Draft A Contract (15 marks)
Jerry wants to hire his friend Kramer to renovate his kitchen. He wants the work to be done within 2 months of the date the contract is entered into. He does not want to pay more than
$20,000 total for the work.
Jerry wants all the kitchen hardware (drawer pulls and knobs) and cabinets to come from a certain manufacturer, Vandelay Industries, because his friend George is the President of the company.
Kramer wants to be able to invoice Jerry for his time and materials as the project moves towards completion. He also wants to undertake the work under his company, Cosmo Contracting Inc. Kramer also wants the contract to contain a clause limiting Cosmo Contracting's liability to the value of the contract and a clause indemnifying Cosmo Contracting against any third party claims made against the company for the work he is doing on Jerry's kitchen
Jerry wants to hold back 10% of the final payment to make sure Kramer finishes the job satisfactorily.
Draft a contract based on the above information ensuring that you have covered off all requirements to form a valid contract. Highlight any assumptions you have had to make to draft the
Contract #1 Uh Oh! (5 marks)
Half way through the renovation Vandelay Industries goes bankrupt. Kramer was able to order and receive most of the hardware and cabinets, but there are two missing drawer pulls and one missing cabinet. Kramer has looked and can find a substantially catio ptially similar cabinet from Newman Enterprises, but no replacement for the two missing drawer pulls. Also, in the process of doing the kitchen renovations Kramer accidentally causes a flood in Jerry's living room causing $50,000 in damages. What contractual legal issues could this potentially cause?
Section A: Renovation Contract
This contract is entered into between Jerry the owner of the house and Kramer of Cosmo Contracting Inc.
Jerry wants to renovate his kitchen within the two months after entering a contract with his friend Kramer who works for Cosmo Contracting Inc. He wishes to obtain hardware kitchen like knobs, drawer pulls, and cabinets from Vandelay Industries because his friend George is the president of the manufacturing industry. The owner of the house wants the cost of the entire renovation to utmost $20,000. Hence, the two parties agree as follows,
Purchase of Renovation Materials
Kramer, the renovator agrees to obtain renovation materials from Vandelay Industries as suggested by the owner of the house. He also wants to invoice Jerry, the house owner for material and time while the project is under renovation till completion.
Indemnification and Assumptions
The two parties agreed to hold harmless and indemnify each other from all forms of loss, liability, claims, and damages inclusive of legal fees and expenses incurred. None of the parties are liable for any incidental, special, or consequential loss, whether the claim relates to negligence, breach of contract or whether the party was notified prior to the renovation process. Jerry assumes that manufacturer will deliver renovation materials that meet his expectations. He also assumes that Kramer has experience in renovating kitchen hardware. Furthermore, it is assumed that the kitchen hardware will not require additional renovation services.
Terms of Payment and Other Considerations
After signing the contract, Jerry agrees to honor invoices from Kramer, the renovator; however, he plans to retain 10 percent of the agreed amount till the renovator wind up renovating the kitchen hardware. The house owner and renovator are aware that the renovation materials to be ordered from Vandelay Industries are of good condition and genuine. Kramer agree to complete the renovation process within two months as suggested by Jerry, the house owner. Jerry agrees to make additional payments in case the cost of renovation materials exceed the budget drafted initially
Legal and Binding Agreement
The two parties approve their authority to enter into this mutual agreement. They also approve that the agreement is binding and legal. In case a breach of contract will be witnessed, Kramer, the renovator agree that he will incur the loss in case the manufacturer delivers renovation materials that does not meet the requirements set by the house honor.
Governing Law and Jurisdiction
The two parties approve that the contract is overseen by the county or state in which the renovation process is administered. Both parties agreed that their operations are conducted under the uniform commercial code since the code spells out the guidelines to the purchase and delivery of goods and services between the source and the buyer.
The two parties agree and consider that this contract denotes a full representation of the mutual agreement between them. In case one or both parties wish to improve, change, or add any terms stipulated in this contract; therefore, they must do so in writing and subsequently signed by the two parties engaged in.
Consequently, both parties concur with the terms and conditions stipulated in the contract and the signatures below act as a seal.
Section B: Contractual Legal issues
During the renovation process, the manufacturer, Vandelay Industries became bankrupt, and Kramer failed to obtain a cabinet and two drawer pulls from them. Kramer had found a similar cabinet from Newman Enterprises; however, this translates to an issue of mis complaint referrals and deals because the company might be having a financial interest contrary to Jerry’s expectations. On the other hand, Kramer had caused a damages worth $50,000 which is beyond his salary for the entire renovation meaning that material loss another contractual issue that he is likely to face. In relation to that, the binding agreement states that both parties are liable to the loss and damages caused in either way.
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