Question

Oliver Owner wishes to build an office building. Oliver hired Original Architect, Inc. to create the design. Over several months, Original Architect, Inc. gave Oliver several drafts of increasing detail. Uninspired by what he saw, Oliver terminated its contract with Original Architect, Inc. and hired Replacement Architect, Inc. in its place. Oliver gave Replacement Architect, Inc. the last drawing Oliver had received from Original Architect, Inc. Replacement Architect, Inc. used this last drawing to create its own final design. Oliver then hired Prime Builder, Inc. to be the prime contractor on the job. The contract price was for a fixed amount, with work to be completed in one year. The project did not go smoothly. Oliver failed to obtain a zoning change on time, and work had to begin one month late. Meanwhile, Prime Builder, Inc. found the design literally impossible to implement; for example, all of the specified conduits would not fit into the space allotted, forcing Replacement Architect, Inc. to redesign. This took Replacement Architect, Inc. two weeks to do. Meanwhile, Replacement Architect, Inc. was unhappy with the quality of the contractor’s work. Within a week after the foundation was poured, it began to crack. Replacement Architect, Inc. determined the soil preparation work was not properly done. It ordered Prime Builder, Inc. to remove the foundation and redo the soil preparation, which the contractor did. The project was finished three months late. As a result, several commercial tenants who had promised to move into the new building found rentals elsewhere. Overwhelmed with all the problems on the construction project, Oliver did not even try to find replacement tenants until two months after the building was completed. Eventually, Oliver fully rented the building.

What will likely happen? What are the likely outcomes? Why? Calculate the damages.

Answer 1

1. Original Architect, Inc. sued Oliver Owner for (a) nonpayment of the design work the architect had done and (b) emotional distress for not being chosen as the project architect.

2. Oliver sued Replacement Architect, Inc. and Prime Builder, Inc. for late completion.

3. Prime Builder, Inc. sued both Oliver and Replacement Architect, Inc. for (a) higher performance costs than anticipated, (b) home office overhead expenses, and (c) lost profits on the new contracts Prime Builder, Inc. would have signed had it not been still working on Oliver's project after the original, one-year completion date.