Saturday, April 13, 2013

Based on the scenario below, does Charlie has any legal arguments to get out of paying the additional $2,000? Or is a deal a deal, as Paul says, since they signed a written amendment to the contract? How do these elements apply to the amendment to the contract? Is there a missing element? Charlie’s daughter is getting married on August 15 (a few weeks away) and the wedding will be at Charlie’s house. He wants his house to look nice and so Charlie hires Paul to paint the outside of his house. Paul and Charlie signed a written contract which states that: Charlie will pay Paul $10,000 to paint the exterior of the house and Paul will have it completed no later than August 14. Charlie pays Paul $5,000 of the $10,000 contract price at the time they sign the contract, and per the terms of the written contract the remaining $5,000 is due when the house is completed. Paul starts the job, and all is going well, except Paul realizes that he may not be able to finish painting the house by August 14 unless he hires additional workers. Paul calls Charlie on August 13 and explains to Charlie that the only way he can have the house fully painted by August 14 is if Paul hires 5 new workers, and Charlie pays Paul an additional $2,000 to cover the extra labor. Charlie is devastated by the news, but he needs his house painted and is a nervous wreck about the entire matter. Thus, Charlie reluctantly agrees to sign an amendment to the contract that states that Charlie will pay an additional $2,000 so the house will be painted by August 14 (so now $7,000 is due at the completion of the work instead of $5,000). The amendment gets signed, Paul finishes the house by August 14, the wedding take place and all is good for a few days. On August 18, Paul sends Charlie an invoice for $7,000 (which includes $5,000 for the original balanced owed plus the additional $2,000 per the terms of the signed amendment). When Charlie gets the invoice, he gets mad and calls Paul and tells him that he should not have to pay the additional $2,000 b/c Paul originally agreed to paint the house by August 14 for $10,000 and not the total of $12,000. Paul says, "Sorry, Charlie, you signed the amendment and you owe me the full remaining balance of $7,000. . . a deal is a deal."

In my view, Charlie has no legal ground to get out of paying the contract. Though he signed original contract, which was a valid and enforceable contract, it is nullified by a second contract —the amendment. Unfortunately for Charlie, his own knowledge and cooperation work against him in this matter.
In many cases, contractors will adjust a bill and include additional charges that may have been briefly mentioned or hinted at without thoroughly discussing them. There are, certainly, incidentals that occur with any project. The legality of tacking on additional charges that weren't initially agreed upon is dubious at best, but it is most often left unquestioned, so many contractors get away with it. If this were the case, Charlie would have some legal footing.
Unfortunately, Charlie was fully aware of the necessary changes. He willingly chose to nullify the first contract because of the importance of the deadline. When it was presented to him as impossible without hiring additional help for $2,000, Charlie had, at that time, every right to object to paying the additional sum. Since the first contract was valid and enforceable, he could have forced Paul to take on the additional expense himself and complete the project on the deadline. The first contract gave Charlie more power, because the price was fixed and the deadline was set—all he had to do was enforce it.
However, because Paul came to him with a counter-offer halfway through the job, Charlie lost the ability to say that he was being unlawfully charged or that Paul was breaking their contract. In fact, at that time, Charlie could have simply forced Paul to continue. But, by signing the amended contract, Charlie bound himself legally to the fact that he knew of the charges in advance and willingly accepted them. Now this contract gives Paul more power, and Charlie is bound legally by it. Therefore, he must pay.

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