Reference no: EM132025119
Question: In order to fill an order from H, L needed additional manufacturing capacity. Consequently, L spoke to S about building an addition to L's factory.
Afterwards, S then wrote to L, proposing to build the addition for $20,000,000.
L wrote back to S, proposing that S build it for $15,000,000, and added a contract term. The contract term stated that if the addition was not complete one year after the contract was signed, then S would pay a penalty of $30,000 per day until it was complete.
In response to this proposal, S sent a counter-offer, proposing to build the factory for $17,000,000. S then changed his mind, called L, and told him he would build the factory for $15,000,000. S then built the addition.
In the end, it took 18 months to build the factory. The matter ended up in court as the parties fought about what was owed. During the pre-trial, S learned that H had changed his mind and had cancelled his order with L after all.
What was payment term of the amount of the contract between L and S? Will S need to pay $30,000 per day for the additional 6 months it took to build the addition?
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