02101

QUESTION ANALYSIS

P: Pat, Plaintiff, computer software consultant

D: Danco Inc. Defandant, corporation

C: Chelsea: President of Danco

CONTRACT TERMS

On April 1, Pat, (P: contracting party) a computer software consultant, entered into a written (SoF satisfied) services contract (applicable law- common law) with Danco, Inc. (D: contracting party) to write four computer programs (subject matter) for use by Danco in controlling its automated manufacturing machines. The contract provided that Danco would pay Pat $25,000 (price) on completion of the work (Condition #1) and that the programs were to be delivered to Danco no later than May 1. (Condtion #2: Time of the essence) The contract stated, "This is the complete and entire contract (Parol Evidence rule) between the parties, and no modification (no modification clause; possibly waiver issue) of this contract shall be valid unless it is in writing and signed by both parties."

MEASURE OF DAMAGES

Pat entered into the contract in anticipation that it would lead to significant work from Danco in the future, (legal remedy: expectation damage) and he consequently turned away opportunities to take on more lucrative work. (Legal remedy: consequential damage)

ANTICIPATORY REPUDIATION

On April 15, Pat called Chelsea, the President of Danco, (Agent of Danco) who had executed the contract on behalf of Danco, (with the implied apparent authority) and told her, "I’m having some problems with program number 3, and I won’t have it ready to deliver to you until at least May 8, maybe closer to May 15. (Anticipatory repudiation?; Failture of Condition #2: time of the essence) Also, I have some doubt about whether I can even write program number 4 at all because your computer hardware is nearly obsolete. (Anticipatory repudiation: not unequivocal) But I’ll get programs numbers 1 and 2 to you by May 1." (Part performance)

Chelsea said in response, "I’m sorry to hear that. We really need all four programs. (No modification as to subject mattter) If you can’t deliver until May 15, I guess I’ll have to live with that." (Waiver of Condition #2: time of the essence)

On April 28, Pat called Chelsea and said, "I’ve worked out the problems with programs numbers 3 and 4. I’ll deliver them to you on May 12."

Chelsea responded, "I’ve been meaning to call you. I’m going to start looking around for another consultant to do the work because I consider what you said in our April 15 telephone discussion to be a repudiation of our contract. (Anticipatory repudiation) My lawyer tells me that, because of the language in the contract, nothing I said to you in that conversation matters. You repudiated the contract, so we don’t owe you anything."

Can (Question 1) Pat prevail in a suit against Danco for breach of contract, and, if so, (Question 2) what is the measure of his damages? Discuss.

ANSWER OUTLINE

I. Can P prevail against D for breach of contract?

1. Applicable law

(1) Common law: service contract

(2) UCC: sale of goods

2. Contract formation

3. Defense- SoF

4. Time of the essence

5. Oral modification

(1) April 15 Call

(2) April 28 Call

6. Waiver of Condition

7. Estoppel

8. Anticipatory Repudiation

9. Parol evidence

II. Measure of Damages

1. Expectation damage

2. Consequential damage

3. Specific Performance