Business Law - Issues in Term Paper

Unlike Baxendale, there were no special circumstances outside of the normal business considerations that would have required specific communication to the contractor as to the nature of potential losses to Jose arising from a completion delay. Ordinary knowledge would have been sufficient for the contractor to know that his delay would also delay the opening of the cafe. The lawyer advised Jose that Jose was liable to the contractor for the rest of the contracted price of the work the contractor performed minus the lost profits and other direct damages Jose could establish. Jose had no other damages, but his business records did show lost profits of $7,500. Jose agreed to let the lawyer contact the contractor and offer to settle the outstanding claim against Jose through a payment of 2,500 to the contractor, representing the balance of the contracting work minus Jose's lost profits.

Jose mentioned that business was so good that he was hoping to break out a rear wall and open an outdoor sun deck for the following summer, but he was hesitant to trust any contractor since there seemed to be no way to guarantee a completion date. The lawyer explained that Jose could actually do so very easily next time, simply by including specific "time is of the essence" clause further detailing specific monetary damages, in advance, for an delays. According to the lawyer, Jose could then hold the contractor to those terms, such as $1,000 per day between the original completion date and the date of actual completion and that most courts would enforce any such liquidated damage clause, if the amount was reasonable and not merely punitive in nature. In a case like Jose's where damages were documented, such a clause would likely be enforced (Dawson, 630).

References

Dawson, J.P., Harvey, W.B., Henderson, S.D. (2002) Contracts: Cases and Comment 8th Ed.

Friedman, L.M. (2005) a History of American Law 3rd Ed..…