Reference no: EM133681490

Homer had always dreamed of a vacation cabin in the mountains. Homer contacted Bilda, a local contractor, and asked Bilda to construct a cabin on the property. After a week of negotiations, Homer and Bilda entered into a valid enforceable signed written contract for the construction of a ten-room cabin.

The contract specifications called for the installation of two fireplaces, each with adequate space to burn several two-foot logs, for the purpose of heating the family room area and master bedroom during the cold winter months. The agreed completion date was to be no later than December l because Homer was planning on hosting a late-December family reunion at the cabin.

The contract contained express contract provisions to cover all parts of the construction process, but it did not expressly state whether floor and window coverings would be included. Exterior decking and painting were specifically included. The total cost of $200,000 was to be paid by Homer upon completion of the job.

Bilda began construction of the cabin on September 15, but (without any legal excuse) walked off the job on November 1. Bilda told Homer, "The job is not going to be profitable" and "besides the trout are biting at Clear Lake."

When Homer called in another contractor to complete construction, he was truthfully told that: (1) the cabin was only half-completed; (2) the fireplaces were too small and could only hold twelve-inch logs and not two-foot logs; and (3) completion of the job including correction of the fireplace problems would take until February 1. The reduced size of the fireplace will make it impossible to maintain a reasonably comfortable temperature in the living area and master bedroom for several months each winter unless an expensive heating system is installed.

The cost to replace the two fireplaces to provide the larger two-foot openings will be $20,000 ($10,000 for each fireplace). Homer also obtained several estimates from other contractors. A reasonable estimate for the cost to complete construction of the cabin (not including the cost to replace the two fireplaces) is $110,000. At the time Bilda stopped construction, Bilda had expended $100,000 for labor and materials. The earliest Homer can now expect completion using another contractor is February 1.

Homer now claims that Bilda orally agreed at the time the contract was executed that Bilda promised to obtain and install floor and window coverings as part of the $200,000 contract. Bilda denies that any such oral agreement occurred. Homer obtained estimates and the reasonable cost for the materials and installation of window and floor coverings is $15,000. Homer was forced to rent another cabin to host the December family reunion at a cost of $1,000.

1. Homer sues Bilda for breach of contract. Discuss issues that Homer will raise, Bilda's responses to those issues, and defenses that Bilda will claim, as well as Homer's responses to Bilda's arguments in his own defense. Explain who should win the lawsuit and why.

2. If the court determines that Bilda breached the Homer/Bilda contract, will Bilda be entitled to any recovery? If so, quantify and explain the recovery.