1. The Winklers were interested in purchasing a home in the Valleyview Farms hou
ID: 2495132 • Letter: 1
Question
1. The Winklers were interested in purchasing a home in the Valleyview Farms housing development. They contracted the developer, Galehouse, and selected a lot that cost $57,000. They asked the developer to show them plans for houses for which the construction costs would range from $1800,000 to 190,000, indicating that this was the price they would be willing to spend on construction only and wasn’t to include the lot price. The developer gave them several books and plans to look at. After the Winklers had several conversations with Galehouse, he drafted plans for a house and gave the Winklers a quote of $198,000 for the construction costs. The lot price was not included. After several weeks of negotiations, the parties agreed on a price of $291,000 for both the construction costs and the lot. Galehouse prepared a written contract to reflect the agreement of the parties, but he forgot to include the lot price. The final contract read “price for $198,000.” The Winklers paid Galehouse $57,000, the lot price, as a down payment. When the construction was completed, and the Winklers were finalizing their loan from the bank, the parties discovered the error in the contract. The Winkler’s argued that the written contract indicated total costs of $198,000, and that is the total amount they should pay. Galehouse sued to have the contract reformed to reflect the full agreed upon price of $291,000. Should the contract be reformed? Why or why not? Fully explain your answer. 2. The Laths were the owners of a farm that they wished to sell. Mrs. Mitchell considered purchasing the land but found that a barn located across the road was objectionable. Mitchell argued that the Laths orally agreed to remove the barn in consideration of her promise to purchase the property, which she agreed to do for $8,400 in a written contract. The contract made no mention of the removal of the barn. After Mitchell moved into her new home and made several improvements to the land, the Laths never removed the barn and expressly communicated that they had no intentions of removing the barn. Mitchell sued the Laths for breach of contract. In whose favor do you think the court ruled? What effect does the parol evidence rule have on admissibility of oral agreements regarding the promise to remove the barn? Fully explain your answer. 3. Shirley and Vince Ladner leased 10 acres of their land to J.D. Pigg, who used the land for his cattle farm. The Landers and Pigg created a 10-year contract, providing that rent be paid annually on August 1. Pigg excuted the lease with his first payment of cash in August 2000. On August 1, 2001, Mrs. Pigg attempted to mail the check for the second rent payment but placed the wrong mailing address on the envelope. Consequently, the check was returned to her residence. Mrs. Pigg then properly forwarded the check to the Ladners. However, the Ladners did not receive the check until August 8, 2001, at which time they refused to accept the payment and returned the check to Pigg. The Ladners claimed that the lease had been terminated by Pigg’s failure to submit payment in a timely manner, and this failure constituted a material breach of contract. Is Pigg’s failure to tender payment on August 1 a material breach of the lease? Why or why not. Fully explain your answer.
Explanation / Answer
1. In this case, there has been mistake in the contract but without intention. Since, after mutual negotiations, both the parties agreed on a price $291000 for both construction cost and the lot, but somehow Galehouse forgot to include the lot price in the written contract. The final contract read price for $198000. After paying $57000, the lot price as down payment and completion of construction, both the parties discovered the error in the contract.
The Wrinklers argued that $198000 is the final amount ,according to the contract, that should be paid. Galehouse sued the contract be reformed as $ 291000 should be the actual payment to be made. Generally, reformation is done as a legal remedy to correct the contract in case any error occurs. During the reformation process, the contract is revised legally in order to correct the agreement.
Now, since both the parties do not agree for this revised contract, they are not agreeing mutually for this mistake, thus the error does not come into the realm "mutual mistake". In this case, the court is held to make the decision, as reformation is not the appropriate decision to be made, there may be penalties involves seeing the intentions of both the parties. Thus, we can say that in the end ,the intentions of both the parties are considered.
2. The breach of contract is a legal term used when one party ddeny to perform the function according to the agreed contract. In case, one party does not perform hois/her actions according to the written contract or we can say does not fulfill contractual promise, it is said to be breach of contract.
In this case, the laths orally agreed to remove the barn located across the road, however, did not mention in the written contract. And, later deny to remove the same. So, in this case, the laths literally breached the contract, therefore Mitchell, the opposite party can not insist the court to order to the Laths to remove the barn as this was not specified in the contract.
In such cases, parol evidence rule is taken into account. It determines the admissibility of the evidence other than actual agreement when a quarrel or dispute occurs over written contract. In case, any oral agreement is made, it merges into written contract knowing as integration. However, written agreement can not be revised but it facilitates decision making and results in finality of the case agreeing with the parties intentions. But, is not applied on oral contracts made. This policy is to prevent lying, frauds.
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