>> Operation Management
Andy enters into a contract with John to redecorate his New York penthouse. John sets to work immediately. He install new wallpaper and lighting in Andy's house, and paint a mural of little cherubs on his dining room ceiling. Shortly thereafter, Andy breaches the agreement by refusing to pay for anything. John has spent $10,000 including labor on the installation of the wallpaper, lighting and mural, and the market value of these items is $15,000. The total redecorating contract was for $50,000. (A) Assume that John cannot estimate with specificity what his cost of the completion would have been. If John sues, what damages can he collect? Explain. (B) Now assume that the total contract price was $12,000. How much may John recover? (C) Now assume that John has fully performed under the contract, and Andy has refused to pay anything. John spent $25,000 to perform. The market value of the new decor is $60,000. The total contract price was $50,000. What damages can John recover?