(“CONTEMPORARY BUSINESS LAW”) (“ Page # 1”)
Rex Roofing contracted with O’Neils to install a new roof for $2500. Rex began work and soon found that the amount was not sufficient and that he had underbid it. Rex told O’Neils that he would not do the job for $2500 but charge $3200 for the job.
According to me it was very wrong on the part of Rex Roofing to first form a contract with O’Neils to install new roof for $2500 and backing out of it after beginning the work. The realization of underbidding the job was not an excuse since it was his duty to first inspect the whole work required and then deciding on the bid which he must have done. Moreover since there were no unforeseen conditions that affected the roof and there were no mistakes in the bid calculations, it was highly unethical for Rex Roofing to refuse to do the job at the agreed upon price. Rex Roofing has violated the contract and is liable to O’Neils to the extent that either it will have to work for O’Neils at the previous agreed price or pay damages (compensation) to O’Neils as deemed correct by the court of law.
Though law would not have required O’Neils to pay more than the price agreed upon in the contract, O’Neils agreed to pay Rex Roofing $3200 as demanded to continue with the work. There could be various reasons why O’Neils did not go to the court when they should have done that. The very first argument and the most important reason was that O’Neils were solely dependent on Rex once the work of changing the roof had started. Finding the O’Neils dependent on them Rex Roofing must have taken undue advantage of them by asking for more money. O’Neils obviously were forced to accept the offer in this situation where may be they had about half of the roof down or a roofless house and there could be rain or snowfall at any time or rainy or winter season could be approaching. It doesn’t certainly sound comfortable where O’Neils are sitting under a topless house after filing a suit against Rex and waiting or see their goods being damaged by rains and snow waiting for the verdict. The other reasons could be that filing a suite would have been time consuming and expensive.
It is essential to the creation of every contract that there must be free consent of parties to the agreement. Here the consent of O’Neil is not free but is caused by undue influence and misrepresentation by the Rex Roofing. Hence the contract is voidable at the option of O’Neil.
Example: A promises to sell his car to B for only $2000. His consent is obtained by use of force. The contract is voidable at the option of A. He may avoid the contract or elect to be bound by it. (2004:6)
I don’t see the reason why O’Neils would have given consent for the contract at higher price had they not been forced by the circumstances. Since O’Neils agreed to the offer at the higher price of $3200 at their own option they are ethically obligated to pay the whole sum of $3200 to Rex Roofing. But O’Neils would be free to file a suite against Rex Roofing at their own convenience for breaking the previous contract and demand compensation.
- Kapoor N.D. (eds.) 2004, Elements of Mercantile law, Educational Publishers, New Delhi.