Question

This question is more of a business law question, but I couldn't seem to put it under that category. Thanks!

Ryan Paul inherited a summer house from his grandmother. It had not been in use for over ten years and was in disrepair. He met with Dusty Rhoades, a general contractor who specializes in carpentry, who agreed to restore the house for $30,000. Neither party agreed on the word “restore.” Dusty thought it meant taking out the dry rot in different parts of the house, shoring up the foundation and rebuilding the porch – all tasks that are tied to carpentry. However, the house had electrical and plumbing issues needing resolution as well. As Dusty was remodeling the structure, he told Ryan the house needed electrical and plumbing work, and asked for permission to get the work done with some subcontractors. Ryan agreed, thinking the cost was in the original $30,000 estimate. When the house was completed, Dusty demanded $48,000. Ryan refused to pay more than the $30,000 price, and Dusty sued.

Identify the issue(s), the decision(s), support for your decision, and the dissenting (opposite) argument in your response. Please make sure you address all relevant issues in your answer.

Answer 1

Issue: Ryan had hired Dusty for repairs and renovation of his summer house. The associated consideration was $30000. When Dusty proceeded with the work, he identified that the house needed electrical and plumbing work. He took permission about the same from Ryan and then proceeded with the additional electrical and plumbing work. However when the house was completed, Dusty asked for $48000, the additional $18000 was for electrical and plumbing work. Ryan denied paying for more than $30000 stating he did not agree for the same. Dusty sued Ryan for breach of contract.

Rule: A contract can be formed between 2 parties based on the oral agreement between them. If the parties have agreed orally for a deal, the deal gets bound by the contract. However all elements of the contract must be present in the agreement – an offer, an acceptance to offer, a consideration as well as an intent to form a legal contract.

Analysis: When Dusty took permission about the electrical and plumbing work, he did not discuss about the consideration associated with it. Ryan thought that the electrical and plumbing work will get accommodated in the original $30000. However that was not the case. In the case of miscommunication, Ryan denied paying for extra cost. However as Ryan had initially agreed upon getting the additional work done, he needs to pay for the additional amount as well.

Conclusion: The court will rule in favor of Dusty. Ryan will be required to clear the overall bill of $48000.