Your worst nightmare has come true â€“ you went to law school, passed the Bar, and are now an associate at Big Law Firm! Plaintiff Paul has hired your firm to represent him in an action against Defendant Dan for the recovery of a balance of $10,000 that he alleges is due to him. Plaintiff Paul (contractor) and Defendant Dan (owner) never met, but, through their architect, who was acting as principal for both parties, they entered into a contract pursuant to which Plaintiff Paul promised to construct a recording studio on the land of Defendant Dan. Both parties signed duplicate contracts in writing, covering the construction of the recording studio, which was to be completed within 300 days. Each duplicate contract contained the following provision: “For each calendar day beyond the scheduled date of completion for which the project has not been completed, contractor Paul shall pay to owner Dan as liquidated damages the sum of $1000 per day.”
When Plaintiff Paul signed both copies of the contract, Defendant Dan’s signature was attached, and the contract price therein named was $35,000. When Defendant Dan signed them, however, the contract price stated in each was $25,000. Until the building was completed – 160 days beyond the scheduled completion date – Plaintiff Paul held a contract under which he was to receive the larger sum, while Defendant Dan held a contract for the same work, under which he was to pay the smaller sum. This resulted from the fraud of the architect who drew the contracts, and who did all the business and made all the payments for the defendant. The contracts were on typewritten sheets, and it is supposed that the architect accomplished the fraud by changing the sheets on which the price was written, before the signing by Plaintiff Paul, and before the delivery to Defendant Dan.
The parties did not discover the discrepancy between the two writings until after the building was substantially completed, as all of the dealings between the parties pertaining to the contract, from first to last, until the building was substantially completed, were through the architect. Each of the parties acted honestly and in good faith, trusting the statements made by the architect, and the failure of the parties to discover the difference between their copies of the contract was caused by the frequently repeated fraudulent representations of the architect to each of them. The architect was indicted, but he left the state and escaped punishment.
In preparation for trial, an independent auditor found that the market value of the labor and materials furnished by Plaintiff Paul was $34,000, and that their total cost to the plaintiff was $32,000. The auditor also found, however, that, in hindsight, it turned out to be bad judgment on the part of Defendant Dan to build the recording studio upon the lot, because the structure only increased the market value of the real estate by $22,000. The reason for this discrepancy was that Defendant Dan expected to make about $500 in profits per day from the operation of the recording studio (although he hoped he would make as much as $1000 per day), but once the recording studio opened, Dan realized that he underestimated overhead expenditures and just how few people even want to use a professional recording studio these days since they can do so much with their own computers, so that Dan could only make around $300 per day in profits.
Plaintiff Paul has only been paid $25,000 thus far. Please write a memorandum to Senior Partner at Big Law Firm discussing all relevant issues, focusing especially on remedies, that are likely to be raised between the parties, who you think is likely to prevail on each issue, and why. Please organize your memorandum by issue. FOR THIS QUESTION ESPECIALLY, DO NOT WORRY ABOUT REACHING A â€œCORRECTâ€ CONCLUSION â€“ WORRY INSTEAD ABOUT EXPLAINING THE LAW