Question:
Oasis Waterpark, located in Palm Springs, California, sought out Hydrotech Systems, Inc., a New York corporation, to design and construct a surfing pool. Hydrotech replied that it could design the pool and sell all the necessary equipment to Oasis, but it could not build the pool because it was not licensed in California. Oasis insisted that Hydrotech do the construction work because Hydrotech had unique expertise in these pools. Oasis promised to arrange for a licensed California contractor to “work with” Hydrotech on the construction; Oasis also assured Hydrotech that it would pay the full contract price of $850,000, regardless of any licensing issues. Hydrotech designed and installed the pool as ordered. But Oasis failed to make the final payment of $110,000. Hydrotech sued. Can Hydrotech sue for either breach of contract or fraud (trickery)? Argument for Oasis: The licensing law protects the public from incompetence and dishonesty. The legislature made the section strict: no license, no payment. If the court were to start picking and choosing which unlicensed contractors could win a suit, it would be inviting incompetent workers to endanger the public and then come into court and try their luck. That is precisely the danger the legislature seeks to avoid. Argument for Hydrotech: This is not the kind of case the legislature was worried about. Hydrotech has never solicited work in California. Hydrotech went out of its way to avoid doing any contracting work, informing Oasis that it was unlicensed in the state. Oasis insisted on bringing Hydrotech into the state to do work. If Oasis has its way, word will go out that any owner can get free work done by hiring an unlicensed builder. Make any promises you want, get the work done to your satisfaction, and then stiff the contractor—you’ll never have to pay.