QUESTION 5 - Please answer (a) and (b) separately

On 3/1/09, Alice contracted with Carol to build a house for Alice on her vacant lot, to be completed on 9/1/09. On the contract form, signed by both parties, Alice checks the box to order an optional powder room, but a clerk in Carol's office fails to copy this to the project database. Alice neither attempts, nor would be permitted on the work site during construction (due to insurance issues.) On 9/1/09, Alice takes possession (having settled on the sale of her prior residence that morning,) but noting that grading and landscaping in the rear of the house are incomplete, and that Carol had failed to include a powder room on the first floor as required, refuses to pay Carol anything.

Carol offers to complete the grading and landscaping, stating that he would require an additional two weeks. Alice refuses, stating that it is past the contractual deadline, prohibits Carol from entering the property and hires Larry to complete the landscaping for $750. Carol offers to reduce the price of the house, but refuses to add the forgotten powder room. Alice obtains three competitive bids to add the powder room, which entails a great deal of work, including tearing down several walls, the lowest of which is $5,000. Alice has NOT, as of the date of the trial, had said work performed, citing lack of funds.

The contract price for the house is $65,000. The price of a similar house in the neighborhood, not having the first floor powder room, is $63,500. Carol's estimate of the remaining landscaping costs, had she been permitted to finish, is $300. Motel costs which would be (but has not yet been) incurred by Alice while the corrective work was being performed would be $600.

5a. Carol sues for the entire $65,000. Alice countersues. Who wins, how much, and WHY?

5b. Discuss all appropriate rules of law raised by this question.