You have been hired by Joe Contractor to handle the following situation:
Big Ben Bully hired Joe Contractor to build him a state-of-the art recording studio. Ben was a very famous artist and was known around Hollywood to love to carry guns. Joe was likewise famous as a contractor for the stars. In fact, one of Ben’s friends told him, “No one can do the job like Joe. I mean NO ONE. His work is special and cannot be replicated.” During contract negotiations, Ben told Joe that he wanted “only the best” wiring for his studio. Ben agreed to pay Joe $1,000,000 for building the studio. Included in that price was $100,000 for making the sound studio wiring “top-of-the-line.” Joe knew that Ben had fired the prior contractor and pulled a gun on him when the contractor tried to negotiate the terms of the contract. Joe was scared of Bully, but he really needed the money quickly, as his daughter needed surgery and he did not have good insurance. Bully knew this as well. The contract specified that Joe should only use cable made by Bosey and substitutions of materials must be approved by Ben. At the time of the negotiations, Joe did not want to agree to that term, as he thought he knew the best cables for the job. However, when Ben started yelling at him that he was stupid and reached toward his waist, Joe agreed. Ben also wanted Joe to sign a contract that required that Joe only build a studio this special for him. Ben had a bit of an ego and wanted to be the only person with this type of studio. Joe signed the contract.
Ben was on tour in an unknown location when Joe started building the studio. Joe went to the store and bought Bosie cable and got to work. Joe was not sure if this was the exact cable Ben wanted, and because he was so scared, he called him repeatedly to verify, but Ben never answered the phone. Since Ben could not be reached and Joe was under a tight time schedule, he got to work. Joe finished the project entirely before Ben got back. When Ben returned, Joe showed him the studio. Ben asked him about the wiring, and Joe showed him the receipt for the Bosey wiring. Ben went into a rage, and said, “I TOLD YOU BOSIE!!!!!!” Ben refused to pay Joe for the job. Joe wants you to sue Ben for failing to pay the balance owed and he wants damages for the delay in payment
- Is there an enforceable contract in place between Joe and Big Ben?
- Would Joe have any defenses to enforcement of the contract if he decided he did not wanted to quit the project before its completion?
- There are 3 types of contract performance: complete, substantial and material breach. Describe the differences (and similarities) among the three, and explain some of the legal ramifications for one or more of these types of performances. (For example, what happens if one party performs completely but the other party performs only substantially?) Give examples from outside readings or experiences in your career or personal business life. Applying those theories to the case at hand, would Ben be successful in seeking specific performance from Joe if Joe tried to get out of the contract?
- Would Ben be successful in preventing Joe from building another studio similar to his for a different artist?
- If Joe had come to you before agreeing to the contract, what advice would you have given him before entering into a contract with Ben to help make sure the contract is enforceable? What if you were Ben’s attorney? What will be (or should be) the outcome of this case and why?
- What are the two most important concepts from this exercise that will help you in future contract negotiations?