Question

BUSINESS LAW

The Smith Construction Company, a general contractor, agrees to build a multi-story office building for the Ace Computer Corporation at a total cost of $7,000,000.. After the project is completed, a representative from Ace Computer inspects the structure. The inspection reveals a significant problem with the electrical system. As a result, Ace Computer refuses to pay the $7,000,000 and take possession of the building. The representative from Smith Construction points out that the electrical work was completed by Brown Electrical Inc., a subcontractor. In other words, Smith Construction had delegated the duty to complete the electrical work to Brown Electrical. Smith Construction demands that Ace Computer pay the $7,000,000 minus the cost of the electrical work. Smith Construction argues that Ace Computer should resolve the electrical problem with Brown Electrical. The representative notes that, since the faulty electrical work was not performed by Smith Construction, it is not liable for the problem.

1.  Will Ace Computer have to pay the $7,000,000, minus the cost of the electrical work, take possession of the building, and resolve the electrical problem with Brown Electrical.  

Answer 1

The Ace Computer Corporation had made the contract with the Smith Construction Company for the construction of the building. It was not the concern of Ace Corp. that which other subcontractors are getting involved in the project. The Ace Corp. was not even aware that the subcontracting for electricity had been done to a third party, Brown Electrical. So, only Smith Construction Company will be answerable to Ace Corp. and will have to take the liability of the electrical issue.