Law for Business 12th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 4

Cornwell was a partner in a company, POA, which sold one-inch parcels of land in each of the 50 states. It approached Gray Loon Marketing (GLM) to design and publish a website through which it would sell the parcels. GLM gave POA a proposed design and an estimated price of $8,080. It stated their philosophy was, "that clients have purchased goods and services … and that inherently means ownership of those goods and services as well." POA agreed, paid a deposit, and design commenced. POA asked for a few minor changes, the work was finished, and POA paid the amount asked for, $8,500. Several months later POA asked for several changes, some requiring major programming work. GLM agreed over the phone to make them and began work immediately. When it completed the work, GLM contacted POA for approval. At that time, POA said it no longer wanted the changes. GLM then sent a bill for $5,224. After several attempts to collect, POA asked for more time to collect the funds, stating it had no problem with the work. When POA failed to pay, GLM sued for nonpayment. POA argued that the contract was for services and that under common law, since there was no agreement for the price of the modifications, it was not liable. Is this correct? Why?