Contracts 2 Week 3

Front 1

Andy contracts with Bonnie to install a heating system in Bonnie’s factory, for a price of $20,000 to be paid on condition of satisfactory completion.” After Andy installs the system, Bonnie states that she is not satisfied, even though, according to experts, the heating system is satisfactory. May Andy recover the $20,000 from Bonnie?

Back 1

Yes. Andy has a claim against Bob for the $20,000 because, under the objective standard, the heating system is satisfactory.

Front 2

Andy contracts with Bonnie to paint a portrait of Bonnie’s daughter, for which Bonnie promises to pay Andy $5,000 “if entirely satisfied.” Andy paints the portrait, but Bonnie honestly states that she is not satisfied with it, and she refused to pay Andy the $5,000. Bonnie gives no reason for her disapproval, and experts in the field state that it is an admirable work of art. May Andy recover the $5,000 from Bonnie?

Back 2

No. Andy has no claim against Bonnie for the $5,000 because it is not practicable to apply an objective standard to the painting, and Bonnie is “honestly” dissatisfied.

Front 3

Andy contracts with Bonnie to have her band play in Andy’s bar for six months. The contract provides that “if the band is unsatisfactory to Andy, the contract is subject to termination with two week’s notice.” Andy has, on occasion, objected when Bonnie is absent and a guitarist is substituted in place of her string bass. After two months, Andy gives notice of termination, stating that he is dissatisfied for this reason. May Bonnie recover in a claim against Andy for the profit on the remainder of the contract?

Back 3

No. Bonnie has no claim against Andy because it is not practicable to apply an objective test to his satisfaction with the band’s performance, and his good faith dissatisfaction is supported by the fact that he previously objected to the substitution before terminating, and it is the stated reason for the termination.

Front 4

Ann promises to sell land to Bob, and Bob promises to pay Ann $50,000 for the land. No provision was made for the time of delivery of the deed or of the payment. When must the deed be delivered? When must the payment be delivered?

Back 4

Could the parties have decided who goes first? Of course, but if they don’t, the court can impose on the parties a constructive condition ordering that performance, preferring simultaneous performance, which can be done here.

Front 5

Andy and Bonnie contract to merge their corporation holdings into a single new company. It is agreed that the new company will not be formed unless each of them raises an additional $500,000 in capital. If Andy fails to raise his $500,000, but Bonnie raises hers, may Bonnie successfully sue Andy for breach of contract?

Back 5

No. If the money is not raised by each of them, the duty to form the new company never arises. The $500,000 from each of them was a condition precedent to the formation of the new company.

Front 6

Andy promises to make necessary interior repairs on a building that he leases to Bonnie, but he does not reserve any right of entry to the building. Is Bonnie’s notice of any necessary repairs a condition on Andy’s duty to repair? Is Bonnie under any duty to give notice?

Back 6

Bonnie’s giving notice is a condition that would trigger Andy’s duty to repair, but Bonnie has no duty to give that notice.

Front 7

Andy, a tenant of Bonnie’s, promises to pay $1,000 for “such repairs as an architect appointed by Bonnie shall approve.” If Bonnie fails to appoint an architect, may Andy sue her for breach of contract?

Back 7

No. Bonnie is under no duty to appoint an architect, but her failure to do so would be a failure of a condition precedent, and Andy’s duty would not arise under the K.

Front 8

Andy, a general contractor, contracts with Bonnie, a sub-contractor, for the roofing work on a construction project. Bonnie is to receive $200,000, but her “payment is due only after the owner pays the general contractor” for the entire job. Bonnie completes the roofing work on July 31, and the entire construction project is completed on August 31, but the owner becomes insolvent before paying Andy. It is now December 31, may Bonnie successfully sue Andy for the $200,000? Why?

Back 8

Probably. Generally, the burden of non-payment is placed on the general contractor, and not the sub contractors, absent clear language that the sub is accepting that burden. Here, it’s likely that the court would only find that the language indicated the time that payment is due, not whether there is any payment due. Because it’s likely that a reasonable time has now past for the payment to be due, Andy owes Bonnie the money now.

Front 9

Andy contracts with Bonnie to repair Bonnie’s building for $20,000, payment to be made “on the satisfaction of Chris, Bonnie’s architect.” Andy makes the repairs, but Chris refuses to approve the work, and Chris provides supporting reasons for the refusal. Other experts in the field disagree with Chris’s explanation. If Andy sues Bonnie for the $20,000, will he be successful? Why?

Back 9

Andy will likely not be successful. The language is probably sufficiently clear to show that Chris’s subjective satisfaction was a condition precedent to payment. If Chris, in good faith, is honestly dissatisfied, it makes no difference that others in the field would have approved.

Front 10

Andy contracts with Bonnie to repair Bonnie’s building for $20,000, payment to be made “on the satisfaction of Chris, Bonnie’s architect.” Andy makes the repairs. Chris fails to inspect the work properly, refuses to approve the work, and Chris provides no reasons for the refusal. Other experts in the field disagree with Chris’s explanation. If Andy sues Bonnie for the $20,000, will he be successful? Why?

Back 10

Andy will likely be successful. Although the parties did not specifically agree that Chris would exercise an honest judgment (good faith) before refusing to approve, the court would impose that condition. Here he failed to inspect, and he provided no reason for the refusal to approve. So if Chris ought to have been reasonably satisfied, then the condition will have been fulfilled and payment would be due