sparkssd said:
A contract was drawn and signed, excluding provisions for “Acts of God”, by Storage Co. and Construction Co. on January 1, 2000. Within is stated that Construction Co. would build a nuclear waste storage tank next to Storage Co.’s previous storage facility in downtown Austin, Texas by September 2000 after beginning in Spring 2000. In the spring of 2000 the city of Austin passed an ordinance limiting the number of workers on projects adjacent to existing nuclear storage facilities to be built. During the passing of this provision Construction Co. made no attempt to defeat the ordinance. On December 25, 2000 a blizzard destroyed the 99% completed facility.
What responsibilities and rights do each company have and a possible verdict?
My response:
A specific clause for an "Act of God" is not required under the basic rules and law of contracts. An Act of God is a "frustration of purpose" which ordinarily pertains to supervening events, such as blizzards, of which no one has control.
It may also be established where, at the time a contract is made, a party’s principal purpose is substantially frustrated without the party’s fault, by a fact of which the party has no reason to know and the nonexistence of which is a basic assumption on which the contract is made.
It is not enough that the transaction will become less profitable for the affected party or even inflict a loss. The frustration must be so severe that it is not fairly to be regarded as within the risks the party assumed under the contract.
So, what you're saying is that the Ordinance passage caused less employees to be at the site, which in turn, caused the project to be slowed down. But for the passage of the new Ordinance, more employees would have been on the job, and the project would have been completed, and not destroyed by the blizzard.
The contractor had no duty to "fight City Hall". That's not it's job, and it wasn't in the contract to do so. If it was anyone's duty, that duty belonged to the owner of the facility - - to protect it's own interests and the contract it had with the contractor. The contractor was merely following the law, and is an innocent party. The contractor suffered a loss "so severe that it is not fairly to be regarded as within the risks the party assumed under the contract" i.e., the blizzard destroyed the yet incomplete project.
The contractor is only doing for you, that which you could not do for yourself; i.e., build the project. If you were the one building the project, you would have lost your investment. But, the contractor is only your "agent", and not a fighter of City Hall. So, why should the contractor take the "hit" ?
The contractor is therefore entitled to payment, in full.
IAAL
