Business Law: Contract Breach Analysis Report for Construction Project

This report analyzes a business law case involving a construction project with multiple contract breaches. The analysis uses the IRAC method to examine the liability of BlockCo for refusing to supply construction blocks, BuildCo for deviating from architectural plans and potentially failing to pay PourCo, and DevCo for potentially failing to pay BuildCo. The report addresses issues of anticipatory breach, material breach, express and implied contracts, and the application of contract law principles to determine the obligations and liabilities of each party involved. It also discusses the potential damages and remedies that may arise from these breaches, including the application of contract amendments and the implications of cost increases on contract performance. The report concludes with a determination of liability for each breach, referencing relevant legal principles and the specific facts of the case.

Business Law
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ANALYSIS
Issue 1: Is BlockCo liable for the breach of contract it entered with BuildCo by refusing to
perform its duty of providing 100,000 blocks for construction?
Rule 1: A contract is an agreement between two or more people which can be enforced by the
law. A breach of contract occurs when one of the party fails to fulfill their part of the agreement.
There may occur an anticipatory breach in the case where one party declares that they will not
fulfill their part before the time they are supposed to fulfill it.
Application 1: The agreement between BuildCo and BlockCo was enforceable by law since it
was justifiable by law and failure to which would lead to legal repercussion. According to the
contract, BlockCo was to provide the construction blocks for $600,000. Before BlockCo began
its supply, it found the business unprofitable due to the unexpected rise in the cost of cement and
therefore refused to perform its duty and informed BuildCo (Bagley, 2018).
Conclusion 1:
Since BlockCo violated its duty of suppling the blocks, it is liable to BuildCo for anticipatory
breach of contract.
Issue 2: Is BuildCo liable to DevCo for breach of contract by failing to construct the 10- story
residential apartment as agreed in the contract?
Rule 2: In the law of contract, material breach is said to occur when one of the party deviated
from a key element of the contract.
Application 2: Under the contract, BuildCo was to construct a 10- story residential apartment
complex, to be completed by 1st march, 2020 while DevCo was to pay $20,000,000. Although
BuildCo completed the construction of the building, it deviated from the initial architectural

plans, which were very important in DevCo’s plan to get the building certified by the
government. In their contract, any relevant deviation by BuildCo would require it to pay
damages of $6,000,000 to DevCo.
Conclusion 2: BuildCo is liable to DevCo for material breach of contract since it made a
significant deviation from the original architectural plans. In line with the contract, BuildCo
should pay the $6,000,000 damages to DevCo.
Issue 3: Is DevCo liable to BuildCo for breach of contract by failing to pay for the construction?
Rule 3: Under the law of contract, one party may fail to fulfill their obligation in the contract
when the exact time to do so occurs. This is referred to as an actual breach of contract. As one
may fail to pay the other party due to breach of contract, the initial contract should be followed
especially if it is inclusive of a clause describing the same.
Application 3: There were definite terms of payment in which DevCo was to pay $20,000,000
to BuildCo after completion of construction as by the contract. After realizing that BuildCo had
installed a cheaper A/C system and glass, DevCo failed to pay since BuildCo had breached the
contract. The other options that DevCo had were to subtract the liquidation damages due to the
deviation or subtract the consequential damages which was the cost of replacement of the A/C
system and windows with the ones that were in the initial plan. BuildCo accepted that it had
deviated from the plan. It intended to argue that DevCo should pay it the amount agreed upon
subtracting only the expectation damages.
Conclusion 3: DevCo will be liable to BuildCo for actual breach of contract if it fails to pay at
all. However, if DevCo subtracts the $6,000,000 liquidation damages, as per the contract, and
pays the rest, there will be no breach of contract.

Issue 4: Is BuildCo liable to PourCo for breach of contract by failing to pay the additional 20%
agreed upon and the price of the additional 50,000 blocks?
Rule 4: There are various types of contracts. Among them are express contract and implied
contract. An express contract is a legally enforceable agreement between two or more parties
which is either spoken or made in writing. An implied contract is an agreement which can be
enforced by law and is made binding by the actions of one of the party.
Application 4: Initially, PourCo was subcontracted by BuildCo to construct the foundation of
the building for $600,000. However, after the increase in cement costs, PourCo asked for a 20%
increase in the payment since it was not profitable at the previous price. BuildCo agreed to pay
PourCo $360,000 for the construction and they amended the contract. PourCo and BuildCo also
signed a contract for the supply of 50,000 blocks at $330,000. The contract for the supply of the
first 50,000 blocks by PourCo was express since it was written. The supply of the last half of the
blocks was an implied contact. Even though there was no formal agreement, BuildCo continued
to order for the blocks from PourCo therefore its actions made the contract to be legally binding.
BuildCo refused to pay the full amount for construction as agreed in the amended contract and
said it would only pay $300,000. BuildCo also refused to pay for the additional 50,000 blocks
that PourCo supplied.
Conclusion 4: Since BuildCo is not willing to pay the full amount for construction and supply of
building blocks by PourCo, it is liable for breach of both the express and implied contract. The
court could sue BuildCo for actual performance.

References
Bagley, C. E. (2018). Managers and the legal environment: Strategies for business. Cengage
Learning.
Boundy, C. (2016). Business contracts handbook. CRC Press.
Kuchhal, M. K. (2013). Business law (6th ed.). Vikas Publishing House.
Marson, J., & Ferris, K. (2015). Business law. Oxford University Press, USA.
Store, T. L. (2019). Business contracts: Attorney's private notes for preparing business
contracts (2020).
What are the different types of contract? (2017). UpCounsel. https://www.upcounsel.com/what-
are-the-different-types-of-contract