CIVE 571 SAMPLE TEST QUESTION

Ace Construction Company ("A") mails a "request for bid" to Baker Steel Fabrication Company ("B"). The request asks for bids for providing steel for a construction project being erected by A, including delivery to the site. B enters a bid by mail, for $400,000 with an exception stating that delivery is not to be included. A mails a letter to B stating, "Your bid is accepted, however, delivery is to be included although you may adjust your price to cover shipping charges." B immediately begins fabrication, notifying A of such. 29 days later B mails a letter to A stating, "In accordance with the provisions of our bid, we will not, under any circumstance, assume the responsibility of shipping and the associated risks of loss or damage to the steel in transit. If you name your shipper, we will be happy to assist him in picking your shipments up at our facility. It is the firm policy of our company to never accept responsibility for our product after it leaves our plant."

After several phone calls between A and B, A mails a letter to B stating, "As you cannot comply with the bid requirements which are incorporated in our contract, we have no choice but to consider you in breach and notify you that we are hiring another firm to perform your contract, at your expense." Due to the shortened period of time, the best bid A can get from other fabricators is $500,000, which he pays. (A delay to the project would have cost more.) B, having partially completed the work, now has a yard full of specially fabricated steel. B estimates the cost-to-date of fabrication was $100,000. The scrap value of the steel is now $20,000. B's cost of shipping would have been $15,000, and the cost of all risk insurance during the shipment would have been $3,000. B's anticipated profit would have been $50,000. A sues B. B sues A.