Contract Issues

Sally Star makes one-of-a-kind woven rugs that have recently been featured in several national magazines. She designs the rugs and uses a unique weaving technique that only she has mastered. Luxoria, a home store, asked Sally, over the phone, whether she would be able to make five small rugs for sale at its store, with a special border that used the Luxoria logo, and would pay her $1,000 for each rug. Sally told the store that it would take her about a month to make five rugs. Two days later, on August 15, Sally e-mailed Luxoria, stating, “All right, I can make five rugs for $1,000 for each rug.” Luxoria replied by e-mail, “OK, but we must have all five rugs by September 20, and then we will pay you the full amount.”

Sally began work on the project. As soon as she finished each rug, she sent it to Luxoria. By September 13, she had sent Luxoria four rugs. On September 14, she injured her hand and could not make the fifth rug in time to meet the deadline. She informed Luxoria that she could have her assistant make the fifth rug, but Luxoria refused, saying that she could not assign the contract to her assistant because the rug needed to be a Sally Star rug. After September 20 passed, Sally asked for the $4,000 for the four rugs. She also noted that she was not sure whether she could sell the rugs elsewhere because they contained the Luxoria logo on them. Luxoria management informed her that Luxoria did not have to pay because she did not fulfill her contract, as she did not provide them with the five rugs.

In a 2-3 page paper, following APA standards, discuss the contract issues in this scenario. Be sure to include your insights into contract formation, breach, assignment, and remedies. What options does Sally have?

Sample Solution
Contract Issues

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