Joe Was a Contractor and Hired Subtrades to Help Build

question 19

Essay

Joe was a contractor and hired subtrades to help build his houses. Sam was a framer and had agreed to frame four houses for Joe for a set price. Joe was to supply the materials. After two houses were completed, Joe's suppliers increased the cost of lumber and Joe told Sam that he could no longer pay him the amount that they'd agreed. Sam agreed to take 15% less for the other two jobs, which were then completed. During this time, regular payments were made from Joe to Sam, but the total amount received was 15% lower than the originally agreed on price for the last two jobs. Sam sued Joe for the original contract price, claiming that he'd received no consideration for his agreement to take less for the last two jobs. Explain what defences may be available to Joe under these circumstances and his likelihood of success.

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Definitions:

Dividends

Dividends are payments made by a corporation to its shareholder members, usually extracted from the company's earnings.

Selling Stock

The process of offering shares of a company's capital to investors in exchange for capital, diluting ownership but potentially raising funds for growth.

S-type Corporation

A special designation that allows corporations to pass corporate income, credits, and deductions directly to their shareholders for federal tax purposes.

Taxation

The practice by which a government collects money from individuals, businesses, and other organizations to fund public services and initiatives.