptance to Seller’s office. Therefore, a valid contract was formed between Mundo and Extra, and Mundo was obligated to sell the presses for $2.4 million.

However, Mundo later withdrew its offer by sending an email stating that all outstanding offers were withdrawn. The withdrawal of an offer typically terminates the offer and extinguishes any contractual obligations. Nonetheless, the question arises as to whether Mundo’s withdrawal was effective and whether Extra’s rights were affected by Mundo’s subsequent actions.

When an offer is accepted, a contract is created, and the parties acquire rights and obligations under that contract. Once a contract is formed, the general rule is that neither party can unilaterally withdraw without breaching the contract. Therefore, assuming Mundo was obligated to sell the presses for $2.4 million, its withdrawal of the offer would constitute a breach of contract.

In the event of a breach of contract, the non-breaching party is entitled to certain remedies. The available remedies depend on the nature and extent of the breach. In this case, Extra’s remedies against Mundo may include the following:

Specific Performance: Extra may seek an order from the court requiring Mundo to fulfill its contractual obligation by delivering the presses for the agreed-upon price of $2.4 million. This remedy is typically available when the subject matter of the contract is unique or when monetary damages are inadequate.

Damages: Extra may also seek monetary damages to compensate for any losses incurred as a result of Mundo’s breach. The damages would aim to place Extra in the position it would have been in if the breach had not occurred. The measure of damages would be calculated based on the difference between the contract price and the price for which Extra could obtain substitute presses.

Reliance Damages: Extra may additionally seek reliance damages, which aim to compensate for any expenses or losses incurred in reasonable reliance on Mundo’s promise to sell the presses at the agreed-upon price. These damages would cover the costs of pressroom renovations and any other expenses directly related to the contract.

In summary, assuming Mundo was obligated to sell the presses to Extra for $2.4 million, its withdrawal of the offer constituted a breach of contract. Extra’s rights against Mundo include the potential remedies of specific performance, damages, and reliance damages. The specific remedy sought would depend on the circumstances and the desired outcome for Extra.

Overall, both contract analysis scenarios involve complex legal issues related to breach of contract, damages determination, and remedies. The outcomes and recoverable damages in each case will depend on the specific facts, applicable laws, and the court’s interpretation of the contractual rights and obligations of the parties involved.