11 Jan After moving in, you learn

Week 4 discussion

DQ1 Dream House

In a contract dated June 15, 2006, Bobby agrees to build your dream house on a lot you own near Naples, Florida. The contract price is $500,000. The house is to be completed and ready for occupancy by March 1, 2007. Bobby is paid a progress payment of $100,000, for labor and materials, in October, 2006. In November, 2006, a hurricane strikes the Naples area and floods the work site. Bobby claims he had completed 50% of the job before the hurricane struck. Thereafter, Bobby performs no further work and walks off the job.

On January 1, 2007, you declare Bobby to be in breach of contract and sign a contract with Sheila to complete the job for $350,000.

Was your contract with Bobby a unilateral or bilateral contract; if unilateral, at what time did Bobby substantially undertake performance?

What remedies and/or damages are available to you and to Bobby?

Since Sheila’s cost to complete the house is more than half the cost, who sees a loss from the hurricane?

DQ2 Nightmare House

After months of combing the real estate ads for a vacation property, you find an ad for a lovely Victorian cottage in a scenic small town about three hours away. After viewing the house, you decide it is the perfect weekend place; and amazingly, the price is in your budget. In fact, you’re amazed that the house is so affordable and has been on the market for a while. You sign a real estate purchase contract to buy the house from the current owners, who have lived there for over 20 years. You make the sale contingent upon an inspection of the property by a licensed construction engineer. The engineer inspects the house over the course of two days and gives the house a clean bill of health. You proceed to closing, and buy the house.

After moving in, you learn for the first time from the neighbors that many actively claim this house is possessed by poltergeists, which the prior residents of the house had reportedly seen. In fact, the house is listed in a national guide to haunted houses, and had previously been included in a walking tour of the town as the haunted house. A newspaper article once described it as a charming Victorian (with ghost). You now jump at every creak and noise the house makes. You want the seller of the house to take it back for failing to inform you that the house is haunted.

Do you have a good basis for rescinding the sale?

What duties will you claim were owed to you by the seller?

What responsibilities did you have as a buyer that may affect your ability to recover?

What damages can you claim stem from the alleged failure to disclose by the seller?