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Question
Earthquake. Stewart, the owner of ABC Construction, agreed with Joan, the owner of XYZ Hotel that he would complete renovations on her upper scale hotel on the beach in Florida by October 1. The amount due to Stewart under the contract was $250,000. The contract contained a clause by which Stewart would pay Joan $50,000 for each day he was late on completing the project. Unfortunately, an unexpected strong earthquake shook the area; and while the earthquake did not damage the hotel itself, Stewart encountered significant difficulty in getting supplies due to the high demand for building material following the earthquake. Because he believed that traveling, himself, to other states to obtain supplies would be prohibitively expensive, he delayed the project for two weeks while waiting for local stores to have sufficient supplies available. Stewart finished renovations six days late. Joan told Stewart that she owed him nothing but that he owed her $50,000. Stewart told Joan that he was suing for the entire $250,000 because it was not his fault the earthquake delayed matters. Assuming the earthquake does not affect Stewart's liability for damages, which of the following is true regarding the provision that he will pay $50,000 for each day he is late?
A. It will be upheld based on freedom of contract.
B. It will be upheld because the penalty per day is less than one half the amounts due for the job.
C. It will be upheld as a stipulated amount.
D. It will be struck because parties are prohibited as a matter of law from specifying damages.
E. It will be struck as a penalty.
Answer
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Related questions
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DUI Charge. Monique was licensed to train massage therapists. A new federal agency, the Aesthetic and Massage Commission, took very seriously its role of enforcing the statute enabling the Commission to do its work and providing that licensed massage therapists must refrain from "any act or conduct indicating bad faith, incompetence, dishonesty, or improper dealing." Monique, while driving home late one night from a party, was stopped by the police and arrested for driving under the influence of alcohol. She pled guilty to the offense. When the Aesthetic and Massage Commission discovered the offense, the officials of the agency met, decided that Monique might drink on the job, and that she might pose a danger to students. Accordingly, her license to teach massage therapy was revoked. Monique threatened to sue to retain her license and was told by the agency head that she had no right to appeal to court because of the nature of the Aesthetic and Massage Commission; and that, in any event, action by an agency is always upheld. Which of the following is true regarding the statement of the agency that Monique had no right to appeal to court?
A. The agency representative was wrong; and if Monique cannot resolve the issue within the agency, she may appeal to court for judicial review.
B. Because the agency was set up to protect the safety of the public, the agency representative is correct unless Monique can establish that she entered into a separate contractual arrangement with the agency when she was hired that gave her the right to appeal decisions to court.
C. Further information is needed regarding whether the agency was an executive agency or an independent agency because while actions of an independent agency may be appealed to court, actions of an executive agency may not be appealed to court.
D. Further information is needed regarding whether the agency was an executive agency or an independent agency because while actions of an executive agency may be appealed to court, actions of an independent agency may not be appealed to court.
E. Because the agency was set up to protect the safety of the public, the agency representative is correct; and Monique has no right to a court action and no right to enter into a contractual agreement with the agency regarding appeal rights.