The city of Kalamazoo hired Good Builders, Inc., to build a new courthouse for $

Question

The city of Kalamazoo hired Good Builders, Inc., to build a new courthouse for $560,000. Good Builders had barely broken ground when the city notified them that it would not be able to pay for the building after all and asked Good Builders to stop all work. Good Builders refused, saying, “Hey, you guys signed a contract. We know our rights.” At the time the city asked it to stop, Good Builders had expended $5,000 on materials, approximately $3,000 of which could have been returned at no loss to the company. By completing the project, however, Good Builders expended an additional $400,000. In a breach of con- tract action by Good Builders against the city, how much money do you think the court should award Good Builders? Why?

Explanation / Answer

In my opinion the court should award $2,000 . When the city notified Good Builders to stop the woek as they are unable to pay , the Goodbuliders spend $5,000 from which $3,000 of materials could be returned to Good Buliders. So Actual money sunk by Good Builders before the notice by the city is $2,000. So unless there is any other penalty clause in the contract for contract cancellation, the Good Buliders can get $2,000. GoodBuilders continued the work on their own in sptie of notice by the city. So the remaining construction risk would be borne by Good Builders.

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