Opinion ID: 396525
Heading Depth: 2
Heading Rank: 1

Heading: Allocation of Risk

Text: 73 The trial court concluded that the underlying risk of economic loss for the failure of Rich's contract with the Government fell on Rich and that Heyl had a compensable reliance interest which was not waived by the parties' agreement. 74 Appellant argues, however, that two aspects of its contract with Heyl specifically indicate that Heyl bore the risk of failure of Rich's agreement with the Government: (1) Heyl's duty under Paragraph 1a.46.1 of the Project Specifications to obtain a building permit for the proposed project, and (2) the waiver provision of Article 8 of the Heyl-Rich Agreement. 75 Neither Heyl nor Rich challenges the trial court's determination that Paragraph 1a.46.1 of the Specifications 14 assigned Heyl the duty to obtain a building permit. Rich would have us infer from this, however, that both parties intended for progress payments to be contingent upon Heyl obtaining a building permit. We are unable to discern in either the language of Paragraph 1a.46.1 or Article 6, 15 or the subsequent behavior of the parties the intent which appellant would have us find. We find the trial court's finding on this issue was not clearly erroneous. 76 A more difficult issue is appellant's assertion that Article 8 of its contract with Heyl constitutes a waiver of Heyl's right to sue Rich for breach of contract. Article 8 reads in part: 77 The Contractor is aware that the work of this contract is being done pursuant to an agreement between the Owner and Government of the Virgin Islands and that the Contractor has read said contract and understands the provisions contained therein. In the event either the Owner or the Government of the Virgin Islands shall fail to comply with one or more provisions of said agreement between them, Contractor agrees it shall make no claim against the Contractor (sic) for damages or extra payment allegedly arising from said failure to comply; unless such action directly affects the dwelling unit costs. 78 (emphasis added). Rich argues that the second Contractor in the last sentence was meant to read Owner, while Heyl contends that the intended words were Government of the Virgin Islands. We believe the trial court was correct in concluding that the disputed word was intended to read the Government of the Virgin Islands, as asserted by Heyl, and that Heyl had not waived its right to sue Rich for breach of contract. 79 Finally, relying upon Restatement (Second) of Contracts §§ 294 and 296 (Tent. Draft No. 10, 1975) 16 the trial court determined that Heyl had a compensable reliance interest because Rich bore the risk of the parties' mutual mistake insofar as the legality of Rich's agreement with the Government. Rich objects to the reasonableness of the trial court's allocation of the risk of mistake as provided for under § 296(c), but under the circumstances of this case, it clearly was not erroneous for the court to so allocate the risk of mistake as it did and subsequently conclude that Heyl had a compensable reliance interest under Restatement (Second) of Contracts § 300, Comment b (Tent. Draft No. 14, 1979), which provides that a party may also have a claim that goes beyond mere restitution and includes elements of reliance by the claimant.