Ethics In Action. Essay

1216 words - 5 pages

Rex Roofing formed a contract with the O'Neill's for installation of a new roof on their house. The price of the contract was $2500. After the work had begun, Rex realized that he was not charging enough for the job and informed the O'Neill's that he could not complete it. The O'Neill's agreed to pay a higher price of $3200. We will, through the analysis of prior case precedents, state our opinions as to whether it was ethical for Rex to refuse to do the job at the original price, and if the O'Neill's are ethically obligated to pay more than the original contracted price.Case Precedent #1Drennan v. Star Paving Co., 51 Cal. 2d 409[L. A. No. 25024. In Bank. Dec. 31, 1958.]William Drennan, plaintiff, a licensed general contractor, submitted a bid on the "Monte Vista School Job" for a paving job. Before Drennan could submit the bid, Drennan asked for bids from subcontractors to do the paving work. Of all of the subcontractors who submitted bids, Star Paving Co. came in with the lowest bid. Star Paving Co. bid the paving job at $7,131.60. Mrs. Johnson, Drennan's secretary, repeated the bid to make sure that the bid amount was correct and was confirmed by Mr. Oppenheimer who was Star Paving Co.'s construction engineer. Drennan compiled his costs, $317, 385.00 including Star Paving Co's bid on his proposal to Monte Vista School. Drennan told Star Paving Co that if awarded the project, they would be awarded the subcontract. On July 28, 1955, Drennan was awarded the project. The next morning, Drennan stopped by Star Paving Co. and found out that the bid amount was a mistake and the job had to be done at $15,000. Drennan told the subcontractor that the work had to be done as agreed upon at the price of $7,131.60."The court found on substantial evidence that Star Paving Co. made a definite offer to do the paving on the Monte Vista job according to the plans and specifications for $7,131.60, and that Drennan relied on Star Paving Co.'s big in computing his own bid for the school job and naming Star Paving Co. as the subcontractor for doing the paving work." As per section 90 of the Restatement of Contracts, "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.""It bears noting that a general contractor is not free to delay acceptance after he has been awarded the general contract in the hope of getting a better price. Nor can he reopen bargaining with the subcontractor and at the same time claim a continuing right to accept the original offer." "As between the subcontractor who made the bid and the general contractor who reasonably relied on it, the loss resulting from the mistake should fall on the party who caused it."Case Precedent #2Schlinkman v. Davis, 195 Cal.App.2d 603.(Civ. No. 10095. Third Dist. Sept. 14, 1961).The plaintiff had...

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