1. Complete question 3 in Assignment 12-6(page 221-223) which states: "A short (and very bad) construction contract appearsafter this assignment. Identify the mistakes, ambiguities, and other problems with the contract.

222 Chapter 12 Revie EXHIBIT 12-1 Sample Construction Contract Construction Contract This contract is entered into on March 13, 2016, between Jane E. Lehmann, 325 River Bluff Road, Elgin, IL 60120 ("Owner") And Robert J. Schell, doing business as Schell Corp., Jane P.O. Box 451, Elburn, IL ("Builder") WHEREAS: . Lehmann owns property at 776 Diane Ave., Elgin, IL, and wishes to build a house on that property. Ca Builder is in the construction business and has agreed to build a house on Sta Lehmann's property. The house will be built according to the blueprints and specification list LI and the final price shall be $475,000.00. co ing TERMS: 1. Schell shall complete construction on or before September 1, 2015. Construction shall be considered complete when the city issues a certifi- cate of occupancy. The Owner may not occupy the property before the final price is paid. 2. Jane shall pay the purchase price in installments: $50,000 upon sign- ing this contract; an additional $100,000 when the roof is complete; $500,000 when the windows are installed, and the balance upon issu- ance of a certificate of occupancy. 3. Builder shall comply with all applicable building codes and municipal regulations, but makes no warranty with respect to materials installed in the house, such as roofing, furnace, appliances, windows, and cabinetry. Any warranties must come directly from the seller or manufacturer of the items. It is understood that Schell will not perform all work himself, but will employ subcontractors for work such as plumbing, electrical wiring, and excavation. 4 . The price does not include landscaping or a driveway, but only includes those things listed on the blueprints or specifications. 5. During the course of construction, the house shall be kept insured against fire or other casualty. Builder shall pay all subcontractors promptly and shall provide Owner with signed lien waivers. 7. Builder has the right to show the house to prospective customers as a sample of his work. 8. At the time of the third payout, Smith shall make a formal inspection of the property and shall submit to Schell, in writing, a list of deficiencies and defects.Review Questions 9. Shell shall provide any paperwork required by Owner's lender in order to obtain payouts during the course of construction and shall maintain liability insurance to compensate in the event of any injury to a worker or Visitor at the building site. 10. If the Owner makes any changes in the plans or specications, the Builder shall add the cost to the price and the owner shall pay the amount of the change promptly. Jane E. Lehmann Robert I. Schell O 223 Career Corner Stacey Hunt, ELLA, CA8, is a litigation paralegal at Duggan Smith 8; Heath, LLP in San Luis Obispo, California. Her rm prosecutes and defends breach of contract actions, which can take many forms. \"We have handled cases involv- ing breach of a lease, a failure to properly: survey a property, even breach of a contract to properly store fermenting wine.\" Whether the rm is representing plaintiff or defendant, the rst thing Stacey does is careally read the contract. \"Our client was recently served with a complaint for breach of an operating agreement for a limited liability company. The attorney asked me to prepare an answer to le-with the court. Before doing so I read the agreement and saw there was a mandatory arbitration clause that none of the attorneys hadeven noticed.\" Opposing counsel agreed to withdraw the complaint and'pr'oceed 'with mediation instead, once the issue was pointed out. \"The client Was very happy not to have to litigate the matter in court,\" said Stacey. In a contract dispute, the language in the contract will be looked at under a microscope. \"Whoever drafted the contract may have thought it was airtight,\" says Stacey, \"but a clever lawyer can nd holes and new. interpretations to cast doubt on the intention of the parties. And a clever litigation paralegal can learn to do that as well.\" , ' Review Questions 1. What part of a contract often begins with \"WHEREAS,\" and what is the purpose of this section? What is incorporation by reference? What types of contracts require notarization? What is a merger clause? Assuming that the parol evidence rule does apply, for What purposes might evidence of oral agreements made before the written contract still be used? 6. Courts sometimes favor one of the parties in interpreting a contract. Which party is favored? 7. Identify at least ve other rules courts use in interpreting contracts. 9'93\".\