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Art and Betty are neighbors and live in an agricultural area. Art just recently had built a new red barn. In late January 2004, Betty asked Art on what terms he would build a barn on her property. Art said that because he had never built a barn for hire, he would charge Betty only $100 per square foot, about $10 more than his expected cost. Art said that he would build a barn 50’ by 50’. Betty said, “OK, if you guarantee January 1, 2005, completion.” Art agreed and asked for $10,500 in advance to purchase supplies, with any additional further payment made on completion. Betty said, “OK,” and paid Art $10,500.
On March 10, 2004, Art started to purchase the lumber and found out that the price had increased 150% from the date of his original bid to Betty. On March 12, 2004, he notified Betty that he could not afford to build the barn for the agreed price. He said he would have to charge $30.00 more per square foot because of the increase in lumber prices. Betty orally agreed to the price increase.
On May 1, 2004, Art notified Betty that he would not build the barn because he had just contracted to sell his farm to Ted and would be moving out of the area. Betty then contacted her uncle John, explained her circumstances with Art and asked John if he would build the barn on the same terms as she agreed with Art. John said that since Betty was his favorite niece, he would build the barn for her at no charge. Betty thanked John for his generosity and accepted. Betty was able to stop looking for someone to build the barn. John died before he started work on the barn.
Betty, annoyed by Art’s failure, sued Art seeking to recover her $10,500, plus damages. Further, Betty is seeking damages from John’s estate for John’s failure to build the barn.
1. In her suit against Art, what are Betty’s rights and what damages, if any, and will she recover? Discuss.
2. In her suit against John’s estate, what are Betty’s rights and what damages, if any, and will she recover? Discuss. +400 words
1. In her suit against Art, Betty has a right to be compensated for the breach of contract and damages caused by Art’s failure to build the barn as agreed upon. Since Betty paid Art $10,500 in advance for supplies, she may be entitled to recover that amount along with any additional damages she incurred due to the breach. The additional damages could include costs associated with finding another contractor or builder and any interest earned on the money had it not been given to Art.
It is likely that Betty will recover at least her $10,500 advance payment from Art as this was part of their agreement before he breached the contract and failed to build the barn. Whether or not she can collect further damages beyond that amount will depend on whether or not those expenses were foreseeable at the time of contracting and if they can be proven in court as being directly related to Art’s breach.
2. In her suit against John’s estate, Betty may have a right to compensation based on quantum meruit (Latin for “what one has earned”). This principle states that parties should receive fair value for services rendered when there is no other contractual arrangement between them; in this case, there was an oral agreement between Betty and John but it was never fulfilled due his death before work began on the barn. Quantum meruit thus provides an equitable remedy by allowing recovery even if there is no contract in place since John already began working towards meeting his obligation under their agreement when he died without completing it.
In such a situation, courts often award reasonable payments based on what services have been provided so far; however, because no work had actually begun yet in this case there might be little grounds for compensating John’s estate unless some other types of losses were incurred because of his death (e.g., organizational/administrative costs associated with finding someone else). If such losses are proven then they may be awarded depending upon how much they are deemed reasonable amongst all parties involved (i.e., both sides must agree upon a fair amount)