Art and Betty own adjoining farms in rural Riverside County, an area, where all agriculture requires irrigation. Art bought a well-drilling rig and drilled a 400-foot well from which he drew drinking water. Betty needed no additional irrigation water, but in January 1985, she asked Art on what terms he would drill a well near her house to supply better tasting drinking water than the County water she has been using for years.

Art said that because he had never before drilled a well for hire, he would charge Betty only $10 per foot, about $1 more than his expected cost. Art said that he would drill to a maximum depth of 600 feet, which is the deepest his rig could reach. Betty said, "OK, if you guarantee June 1 completion." Art agreed and asked for $3500 in advance, with any additional further payment or refund to be made on completion. Betty said, " OK," and paid Art $3500.

Art started to drill on May 1. He had reached a depth of 200 feet on May 10 when his drill struck rock and broke, plugging the hole. The accident was unavoidable. It had cost Art $12 per foot to drill this 200 feet. Art said he would not charge Betty for drilling the useless hole, but he would have to start a new well close by, and could not promise its completion before July 1.

Betty, annoyed by Art's failure, refused to let Art start another well and on June 1, she contracted with Carlos to drill a well. Carlos agreed to drill to a maximum depth of 350 feet for $4500, which Betty also paid in advance, but Carlos could not start drilling until October 1. He completed drilling and struck water at 300 feet on October 30.

In July, Betty sued Art seeking to recover her $3500, plus the $4500 paid to Carlos.

Discuss:

1.Was a contract between Betty and Art formed?If so discuss the offer, acceptance, and consideration

2.Performance - Was the contract properly performed.Are there any prevention to performance issues ie. was Art unable to perform and why.Is it a good enough excuse for Art to back out of the contract?

3.What are the defenses available to Art.What damages is Betty entitled to, if any.