Reference no: EM131659204

Question: Not every contract can be performed. If you are a contractor, you may take on a job that, for one reason or another, you cannot or do not wish to perform. Simply walking away from the job and hoping for the best normally is not the most effective way to avoid litigation-which can be costly, time consuming, and emotionally draining. Instead, you should consider various options that may reduce the likelihood of litigation. For example, suppose that you are a building contractor and you sign a contract to build a home for the Andersons according to a set of plans that they provided. Performance is to begin on June 15. On June 1, Central Enterprises offers you a position that will yield you two and a half times the amount of net income you could earn as an independent builder. To take the job, you have to start on June 15. You cannot be in two places at the same time, so to accept the new position, you must breach the contract with the Andersons. Consider Your Options What can you do in this situation?

One option is to subcontract the work to another builder and oversee the work yourself to make sure it conforms to the contract. Another option is to negotiate with the Andersons for a release. You can offer to find another qualified builder who will build a house of the same quality at the same price. Alternatively, you can offer to pay any additional costs if another builder takes the job and is more expensive. In any event, this additional cost would be one measure of damages that a court would impose on you if the Andersons prevailed in a suit for breach of contract (in addition to any costs the Andersons suffer as a result of the breach, such as costs due to the delay in construction). Thus, by making the offer, you might be able to avoid the expense of litigation-if the Andersons accept your offer. Settlement Offers Often, parties are reluctant to propose compromise settlements because they fear that what they say will be used against them in court if litigation ensues. Generally, however, offers for settlement will not be admitted in court to prove that you are liable for a breach of contract (though they are at times admissible to prove a party breached the duty of good faith).

CHECKLIST FOR THE CONTRACTOR WHO CANNOT PERFORM

1 Consider a compromise.

2 Subcontract out the work and oversee it.

3 Offer to find an alternative contractor to fulfill your obligation.

4 Make a cash offer to "buy" a release from your contract. Work with an attorney in making the offer, unless only an insignificant amount is involved.