discussion post 632

Choose Either Question 1 or Question 2 and Answer the 4 Questions

Question 1

Cambridge Engineering, Inc. (“CEI”) is a national company that provides traffic engineering services, and most of its clients are the Departments of Transportation of the federal and state governments. The Missouri Department of Transportation plans to add one lane of travel in each direction of Interstate 70 near Kansas City, and it enters into a $100 million contract with CEI. The project is to be completed within 30 months, and the contract provides that the failure to complete the project on time for any reason will result in liquidated damages of $10,000 to be paid by CEI to the Department of Transportation for every day of delay in completion of the project exceeding 30 months.

(1) CEI needs a Project Manager and they recruit Joseph Pepper, who is currently living and working in Philadelphia. After a round of interviews, CEI’s Director of Human Resources calls Joseph and offers him the job. It is to be for the term of 30 months, with a salary of $80,000 per year plus benefits and a bonus for completing the job on time and on budget. She tells him that this offer is subject to the approval of the CEO, which had not yet been provided. The next day Joseph sends an email message to the Director of Human Resources and accepts the offer. The Director of Human Resources calls Joseph later that day and tells him that the CEO did not approve hiring him because she wants to hire her niece instead. Joseph is upset and he contacts an attorney because he believes that he had an enforceable oral contract for the job. Was there an enforceable employment contract? Why or why not?

(2) Same scenario as in No. 1 except that the CEO approved hiring Joseph. CEI prepares a contract and it includes a provision that Joseph must relocate to Missouri for the length of the project (probably 30 months). This topic had not been discussed during the interviews, and Joseph balks about this as he had hoped to travel between Philadelphia and Kansas City every week instead of moving his family to Kansas City. Is this a mutual mistake of fact that will allow for rescission of the oral agreement? Why or why not?

(3) Same scenario as No. 2 except that Joseph is willing to relocate to Kansas City. Where consideration is something of legal value being given by each party, what do you think should each party seek from the other as the consideration to be included in the written contract? In other words, what is the bargained for exchange from each party?

(4) The project runs 60 days over the 30 month duration for completion, so the Missouri Department of Transportation demands $600,000 from CEI ($10,000 per day for 60 days). CEI objects and claims that the delay was caused by an unexpected run of bad weather both in winter and summer, so the delay was not its fault. Where the contract was express in providing that the liquidated damages of $10,000 per day for delay in completion for any reason, is the court likely to enforce this provision? Why or why not?

Question 2

A very reputable law firm specializing in trusts and estates enters into a written lease for 15,000 sf of space in an office building pursuant to a five year lease. The clients who visit this law firm are generally wealthy individuals who are seeking advice about managing their wealth, preparing their wills and creating trusts for their beneficiaries. The law firm occupies most of the second floor of the building, and another tenant occupies the remaining 4,000 sf on that floor. The lease does not contain a right of first refusal for the contiguous space, and it is silent about possible expansion space. About one year into the lease, the managing partner of the law firm told the building owner’s representative on site that the firm was growing and would be interested in leasing the other 4,000 sf on that floor whenever its tenant left. The building owner’s representative responded, “No problem; we will be glad to do that.” This was not memorialized in any written document, particularly a written amendment to the law firm’s lease. The other tenant left when the law firm had three years remaining on its lease. The building owner told the managing partner of the law firm that the space had already been leased for the next ten years for use as a methadone clinic, and that there was a written lease between the building owner and the operator of the methadone clinic that could not be broken. The members of the law firm were upset because they had not been told in advance that the tenant was vacating the premises and given an opportunity to lease that space, and even more upset because their clients would not want to visit their offices when they would have to share the building lobby, the elevators and the second floor hall with the clientele of the methadone clinic down the hall.

(1) Does the law firm have a valid claim for breach of contract against the building owner for failing to provide an opportunity to lease the 4,000 sf of space before leasing it to the methadone clinic? Why or why not?

(2) Was there a misrepresentation by the building owner’s representative when he said, “No problem, we will be glad to do that?” Why or why not?

(3) Three years into the five year lease term, the law firm vacates the premises without notice because of a conclusion that the close proximity of the methadone clinic has driven away some of the law firm’s clients. The building owner sues the law firm for breach of contract. What damages can the building owner seek from the law firm?

(4) How does the concept of mitigation of damages come into play with respect to the building owner’s conduct after the law firm vacates the premises? Does this provide any defense to the law firm in the building owner’s lawsuit?

 

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