Bar Exam (US) Contracts: Question below is based on the following fact situation. On March 1, 20...

Question

Question below is based on the following fact situation.

On March 1, 2006, Paul Parsons and Otto Owens executed a contract that provided that Owens would construct a two-level "redwood deck" on each of the eight specified beach houses that Parsons owned at Hampton Beach, with all work to be completed by May 1, 2006. The contract provided the following: "The cost is $2,500 per deck, to be paid upon completion of the decks in each of the eight beach houses." The contract further stipulated, "Approval would be required by Alton Jones, the architect, that the work had been satisfactorily performed in accordance with the plans and specifications." Furthermore, the contract stated, "THIS CONTRACT IS NOT ASSIGNABLE."

On March 15, Owens assigned the "monies to become due under the contract of March 1" to the Wilmington Trust Co. as security for a debt owed by Owens's nephew to the bank. On the morning of March 25, Parsons went to one of the beach houses as Owens and his assistants were completing the work on the fourth deck. Parsons said to Owens, "I'm very pleased with your progress to date. If you are willing, I would like you to build the same kind of decks on four identical beach houses that I own at Fire Island, on the same terms and conditions as our existing contract, the work to be completed by May 20. If you can meet that deadline, I'll pay you $10,000 at that time." Owens replied, "Agreed. Let's shake hands on it." They shook hands.

On April 2, Parsons left on a month-long vacation to the Orient. The following day, Wilmington Trust Co. sent a letter to Parsons's home notifying him of Owens's assignment of March 15. Owens completed the work on the first beach houses by April 15 and immediately started the construction of the decks on the Fire Island beach houses. On April 22, Hurricane Zelda totally destroyed four of Parsons's beach houses at Hampton Beach. In addition, the hurricane demolished a beach house at Fire Island, on which Owens had completed 85 percent of the deck work. Two of Owens's assistants were seriously injured and all of his equipment was washed away.

When Parsons returned on April 27, he found the letter from Wilmington Trust and also the following letter dated April 23 from Owens: "The hurricane destroyed my equipment worth $4,000. I am dead broke and cannot complete the work on the three remaining beach houses at Fire Island. Please pay Wilmington Trust Co. the $20,000 for the work I did at Hampton Beach, and please send me $2,500 for the deck I built on the Fire Island beach house."

Although Alton Jones had inspected four of the houses at Hampton Beach to his approval, the hurricane destroyed the other four, which he had not inspected.

Assume for the purposes of this ques tion only that Owens did not assign the "monies to become due under the contract of March 1" to the Wilmington Trust Co. as security for the debt owed by his nephew. What is the maximum amount that Owens may recover from Parsons for the construction that he completed prior to the hurricane?

AnswerChoose the correct answer.Choose all that apply. Correct Partially correct Incorrect Don't Know

  1. A
    Correct Answer
    $10,000 only.
  2. B
    Correct Answer
    $10,000 plus $2,125 (the amount due for 85% of the completed work on the Fire Island beach house).
  3. C
    Correct Answer
    $20,000 only.
  4. D
    Correct Answer
    $20,000 plus $2,125 (the amount due for 85% of the work completed on the Fire Island beach house).
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