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three million dollars on the table’.

After the fifth invoice was delivered, ABC was approached by the accounting firm for additional information and explanation of bills from an equipment parts supplier, the cost of which comprised a portion of the fifth invoiced amount. After a lengthy meeting on the subject, during which some clarification of the information was provided, the accounting firm requested that further additional information be provided prior to payment of the fifth invoice being due. Although the signed contract did not obligate ABC to obtain such additional information, a representative of ABC verbally informed the accounting firm that ABC would provide the additional information as requested, and prior to payment of the fifth invoice being due. However, ABC never did so.

Thirty-one days after the fifth invoice had been received, ABC notified the accounting firm that ABC was terminating the contract as the accounting firm had defaulted in its payment obligations under the specific wording of the contract.

43. A contractor decided to use a computer program to prepare its bid for tendering on a construction project. Having been approached by a software developer promoting its software package for bid preparation, the contractor dealt with the software developer and entered into a contract in the form of a license agreement authorizing the contractor to use the software. However, the contract between the contractor and the software developer also included an express provision which limited the software developer’s liability on account of any damages that the contractor might suffer as a result of using the software to the amount of the license fee paid by the contractor for the use of the software. The licence fee for the software package was $25,000.

The contractor used the software program to prepare a bid for an important contract opportunity. Unformtunately, the software contained a software defect, a flaw which resulted in the bid price that the contractor submitted on the project being understated by $2,000,000. Because of the understated price, the contractor was the lowest bidder and the contract was awarded to the contractor.

The owner insisted that the contractor perform its obligations on award of the contract, even though the contractor attempted to persuade the owner that its low price was due to a software defect. The contractor performed the work under the contract as best it could, and upon completion of the contract determined that its loss on the project amounted to $1,400,000.

The contractor claimed that its loss of $1,400,000 was entirely due to the software defect. The contractor retained an independent expert who confirmed that the contractor had performed as well as it could have on the project and that the losses were in fact due to the pricing error that had resulted from the software defect.

The contractor sued the software developer to recover its loss.

Explain and discuss whether the contractor could succeed in a breach of contract claim agains the software developer. In answering, please include a brief summary and description of the development of relevant case precedents relating to the enforceability of contractual provisions that limit liability.

5.7.84 HOW SOLVE TO LAW/ETHICS PROBLEMS