Case Problem analysis for Business Law.

Case Question \# 3 Sally's Gym grows in membership and becomes a thriving business. Sally has a large number of people who have come to her gym desiring training in strength sports like powerlifting and Olympic weightlifting. Sally doesn't know much about training in these areas, and while her gym does have some weightlifing equipment, she really does not have enough space and the proper equipment to properly train clients in these areas. Sally decides that she wants to grow her business, so she hires Raymond, a contractor, to build a dedicated weightlifting space on her property. She goes over some plans with Raymond, and they enter into a contract for the following: 1. Raymond will construct a metal building behind Sally's main facility. This will be a separate metal building designed for nothing but weight training. Raymond will build a cement walkway from Sally's main building to the weight training building that will be covered with a metal awning so patrons don't have to walk in the rain to go the additional building. 2. The new building will be a 30ft. by 50ft. metal building on a concrete slab. It will be insulated and have central heating and air conditioning. It will not have any plumbing or bathroom facilities, as those will be located in the Sally's main building. 3. The total price for the new building will be $50,000, and will be completed and ready to use within 3 months. Sally agrees that she will pay $10,000 after the concrete slab is laid, and another $20,000 once the metal building is fully constructed, "dried in" (the exterior is completed such that the inside is completely dry), and has electricity. She will pay the remainder of the price once Raymond has completely finished the building and it is ready to use (fully insulated, installed the central heating and air conditioning. etc.). Sally stresses to Raymond that it is critically important that the building is done within 3 months. She is afraid that she will lose clients who are interested in strength training to her competitors if she doesn't get this new facility completed soon. Raymond says that he doesn't foresce that being a problem and agrees to have the 3 month time frame stated in the contract as the expected completion date. However, he notes that he can't guarantee that it will be completed within that time frame due to construction issues that could arise that are out of his control, and the contract does not have a time is of the essence clause. Sally hires Raymond anyway because he is the largest contractor in the area and has an excellent reputation for finishing products on schedule and within budget. Initially, the construction project goes well. Raymond gets the conerete slab laid on schedule, and Sally pays him $10,000. Raymond also gets the second stage of the project done on schedule, and requests the second $20,000 payment from Sally. However, Sally is a little bit short on money at that time, and asks Raymond if she can wait another month before making the $20,000 payment. Raymond's company is quite large and has no problems with its cash flow, so he tells Sally that will be fine and continues with the project. counters problems during the third stage of the project. Due to supply shortages VID-19 pandemic, he cannot get all of the materials and equipment he needs to atral heating and air conditioning within the 3 months project deadline. Other than ating and air, the building is finished. Raymond and Sally have the following Raymond: OK, everything with the building is done other than the central heating and air conditioning. Due to unexpected supply shortages, it will probably be another 2 months before the central heating and air equipment is in, but once it gets in we'll install it as soon as possible. But you can start using the building now. Sally: Are you kidding mel? The building is basically useless to me without air conditioning! It's in the middle of the summer - no one is going to want to use the building to lift weights when it's over 100 degrees in there! We agreed that this thing had to be done within 3 months! Raymond: I know this is disappointing, but there's nothing we can do about it. How about this - you still owe me a $20,000 payment from the second stage of the project. Go ahead and make that payment now, but I don't expect you to pay me the final $20,000 until the AC comes in and we get it all installed. I think that is more than fair. Sally: You're crazy. I'm not paying you another cent. You've completely breached this contract because you didn't deliver what I paid for within the time frame we agreed on. In fact, I may sue you to get back the $10,000 I've already paid you. 