Additional Problems 1 & 2, Chapter 15

1. On April 1, Conrad and Owen executed a contract under which Conrad agreed to build a specified house on Owen's land for $700,000. The contract provided that Owen was to make periodic payments to Conrad as different phases of construction were completed, with the last payment of $70,000 due 5 days after completion of the house. The contract further provided that the house was to be completed by August 1 and included the following provision: "If Conrad is late in completing the construction of the house, the purchase price is to be reduced by $3,000 for each and every day after August 1." Conrad constructed the house according to the contract, except that it was completed 5 days after August 1. Owen made all scheduled payments except for the final payment of $70,000. Although Owen could not prove any monetary damages caused by Conrad's delay, Owen offered to make a final payment of $55,000 to Conrad, after deducting $15,000 for the 5-day delay. Conrad rejected Owen's offer and sued Owen for $70,000. How much, if anything, will Conrad recover from Owen? Explain. (Hint: the issue here is whether the liquidated damages provision in the contract is valid] 2. Millie, a famous singer, entered into a contract to perform at Tanya's night club during the month of December. Tanya advertised that Millie would be performing at Tanya's nightclub and obtained many advance reservations from customers for the performance. In November, Raisa, the owner of another nightclub, convinced Millie to breach her contract with Tanya and to perform at Raisa's nightclub instead during the month of December. On November 15, Millie told Tanya that she would not be available to perform at Tanya's nightclub as planned. When Tanya found out that Millie would be performing at Raisa's nightclub instead, Tanya became furious and immediately called her lawyer. (a) Tanya sues Millie, demanding specific performance of the contract. Discuss. (b) Tanya seeks an injunction against Millie, to stop her from performing at Raisa's nightclub during December. Discuss. (c) Tanya sues Millie for breach of contract and demands damages. What damages, if any, may Tanya recover? (Hint: the damages can be described in general terms] (d) Does Tanya have any action for damages against Raisa? Discuss. (Slip part (d): we will discuss in class briefly]