Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 3

Assignment and Delegation. Bruce Albea Contracting, Inc., was the general contractor on a state highway project. Albea and its sureties (the companies that consented to guarantee the financial liabilities involved) agreed to be liable for all work on the project. Albea subcontracted with APAC-Southeast, Inc., an asphalt company. The contract stated that it could not be assigned without Albea's consent. Later, Albea and APAC got into a dispute because APAC wanted to be paid more for its asphalt. APAC then sold and assigned its assets, including the contract, to Matthews Contracting Co. Albea was informed of the assignment and did not approve it but allowed Matthews to work. Matthews demanded higher payments for asphalt, and Albea agreed because no other contractor would step in at the original price. Albea suffered a loss on the job and could not pay its bills, so Albea's sureties paid Matthews $2.7 million for work performed. APAC sued Albea and its sureties for $1.2 million for work it had performed before the contract was delegated to Matthews. The trial court granted APAC $1.2 million. On appeal, the defendants argued that APAC had breached the contract by assignment without consent. Did APAC breach the contract with Albea? Did Albea owe APAC anything? Explain your answers. [ Western Surety Co. v. APAC-Southeast, Inc., 302 Ga.App. 654, 691 S.E.2d 234 (2010)]