Slodder Construction Co Entered into a Contract with the City

question 29

Essay

Slodder Construction Co entered into a contract with the City of Lowey. It agreed to build a tunnel under city hall in exchange for a total price of $5 000 000. Shortly after beginning the project, Slodder realized that it had entered into a very bad bargain. The job was much more difficult than initially expected. It would cost $15 000 000 to complete. Slodder nevertheless carried on in order to protect its reputation. Somewhat surprisingly, however, after half the tunnel had been finished, Lowey breached the contract by refusing to give Slodder access to the worksite. At that point, the city had already paid $2 500 000 to Slodder, and Slodder had already spent $7 500 000 on the project. Before trial, another construction company completed the tunnel under a separate contract with the city. Is Slodder entitled to receive any more money from the city in the form of expectation damages or reliance damages? Explain your answer. Is there any other basis upon which Slodder can claim a remedy from Slowey? If so, how much will that remedy be worth? Explain your answer.

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Definitions:

Labor Efficiency Variance

The difference between the actual labor hours worked and the standard labor hours expected for the level of production achieved, multiplied by the standard labor rate.

September

The Gregorian calendar's ninth month.

Materials Price Variance

Materials Price Variance is the difference between the actual cost of materials and the standard cost, indicating how much more or less was paid for materials than expected.

September

The ninth month of the Julian and Gregorian calendars, known for marking the transition from summer to autumn in the Northern Hemisphere.