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Caroline's house was badly damaged by storms in March. She engaged David, a builder, to repair the damage. David told Caroline that the work would cost £10,000 and would be finished by 1 June. Caroline accepted David's terms because she wanted to be able to put the house up for sale in June.

David started work on the repairs to Caroline's house in April, but further storms delayed the work. Four weeks later David approached Caroline asking her to increase the contract price to £15,000 due to increased overtime costs David would face to meet the deadline of 1 June. Reluctantly Caroline agreed.

David completed the repair before the end of May and sent Caroline a bill for £15,000. However, Caroline informed David that she could only afford to pay £10,000 because she was in financial difficul- ties. David, fearing that he would otherwise receive no payment at all, reluctantly accepted £10,000 in full settlement.

David has now discovered that Caroline has made a substantial profit on the sale of her house and is about to depart on a round-the-world holiday.

Advise David on whether he can recover the rest of the money.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91644513

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