Question

Hector is a building contractor and entered into a contract on February 1, 2018 to build a house for Lois for $350,000 with a completion date of July 1, 2018. Payments are to be made to Hector by Lois of $50,000 on the signing of the contract, $150,000 on April 1, provided the house is partially completed as defined in the contract, and $150,000 on July 1, 2018, when the house is fully completed. Lois is very clear that the house must be finished by July 1, 2018 because she will return from her honeymoon that day and needs to move in on that day. The original payment on July 1 and the partial completion payment on April 1 are made by Lois. Lois is satisfied things are going well. However, she drives by the house on May 1 and is angry when it appears no one from Hector’s company is working and it doesn’t appear anything additional has been done since April 1. She contacts Hector, who admits that work has stopped on the house and that because of a labor dispute he cannot complete the job by the deadline of July 1 without an additional payment from Lois of $20,000 so he can hire additional workers. Lois is incensed, but ultimately agrees to pay the $20,000 and Hector assures her it will be completed by July 1. Hector completes the house on July 1, but Lois refuses to pay the final payment of $150,000 or the $20,000 on the additional agreement saying that Hector has breached the original contract by pointing out, among other things that the garage floor of the house was to be painted with an abrasive blue paint and that the fixtures in two of the bathrooms did not meet the specifications of the contract. Hector used a similar, but less expensive abrasive paint in the garage and similar but less expensive bathroom fixtures. It is estimated that the less expensive items saved him about $3,000. Hector counterclaims for $170,000. Discuss all the issues associated with this scenario. Who should win the litigation between Hector and Lois and how much is the relief to be received?

Answer 1

Hector is the contractor and Lois is the customer in the above case. The total cost is $350000

Payment : $ 50000 at the time of signing agreement, and $150000 partial payment while progressing the work and balance amount is $150000 once completed the work on agreed time.

contract effective February 1 2018 and completion date July 1 2018.  

Here the case is the Work has been completed at the agreed date but contractor hector incurred extra expense of $20000 due to labour strike.

Here the contractor Hector will win the case as they have completed the work by time and Lois to clear their payment. Assume the extract cost incurred is Hectors responsibility and Lois may consider as humanitarian concept. Hector supposed to receive the balance amount of $150000 only. Subject to Courts decision.