Legal aspects of engineering

1. Black is purchasing a house under a real estate mortgage held by White Mortgage Company. Under the terms of the mortgage, Black is obligated to make a payment to White Mortgage Company each month. Part of the payment is for interest, another part reduces the mortgage balance, and a third part is deposited in an escrow account to pay for taxes and insurance. Black sells his house to Gray, with Gray agreeing to take over the mortgage payments. If Gray defaults, can White Mortgage Co. take action to recover from Black?

2. Black Tool and Die Company agreed to make a punch press die for White for $10,000. A one-month delivery time was agreed on. Black was ready to begin work on the die when White called and told Black to hold up until further notice. White then shopped around in an attempt to find a lower price for the die. White could not find a better price and called Black about two weeks later to tell Black to go ahead on the die, but Black refused, saying that its work schedule was now such that the die could not be completed within six months. White claims breach of contract and threatens to sue. What is the likely outcome of the case? Why?

3. Why is it necessary for courts to recognize an anticipatory repudiation in connection with contracts involving a structure that is to be built and installed?

4. Black hired Automation to build a special machine to be used by Black in the manufacture of automobile door handles. The door handles were to be sold to Gray Motor Company. The price of the special machine was to be $200,000. Shortly before work was to begin on the special machine, Gray canceled the order for door handles and Black immediately canceled the order for the special machine. Does White have a right to resort to legal action? If so, against whom and for how much?

5. What is the purpose of (a) nominal damages, (b) compensatory damages, and (c) exemplary damages?