Contract Essay

 
Case1

An information technology firm submitted a bid to design software and hardware for an electronic technology process
to control the operation of a large scale baggage handling and related security facility for a major airline.
The firm’s guaranteed maximum price was the lowest bid and the contract was awarded to it. The contract conditions
entitled the information technology firm to terminate the contract if the airline did not pay monthly progress payments
within 15 days following certification that a process payment was due. Pursuant to the contract an independent
engineering firm engaged as contract administrator carried out the certification.
The work under contract was to be performed over an 8 month period. After commencing work on the project the
information technology firm determined that it had made significant judgment errors in arriving at its bid price and that
it would face a major loss on the project. Its concern about the anticipated loss was increased further when it was also
learned that, in comparison with other bidders, its bid price was extremely low and that, in winning the bid, by
comparison with the other bidders, it had left more than two million dollars “on the table”.
Three monthly progress payments were certified as due by the independent engineering firm and paid by the airline in
accordance with the terms of the contract. However, after the fourth monthly progress payment was certified as due by
the independent engineering firm, the airline’s finance department asked the information technology firm’s
representative on the project for additional information relating to an invoice from a subcontractor to the information
technology firm. The subcontractor’s invoice comprised a portion of the fourth progress payment amount. The airline’s
finance department requested that the additional information be provided prior to payment of the fourth progress
payment.
There was nothing in the signed contract between the information technology firm and the airline that obligated the
information technology firm to provide the additional information on the invoice from its subcontractor. However, the
information technology firm’s representative did verbally indicate to the airline’s finance department that the
additional information would be provided.
The information technology firm never provided the additional information relating to the subcontractor’s invoice
Sixteen days after the fourth progress payment had been certified for payment, the information technology firm
notified the airline in writing that it was terminating the contract because the airline was in default of its obligations to
make payments within fifteen days pursuant to the express wording of the contract.
Was the information technology firm entitled to terminate the contract in these circumstances? In giving reasons for
your answer, identify and explain the relevant legal principles, their purposes, how these precedents have arisen,
and how they apply to the facts. Be sure to reference relevant statutes and precedents.

Case2

An owner and a Contractor entered into a written construction contract which provided that payments were to be
made by the Owner to the Contractor within five days subsequent to an Engineer’s Certificate being issued and that, if
the Owner should fail to pay the Contractor within such five day period any sums certified as due by the Engineer, the
Contractor would be entitled to terminate the construction contract. The Contractor had been the lowest bidder on the
project and, as the construction proceeded, became concerned that, because of its low bid, it would lose money on the
contract.
During the first two months of the six-month construction schedule, the Engineer certified payments due by the Owner
to the Contractor and such payments were made to the Contractor within five days of such certification.
At the end of the third month of construction, the Engineer certified a further sum as due to the Contractor. In spite of
having received the Engineer’s Certificate, the Owner requested that prior to payment the Contractor obtain the
corporate seal of one of its subcontractors on a document supporting the Engineer’s Certificate and the Contractor
stated that it would obtain such corporate seal. However, the Contractor never did obtain the corporate seal; the five
day payment period passed and ten days later the Contractor notified the Owner that it was terminating the contract
on account of the Owner’s failure to pay it within the five day period pursuant to the terms of the construction
contract.
Was the Contractor entitled to terminate the contract in the circumstances? Explain. In giving reasons for your
answer, identify and explain the relevant legal principles, their purposes, how these precedents have arisen, and how
they apply to the facts. Be sure to reference relevant statutes and precedents.

 

PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A GOOD DISCOUNT