Case Study Of NPA-Powersnap

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NPA-PowerSnap:
Applicable law:
Bonebrake: The predominant thrust of the agreement is the service of rebuilding Newstate’s power-grid. Common Law applies.
Enforceability:
Offer §24: o The RFP was not an offer because invitations to bit are not considered offers. But when PowerSnap submitted a bid, PowerSnap became the offeror and NPA became the offeree.
Acceptance §50: o When partly by default, PowerSnap got the contract to rebuild the power-grid with a total contract price of $300 million dollars, it became NPA’s mirroring of PowerSnap’s manifestation to assent.
Consideration (suspenders) §71: o PowerSnap promised to rebuild Newstate’s power-grid in exchange for NPA’s promise of payment. Therefore, an exchange of promises that were bargained
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o Mr. Volt raised a question during the contract signing about the specific article. o NPA’s executive assured him that the clause meant that cancellation could take place only for a good reason related to non-performance of the contract.
Breach:
NPA cancelled the contract at the beginning of November, in accordance with article 11 of the contract. Therefore, total breach of contract.
Article 11 also mentions, if NPA terminates the contract, the contractor shall be compensated for actual, reasonable, and necessary expenses, including reasonable demobilization costs caused by such termination. Those damages would be reliance interest.
Damages:
Liquidated: o There is no Liquidated Damages clause in the contract. But article 3 of the contract does state that payment shall not exceed $300 million.
Expectation §347: o Would put PowerSnap where it would have been had the contract been fully performed. This would be all transportation and materials ($40 million), feeding and housing the workers ($20 million), workers’ wages ($30 million), moving all back to mainland after termination ($30 million), and PowerSnap’s expected profit (30% of $300 million= $90
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Volt that the clause meant that cancellation could take place only for a good reason related to non-performance of the contract. o The representation was not true because NPA was able to cancel the contract because of pressure and scrutiny from the media, rather than non-performance. o It is material because it induced Mr. Volt to sign the contract, making the contract voidable.
Impossibility:
o NPA would argue that according to Newstate law, they would not be able to award a public contract of more than $100 million unless there were three or more bids submitted for the project. Because there were only two bids submitted for the $300 million project, Newstate law would make it impossible for the public contract to be awarded, voiding the contract with PowerSnap.
Conclusion:
NPA breached the contract with PowerSnap, and will be liable to pay reliance damages according to article 7 of the contract. Even though NPA may have a valid defense claim about Newstate law not allowing the contract, PowerSnap should regardless, be put in the position they would have been in had the contract never occurred. It was NPA who breached as well as NPA’s fault for not mentioning the law before awarding the

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