Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 11

Hydrotech Systems, Ltd., a New York corporation, agreed to sell wave-pool equipment to Oasis Waterpark, an amusement park in Palm Springs, California. Although Hydrotech was not licensed to install such equipment in California, it agreed to install the wave-pool equipment after Oasis promised to arrange for a California-licensed contractor to "work with" Hydrotech on any construction.
The contract between Hydrotech and Oasis called for Oasis to withhold a specific portion of the contract price pending satisfactory operation of the wave pool. Although the pool functioned properly after installation, Oasis continued to withhold payment for both the equipment and the installation services.
Section 7031 of the California Business and Professions Code states that a suit may not be brought in a California court to recover compensation for any act or contract that requires a California contractor's license, unless the plaintiff alleges and proves that he or she was duly licensed at all times during the performance.
Can Hydrotech recover its compensation due under the contract? Does Hydrotech have a valid action against Oasis for fraud? Is it ethical for Oasis to use the California law to defend itself? [Hydrotech Systems, Ltd. v. Oasis Waterpark, 803 P.2d 370 (Cal. 1991).]