Contracts

Fact pattern

Plumber was hired one year ago to be on call for all twenty units in Landlord’s apartment building. Under his agreement with Landlord, Plumber agreed that he would respond within 24 hours to any tenant who requested plumbing services. Plumber was to be paid a monthly retainer of $100 to be on call, and would be paid an additional $50 per hour of work he performed in the apartments. If Plumber failed to respond to a tenant within 24 hours, $50 would be deducted from his additional hourly wage. If Plumber failed to promptly respond for three months, Landlord could immediately terminate the agreement and refuse to pay any past due amounts. 

Initially, Plumber responded to tenant phone calls promptly. After two months under the agreement, however, Plumber began to call tenants back at a much more leisurely pace, two to three days after the initial call. Although Landlord reviewed Plumber’s invoices and was aware of Plumber’s delayed responses, Landlord did not impose the $50 penalty as outlined in their agreement.   

After six months of belated responses, Landlord read an online review of her apartment building. The reviewer complained that maintenance requests were not addressed quickly. Landlord then emailed Plumber: 

Good afternoon. I wanted to let you know that although I have let things slide about the requirement that you respond to tenants within 24 hours, I really need you to start complying with the requirement now. From here on out, if you don’t respond within 24 hours as we agreed, I will be deducting $50 from your invoices.

The following week, Tenant, a resident in Landlord’s building, called Plumber asking Plumber to fix a blocked sink. Plumber did not call Tenant back until three days later. Landlord ran into Tenant in the building lobby and learned of Plumber’s late response. After Plumber submitted his invoice for his work on the sink, Landlord sent another email:

I understand that you didn’t call Tenant in Apartment 2B back until three days after she called you. As we previously discussed, this is a violation of our agreement. I recently learned, however, that you are not properly licensed by the state, as required by Section 3.82, “Revenue Raising Licensing Requirements.” Since you aren’t licensed, our contract is illegal, and I won’t be paying you any more money.

As promised, Landlord refused to pay Plumber his $100 monthly retainer or for the three hours of work he performed in apartment 2B. Plumber has sued Landlord for breach of contract, and has asked for $250 in damages. Landlord responded that not only is the contract illegal, but that even if the contract was enforceable, she doesn’t owe Plumber anything, given Plumber’s repeated late responses to tenants over the last six months.

Questions

1. Is the contract between Landlord and Plumber unenforceable because Plumber is not properly licensed by the state? Explain.
2. If Plumber’s lack of a license does not render the contract unenforceable, may Landlord exercise the immediate termination clause based on at least three months of belated responses to tenants? Explain.
3. If a court finds that Landlord breached the contract, is the court likely to award Plumber the $250 he has requested? Explain.