't pay Raymond anything more. She begins to use the building, but as anticipated, tomers are quite unhappy with how hot it is. Two months after the original 3 month d, Raymond calls Sally and says "I have the air conditioning equipment in. I can cek and get it installed. After I get it in you can pay me for the building." Sally thim on the property, and instead sues him for breach of contract to get her first ment back. Raymond countersues and asserts that Sally has breached the contract, Id be allowed to finish the job and get his full payment. Evaluate this breach of im. Who breached, and why? What are they entitled to? Case Question \# 3 Sally's Gym grows in membership and becomes a thriving business. Sally has a large number of people who have come to her gym desiring training in strength sports like powerlifting and Olympic weightlifting. Sally doesn't know much about training in these areas, and while her gym does have some weightlifing equipment, she really does not have enough space and the proper equipment to properly train clients in these areas. Sally decides that she wants to grow her business, so she hires Raymond, a contractor, to build a dedicated weightlifting space on her property. She goes over some plans with Raymond, and they enter into a contract for the following: 1. Raymond will construct a metal building behind Sally's main facility. This will be a separate metal building designed for nothing but weight training. Raymond will build a cement walkway from Sally's main building to the weight training building that will be covered with a metal awning so patrons don't have to walk in the rain to go the additional building. 2. The new building will be a 30ft. by 50ft. metal building on a concrete slab. It will be insulated and have central heating and air conditioning. It will not have any plumbing or bathroom facilities, as those will be located in the Sally's main building. 3. The total price for the new building will be $50,000, and will be completed and ready to use within 3 months. Sally agrees that she will pay $10,000 after the concrete slab is laid, and another $20,000 once the metal building is fully constructed, "dried in" (the exterior is completed such that the inside is completely dry), and has electricity. She will pay the remainder of the price once Raymond has completely finished the building and it is ready to use (fully insulated, installed the central heating and air conditioning. etc.). Sally stresses to Raymond that it is critically important that the building is done within 3 months. She is afraid that she will lose clients who are interested in strength training to her competitors if she doesn't get this new facility completed soon. Raymond says that he doesn't foresce that being a problem and agrees to have the 3 month time frame stated in the contract as the expected completion date. However, he notes that he can't guarantee that it will be completed within that time frame due to construction issues that could arise that are out of his control, and the contract does not have a time is of the essence clause. Sally hires Raymond anyway because he is the largest contractor in the area and has an excellent reputation for finishing products on schedule and within budget. Initially, the construction project goes well. Raymond gets the conerete slab laid on schedule, and Sally pays him $10,000. Raymond also gets the second stage of the project done on schedule, and requests the second $20,000 payment from Sally. However, Sally is a little bit short on money at that time, and asks Raymond if she can wait another month before making the $20,000 payment. Raymond's company is quite large and has no problems with its cash flow, so he tells Sally that will be fine and continues with the project. counters problems during the third stage of the project. Due to supply shortages VID-19 pandemic, he cannot get all of the materials and equipment he needs to atral heating and air conditioning within the 3 months project deadline. Other than ating and air, the building is finished. Raymond and Sally have the following Raymond: OK, everything with the building is done other than the central heating and air conditioning. Due to unexpected supply shortages, it will probably be another 2 months before the central heating and air equipment is in, but once it gets in we'll install it as soon as possible. But you can start using the building now. Sally: Are you kidding mel? The building is basically useless to me without air conditioning! It's in the middle of the summer - no one is going to want to use the building to lift weights when it's over 100 degrees in there! We agreed that this thing had to be done within 3 months! Raymond: I know this is disappointing, but there's nothing we can do about it. How about this - you still owe me a $20,000 payment from the second stage of the project. Go ahead and make that payment now, but I don't expect you to pay me the final $20,000 until the AC comes in and we get it all installed. I think that is more than fair. Sally: You're crazy. I'm not paying you another cent. You've completely breached this contract because you didn't deliver what I paid for within the time frame we agreed on. In fact, I may sue you to get back the $10,000 I've already paid you. 't pay Raymond anything more. She begins to use the building, but as anticipated, tomers are quite unhappy with how hot it is. Two months after the original 3 month d, Raymond calls Sally and says "I have the air conditioning equipment in. I can cek and get it installed. After I get it in you can pay me for the building." Sally thim on the property, and instead sues him for breach of contract to get her first ment back. Raymond countersues and asserts that Sally has breached the contract, Id be allowed to finish the job and get his full payment. Evaluate this breach of im. Who breached, and why? What are they entitled to