Business Law 1
Breach of Contract and Remedies

1.        Liquidated Damages. Vrgora, a general contractor, entered into a contract with the Los Angeles Unified School District (LAUSD) to construct an "automotive service shed" and an enclosed room outfitted with an electronic vehicle performance tester. The contract specified a price of $167,195.09, a completion time of 250 days from commencement, and a liquidated damages clause of $100 per day for late completion. Vrgora began construction on January 31, 1977, with an expected completion date of July 29, 1977. Delays in the project arose when the manufacturer of the tester did not receive approval for the tester until September 23, 1977 (a delay of over six months). The tester arrived on November 15, 1977, but because of a conflict over payment, the manufacturer removed the tester. Upon payment, the manufacturer delivered the tester again on December 2, 1977, and Vrgora completed the project on May 2, 1978. LAUSD assessed $20,700 as liquidated damages and eventually brought an action against Vrgora to collect the assessed damages, which Vrgora refused to pay. Given the circumstances of this case, will the court require Vrgora to pay the liquidated damages demanded by LAUSD?

2.        Waiver of Breach. Roger and Lois Robinson bought a mobile home and lot subject to a promissory note secured by a deed of trust in favor of Delores Dorn and Elizabeth Britt. The note provided for monthly payments. The deed of trust provided that "by accepting payment of any sum secured hereby after its due date" Dorn and Britt would "not waive [their] right either to require prompt. payment when due of all other sums so secured or to declare default for failure so to pay." For the first six months, none of the Robinsons' payments was more than a week late. Over the next seven months, their payments were consistently, on average, one or two weeks late. After they had missed two consecutive payments without explanation, Dorn and Britt initiated foreclosure proceedings. The Robinsons argued that since Dorn and Britt had accepted the previous late payments, they were required to give notice before filing to foreclose. Had Dorn and Britt, by their acceptance of late payments, waived their right to prompt payment, not withstanding the nonwaiver clause in the deed of trust? Explain.

3.        Recovery Based on Quasi Contract. Southwestern Bell Telephone Co. executed a license agreement that gave United Video Cablevision of St. Louis, Inc., authority to construct and operate a cable television system using poles and conduits owned by Bell. The agreement specified that United Video would make a down payment for rent and telephone wire service. By law, Bell was required to locate and mark underground facilities, upon request, before any excavation so that no disruption of the telephone lines would take place. Bell had provided this service free of charge for many years, and it performed the service for United Video before United Video installed its lines. After United Video had substantially completed its installation, Bell notified the company of its intention to charge for the locating and marking service. The charge was not a part of the oral or written contract, and United Video refused to pay. Bell sought to recover based on quantum meruit. Discuss whether Bell should succeed in its claim.

4.        Limitation of liability. Patricia Elsken leased an apartment in a large apartment complex. She signed a "Residential Alarm Security Agreement" in which she agreed to have security services provided by Network Multi-Family Security Corp. The contract contained a clause limiting Network's liability to $250 for any injury or damage caused by a failure of the alarm service or by Network's negligent performance. The agreement stated, in all capital letters, that Network was not an insurer and that "resident assumes all responsibility for obtaining insurance to cover losses of all types." The agreement also provided that "Resident may obtain from Network increased liability by paying an additional charge directly to Network." Network received an alarm signal indicating intrusion into Elsken's apartment at 10:33 A.M. on April 11, 1988. Network called Elsken's apartment and, receiving no answer, called the apartment. manager instead of going to Elsken's apartment. The manager told Network to disregard the alarm. Later that day, Elsken was found dead in her apartment, the victim of an apparent homicide. The administrator of Elsken's estate brought an action for damages against Network, alleging negligence. Will the court hold that the contractual limitation of liability for personal injury is valid and enforceable?