The contract was very specific and clear on the obligations or parameters that Able’s Demolition needed to exercise before beginning work and to receive compensation for their work. Whenever a contract is signed, all the information within the contract is relevant (as long as it is not- “voidable or unlawful or isn’t unconscionable” (Brown & Sukys, 2020, Chapter 7& 8 ) Yes, if this part of the contract was boiler plate text, then I could see how it could be unconsidered (Kar & Raddin, 2019. Para. 16). Clearly, these sections in regards to commencement and payment were explicit not boilerplate.
The phrase, “Checking all the boxes,” refers to meeting all the requirements (Amlen, 2019).
The City of Pontiac did not breach their contract with Able, yet Able did first and materially breach the contract. The reason that the City included the following requirements in the contract was for public safety.
The City of Pontiac’s Express Requirements to Commence Work and for Payment
- Contractor must (Section V Pre-Demolition Approval),
- Secure written approval to proceed
- On the anticipated date of service,
- From the Director of Law or Designee, and
- Secure a “Letter to Proceed.”
- Contractor must,
- Present the “Letter to Proceed”
- To the Director of Finance of the City, and
- Before executing services.
- Otherwise it is an unauthorized service and forfeit any payment (Section V & Section VII. Compensation).
Able’s Demolition argues that the contract was ambiguous, that the City breached the contract, promissory estoppel, unjust enrichment and quantum meruit.
Able’s Arguments Against the City and Why Their Arguments Did Not Stand Up in Court.
- Able breached the contract substantially, not the City. The City did everything is said it would do if Able did not secure and present the letter to proceed before commencing work. Also, even if Able could show breach of contract, they in fact were the first party to breach the contract. Additionally, by the City not paying Able, they are indeed doing what they said they would do within the language of the contract. They are actually upholding the contract. If they would have paid Able, then they would have been breaking the contract.
- Able claims the contract was ambiguous. The contract was in-fact explicit.
- Able says the City is benefiting from unjust enrichment. However, these rules and conditions are put into place to protect the public, and private citizens from their property being destroyed. Such that at the last minute, a person can obtain a temporary re-straining order to stop the demolition. These checks and balances are put into place to protect the rights of the citizens. Thus, the City is not hoping to unfairly gain financially, yet keep the strict policy secure in order to protect people’s property.
- Able claims promissory estoppel , which would protect them in the case of this breach, because they relied upon the payment promise, then suffered a loss by not getting paid. This does not stand up in court, because the clauses in quest are condition precedent. Able’s had explicit conditions required before acting and getting paid.
- Able claims quantum meruit or that they have earned the money owed to them for their services. All of the above reason’s disproved this allegation. It was because the clauses are condition precedents.
- Additionally, Able breached the contract first, thus they can not pursue action. Additionally, by the City not paying Able, they are indeed doing what they said they would do within the language of the contract. They are actually upholding the contract. If they would have paid Able, then they would have been breaking the contract.
Discussion and Opinion
Able may have not understood the gravity of these conditions and the possible consequences. They may have been more familiar with working with private contracts versus public contracts. They have been loose on these types of conditions of the contract in the past and not suffered. They may have truly thought unjust enrichment, promissory estoppel and quatem meruit would protect them by proceeding with work without the explicit conditions from the “Letter to Proceed”. It is also possible that there is a lack of communication on its way down the chain of command. Slipping through the cracks because of poor communication or checks and balances is no excuse. Particularly for a service that has un-reversible actions that can severely do damage to other people’s property.
A material breach is one that explicitly states that something specific will make the contract invalid or void. Basically, it invalidates the breaching parties right to sue. The entire section in regards to the “letter to proceed” requirement was a material breach of contract. When Equifax data was breached in 2017, a class action lawsuit stated that the forty day waiting period to disclose this to shareholders and clients was a material breach of contract (Bottum, 2019, Pg. 2099). The SEC has a four day period after discovery of a data breach to disclose the breach (Bottum, 2019, Pg. 2126). Thus a material breach of contract according to SEC regulations. During this month and a half delay Equifax sold about $2 million in shares, which investors may not have done knowing this new information.
There are protections against breaches when services are provided and costs incurred, and the other party benefits. That is the unjust enrichment protection. However, the City made it clear that the protection of the rights of citizens and their private property was their priority, not gaining a service at no cost.
For an unjust enrichment claim, there must be an ‘unjust factor’
(Jaffey, 2014, Pg. 987, Para. 3)
Also, out of the box language or boilerplate text can be omitted. Why? Boilerplate text can be omitted as part of the actual terms of a contract because there is not a shared meaning. “The shared meaning of a contract or the (‘common meaning of the parties’) as that meaning that is most consistent with the presupposition that both parties were using language cooperatively to contract” (Kar & Radin, 2019. Para. 3). As anyone can see, the parts of the contract called into question are not generic, yet very explicit.
Contractors deal in contracts; it is in the name of their profession, ‘Contractors.’ I’m not a contractor and do not deal in formal contracts with this much consideration on a regular basis. As a person unfamiliar with this type of work, and if I were presented with this contract before starting a business relationship, especially for the amount of money and costs at stake, this section would make me pause and clarify.
Nether the less, if anyone signs a contract that expressly and specifically spells out requirements, take care to check the boxes and plan them into execution.
References
Amlen, D. (June 26, 2019). Fulfill Requirements. Retrieved from https://www.nytimes.com/2019/06/26/crosswords/daily-puzzle-2019-06-27.html on November 11th, 2019
Bottum, T. (2019). Material breach, material disclosure. Minnesota Law Review, 103(4), 2095.
Gordon, B. & Sukys, P. (2020). Business Law with UCC Applications. 15th ed., 2020.
Jaffey, P. (2014). Unjust Enrichment and Contract. Modern Law Review, 77(6), 983–993. https://doi-org.proxy.davenport.edu/10.1111/1468-2230.12099
Kar, R. B., & Radin, M. J. (2019, February). PSEUDO-CONTRACT AND SHARED MEANING ANALYSIS. Harvard Law Review, 132(4), 1135+. Retrieved from https://link-gale-com.proxy.davenport.edu/apps/doc/A577668136/ITBC?u=lom_davenportc&sid=ITBC&xid=f937bec3
Check the Boxes 