The partners entered into an oral contract in June, under which plaintiff agreed

Question

The partners entered into an oral contract in June, under which plaintiff agreed to construct a building for defendant on a time and materials basis, as a maximum cost of $56,146, plus sales tax and extras ordered by defendant. When the building was 90 percent completed, defendant told plaintiff he was unhappy with the whole job as “the thing just wasn’t being run right.” The parties then on October 17 signed a written agreement lowering the maximum cost to $52,000 plus sales tax. Plaintiff thereafter completed the building at a cost of $64,155. The maximum under the June oral agreement, plus extras and sales tax, totaled $61,040. Explain whether defendant is obligated to pay only the lower maximum fixed by the October 17 agreement.

1. Highlight the pertinent facts;

2. Identify the issue of law posed by the case problem;

3. What should be the decision in the case?

4. The reasoning for such decision.

Explanation / Answer

2. Now the issue of the law posed by the case problem is whether the defendant should pay as per oral contract of June 17 or written agreement of Oct 17.

3. The decision, in this case, will be the defendant has to pay the plaintiff as per the written agreement i.e. $64,155 inclusive of sales tax and extras ordered by defendants as the written agreement is more powerful than the oral contract. Although, the oral contract is enforceable written agreement is valid and here oral contract becomes void.

4. The written and oral contract is valid and legally bound but written agreements are valid for a longer period of time i.e. 6 years depends again on the states and oral contracts are 3 years valid. Written agreements are more specific as it outlines the obligations involved for both the parties.

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