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Contracts

Exam 23
30 minutes

Fact Pattern

Homeowner hired Contractor to renovate her kitchen. Contractor agreed to install a new stove and oven unit, replace all of the laminate counters with quartz, and refinish the cupboards. In exchange, Homeowner agreed to pay Contractor $12,000, with one $6,000 installment up front when the agreement was signed, and the second $6,000 after work was complete. Homeowner was happy to pay $12,000 for the work, as she believed the renovated kitchen would add $15,000 to the value of her house. 

During the course of negotiations, Homeowner asked Contractor if it would be possible to guarantee that the work would be finished in four months. Contractor replied that he was happy to agree to a target date, but because it was difficult to anticipate possible complications with home renovation work, he was not willing to include a specific calendar date in their contract. Instead, Homeowner and Contractor specified in the agreement that the work would be finished “within a reasonable time of the target date, keeping in mind any contingencies that may arise during the project.” After that sentence, the agreement concluded, “This written agreement constitutes all terms and conditions of the contract.” 

After signing the agreement, Homeowner gave Contractor a personal check for $6,000, which Contractor cashed the next day. Contractor had informed Homeowner that it would likely take a week to arrange scheduling for his employees and order the needed supplies. Two weeks went by, however, without any update from Contractor to Homeowner. Homeowner called Contractor several times over the next week, leaving a series of voicemails asking him to call her back. Homeowner also emailed Contractor twice, writing that she was concerned to have not heard from him at all, and to please call her.

The following week, worried about the project, Homeowner visited Contractor’s office. Contractor was there, but when Homeowner asked why Contractor hadn’t called her back, Contractor waved his hand, said he had been extremely busy with other projects, and promised to give her an update “soon.”

Homeowner was not satisfied with this response, and drafted a letter over the weekend. In her letter, Homeowner said that she was concerned at the total lack of communication, particularly since Contractor had cashed her check a month earlier and had no orders or schedule to show for it. Homeowner concluded, “I am extremely concerned that you have done no work, and that you will not be doing any of the work we agreed upon despite receiving half of the payment already. Please contact me to discuss whether you are planning to finish my kitchen renovation as we agreed.” Homeowner sent the letter by certified mail, so that she received confirmation that Contractor received the letter. 

An additional two weeks later, after no response from Contractor, Homeowner sued for breach of contract. Contractor responded that he was planning to renovate her kitchen, but other projects had piled up, so he would have to delay work on her kitchen for another six months. Contractor argued that he was not in breach, as their agreement had no deadline. After Homeowner filed her lawsuit, her house unfortunately caught fire, and her kitchen was severely damaged. Homeowner has since hired another firm to rebuild the kitchen, at a cost of $20,000.


Questions

  1. Is Homeowner’s breach of contract suit premature, since even the four month deadline they initially discussed has not yet passed? Explain.
  2. If Homeowner argues that Contractor was clearly not going to perform before the “target date,” will a court consider their exchanges during negotiation to clarify what “target date” means? Explain.
  3. How much is the court likely to grant Homeowner in damages? Explain.

Question 1

Is Homeowner’s breach of contract suit premature, since even the four month deadline they initially discussed has not yet passed? Explain.

Question 2

If Homeowner argues that Contractor was clearly not going to perform before the “target date,” will a court consider their exchanges during negotiation to clarify what “target date” means? Explain.

Question 3

How much is the court likely to grant Homeowner in damages? Explain.

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