Rich & Whillock v. Ashton Development - Case Study Example

In a meeting, persons at the helm of affairs of Rich & Whillock, Inc Bob Britton Inc, and the Ashton Development, Inc unanimously decided to blast the rock discovered. Clearly, the contract price of $112,990 did not include blasting costs. However the contract stated “[a]ny rock encountered will be considered an extra at current rental rates” (Rich & Whillock, Inc Vs. Ashton Development, Inc). Rich and Whillock estimated that an additional $60,000 was required to remove the rock, increasing the total contract price approximately to $172,000.

Rich and Whillock informed Britton that the actual cost might be higher than the estimated cost due to the unpredictable nature of the rock. Britton agreed Rich and Whillock to pay the extra costs arising out of the rock work and directed them to go on the with the work. Rich and Whillock proceeded with the rock work and submitted invoices, and received payments at the end of every week. They prepared separate invoices for the regular contract work, and the extra rock work supported by employee time sheets.

Although Whillock asked Britton if he needed any clarification regarding any of the billings by the end of April, Britton had no doubts and directed Whillock to continue with the rock work. As described by Gibbs and Hunt (2010), after receiving a total payment of $190,363.50 by 17th June, Rich & Whillock Inc submitted the final invoice amounting an additional $72,286.45. After consulting with Ashton officials, Britton refused to pay the money stating that Ashton Development, Inc was short on funds and had little money left to pay that amount (p.738). Britton had no objections about the work done until he received that final invoice.

In addition, Britton had not asked for accounting of charges prior to the receipt of the final invoice. Whillock told Britton that his company would end up in closure unless that final invoice was paid, because Rich & Whillock Inc was a new company. As the project was a huge