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Question

Nemo asks if you can help him get out of a contract with Magic Man Roofing, Inc. Nemo called Magic Man about repairing a leaky roof. Because of a conflict, only Nemo’s wife, Wilma, met with Magic Man’s agent at their home. The Magic Man told Wilma she needed an entire new roof and estimated the cost at $7,500 for labor and materials. However, he said they could start as early as next week, depending on the weather. The Magic Man told Wilma that she would need to put 1/3rd down ($2,500) to lock in that estimate and to get on Magic Man’s schedule. Wilma told the Magic Man that she wanted to lock in the estimate but could not make any deposit without first talking to Nemo. The Magic Man verbally agreed to hold processing her credit card number for 10 days. With that assurance, Wilma signed a form agreement with Magic Man to confirm the estimate. However, the form agreement also stated that if the customer cancelled the contract the customer forfeited any deposit. The agreement said nothing about holding credit card processing and did not have an integration clause. The following day, Nemo decided not to go with Magic Man and informed them so by telephone. However, it was too late. Nemo learned that Magic Man had already processed the credit card for $2,500.

(a) Is the contract enforceable? Analyze and explain.

(b) Suppose Wilma and Nemo agree to let Magic repair the roof but they cause additional structural damages to the point where the house is now uninhabitable. Identify the types of damages available to Wilma and Nemo.

(c) How could Magic limit damages?

(d) Suppose Magic finds that the house is so infested with carpenter ants and termites that the house would have to be torn down. What defenses, if any, would Magic have to enforcement of the contract?

(e) If Magic refused to do the work prior to the agreed start date, what would that be called and what options would Wilma and Nemo have?

(f) Could Magic Man delegate the contract to another contractor?

(g) Could Magic Man assign Wilma’s contract as collateral for a loan?

(h) Suppose Wilma and Nemo sell the home before Magic can do the work. What is the term for substituting a different party to create a new contract?

(i) Suppose Wilma and Nemo cannot afford to pay for the roof repair but her parents agree to sign the contract with Magic and pay for the repairs. If her parents later refuse to pay, could Wilma and Nemo force them to do so?