Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 18

The parties entered into an oral contract in June under which the plaintiff agreed to construct a building for the defendant on a time and materials basis, at a maximum cost of $56,146, plus sales tax and extras ordered by the defendant. When the building was 90 percent completed, the defendant told the plaintiff he was unhappy with the whole job as ''the thing just wasn't being run right.'' The parties then, on October 17, signed a written agreement lowering the maximum cost to $52,000 plus sales tax. The plaintiff thereafter completed the building at a cost of $64,155. The maximum under the June oral agreement, plus extras and sales tax, totaled $61,040. Explain whether the defendant is obligated to pay only the lower maximum fixed by the October 17 agreement.