A state law required builders of homes to be licensed. Although DelVal Construction, Inc. did not have a license, it built a home for German at a price of $385,000. German made a down payment of $65,000 before DelVal began construction. When German failed to pay the balance that was owed, DelVal sued her. She raised the defense that the unlicensed contractor could not recover for the contract price. The jury, after hearing the evidence, concluded that DelVal performed satisfactory work. DelVal claimed that the lack of a license was not a bar to recovering the money because the president of the corporation was a licensed builder and the only shareholder of the corporation. Is this an illegal contract? Should the law allow German to take advantage of DelVal by not paying the additional $320,000 for the house? What public policy would support such an outcome? Which party will succeed?

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4 April, 13:37

A state law required builders of homes to be licensed. Although DelVal Construction, Inc. did not have a license, it built a home for German at a price of $385,000. German made a down payment of $65,000 before DelVal began construction. When German failed to pay the balance that was owed, DelVal sued her. She raised the defense that the unlicensed contractor could not recover for the contract price. The jury, after hearing the evidence, concluded that DelVal performed satisfactory work. DelVal claimed that the lack of a license was not a bar to recovering the money because the president of the corporation was a licensed builder and the only shareholder of the corporation. Is this an illegal contract? Should the law allow German to take advantage of DelVal by not paying the additional $320,000 for the house? What public policy would support such an outcome? Which party will succeed?

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Giancarlo Garcia · Answer 1

This contract is LEGAL, because DelVal Construction, Inc. is a register firm that has the legal right to construct buildings and German has the statutory obligations to own a house. The law only prohibits DelVal from practicing without license, and not it's ability to practice. DelVal has committed a civil crime, by practicing without license, which the penalty is to pay a fine between $500 to $1000. The law doesn't hold any crime in their agreement, as the two parties has the right to such agreement.

It will be injustice for the law to German to take advantage of DelVel for not being licensed. German is an exploiter, because he has committed a crime called Exploiting legal loopholes - for someone to see a loophole as a chance to exploit from a person, using evidence that are related to legal situation and exploit from another person. Therefore German should be punished with a fine not more than $10,000, and should be mandated to pay for the services received from DelVel.

The public policy that will be used for this case is Civil law. Because DelVel has committed an offence by practicing without license, which is punishable by the civil law, with a fine payment that is between $500 to $1000. German has also committed an offence by exploiting legal loopholes on DelVel, which is also punishable by the civil law with a fine payment that will not be more than $10,000.

DelVel construction, Inc. will succeed in this case, because the law will mandate German to pay the remaining balance of $320,000 as were agreed with DelVel in their contract agreement.