Question

BUSINESS LAW

The Thunder, Inc., the owner of a professional basketball team, decided to build a new basketball stadium. The Thunder, Inc. entered into a contract with Quickbuid corporation to have Quickbuild corporation build the basketball stadium for $18,000,000. It would cost Quickbuild corporation $15,000,000 to construct the stadium. Quickbuild corporation immediately started work and entered into multiple contracts with subcontractors to provide material and services in constructing the stadium. One year later, The Thunder, Inc. ran out of funds and was unable to pay for the completion of the stadium. Quickbuild corporation were forced to cessation of most work. By the date of the cessation, Quickbuild corporation has incurred $10,000,000 payable to the material suppliers and subcontractors. One independent subcontractor Beta corporation was hired by Quickbuild corporation to install concrete foundations. Since Quickbuild claimed that it was owed $10,000,000 from The Thunder, Inc., Beta corporation sued The Thunder, Inc. to recover the alleged compensation.

(1) Which type of breach made by The Thunder, Inc.? What’s the legal consequence following such breach?

(2) Can Beta Corporation recover the alleged compensation from The Thunder, Inc.? Why?

(3) What’s the amount can Quickbuild recover from The Thunder, Inc.? How to calculate the damages?

Answer 1

(1) Which type of breach made by The Thunder, Inc.? What’s the legal consequence following such breach?

Answer: The contract between Thunder, Inc. and Quickbuild Corporation was not much clear to justify argue in case of contract breach. Below are the classification of breach

Between Thunder and Quickbuild – Actual Brach of Contract

The terms and conditions are not defined for the failure situations of both the side. The probable events and the damage cost shall be clearly written in the contract. The one of the remedy is Quickbuild to take over the Thunder and sell its properties under terms and conditions but unfortunately it was not in the contract.

Between Quickbuild and Beta- Minor Breach of Contract

The Beta Corporation has done all its job but their contractor is dependent on the Thunder who has ran out in the middle of project.

Between Thunder and Beta – Anticipatory Breach

There is no contract between Thunder and Beta but Beta is demanding to pay its bill to Thunder. The Beta Corporation is independent and not having direct connection with the Thunder. The billing cycle and contract term should be separate from the contract between Thunder and Quickbuild. But it seems that Beta is dependent on the Thunder for the payment of their work.

(2) Can Beta Corporation recover the alleged compensation from The Thunder, Inc.? Why?

Answer: No, the contract of Beta was with Quickbuild and they cannot ask recovery to the Thunder. This is because the Thunder has ran out because of the loss and they are not intentionally intended for not doing payment to Quickbuild.

(3) What’s the amount can Quickbuild recover from The Thunder, Inc.? How to calculate the damages?

Answer: As per the Actual breach, per month 15% of overall contract prices shall be added in the due payment to Quickbuild. This is as per the bank interest on such amount of capital adding losses due to additional legal work.