Problem.Dispute.Ecoville garbage collection

     On December 1, the City of Ecoville invited bids for the exclusive right to collect and dispose of the city's residential trash for a period of five years, commencing on May 1 of the following year.  Sealed bids were to be submitted no later than January 30.

     The bid invitation included a copy of the 30 page contract, drafted by the city, which would be signed by the city and the successful bidder. A portion of the bid invitation instructed bidders to base their bids on "the current official map of the City of Ecoville available from the main branch of the Ecoville library."

     Several companies submitted bids. The bid of Mother Earth, Inc., based on 10,000 households, was $8,000,000.00. The bid also contained a formula for increased payment to Mother Earth in the event of growth in the number of households in the city subsequent to an award of a contract (contrast the facts of Angel v. Murray).  This baseline bid was lower by $200,000.00 than the next lowest bid. Accordingly, in early February, the city notified Mother Earth, Inc. that it planned to accept Mother Earth's bid, subject to any modifications mutually agreed prior to signing the contract.

     Prior to signing the contract, Mother Earth's president and representatives of the city discussed several aspects of the contract. As a result of these discussions, they made and initialed several handwritten changes to the typewritten contract before signing the contract. None of the changes so made bear any relevance to the dispute described below.

     Mother Earth, Inc. commenced operations on May 1. Within two weeks, city offices were deluged by hundreds of calls from angry residents complaining about missed or delayed trash collection. Investigation by city officials revealed two basic problems:

     (1) Elderly residents of 1000 households expected that trash collectors would carry trash cans from back yards to the trash trucks, consistent with the widely known practice of the previous trash hauler. Mother Earth, Inc. did not follow this practice. As a result, trash from households of many elderly residents was not collected during the first week of May and many residents of such households had great difficulty in getting trash curbside during the second week of May.

     (2) Trash pickup for 500 households scheduled for Wednesday did not occur until Saturday morning. These households were located in three recently developed residential subdivisions in the city.

     You are a lawyer representing Mother Earth, Inc. You are scheduled to meet with lawyers for the city tomorrow afternoon to discuss the problems that have arisen and seek a negotiated settlement of differences.

     In preparation for the meeting, you studied the 30 page typed contract with the city. Three paragraphs of the contract read as follows:

52. Supplementary services: Mother Earth, Inc. will assist disabled residents and other needy persons by carrying trash containers to the collecting vehicle from places in which such residents customarily locate trash containers, provided, however, that city shall furnish Mother Earth, Inc. with the addresses of the residences in which such persons reside.

66. No modification of this agreement shall be of any force or effect unless in writing signed by both parties.

73. This contract contains the entire agreement of the parties, to the exclusion of all other prior or contemporaneous agreements, written or oral.

     The contract makes no other mention of the kind of services referred to in paragraph 52. Your client has told you that it never agreed to provide such services to households with elderly residents and that to do so would significantly increase its costs. In addition, your client has told you that the city never furnished addresses of households with elderly residents.

     City officials maintain that at the meeting preceding the signing of the contract the president of Mother Earth, Inc. orally agreed to extend paragraph 52 services to households with elderly residents and that the parties simply forgot to clarify that point in the handwritten changes they had made to the contract prior to signing it. The city also maintains that it didn't furnish addresses to Mother Earth, Inc. because in April a representative of Mother Earth, Inc. had called the city and said: "We got the paragraph 52 addresses from the prior trash hauler."

     In preparation for the meeting you also learned from your client that, in preparing its bid, your client had studied the December official map of Ecoville rather than the new official map adopted the ensuing January.  The newer map showed the recently developed subdivisions referred to above. The older map did not.  A new official map was published annually on January 2nd and was first available for reference at the main branch of the Ecoville library on January 15.

     Your client discovered the existence of the new subdivisions after signing the contract and before beginning performance.  Because of its desire to preserve good relations with the city, your client had refrained from mentioning its discovery to the city. Instead, it had scheduled trash pick up from the new subdivisions on Wednesdays, and hoped (too optimistically, as it turned out) that trucks assigned to adjacent areas could, if assigned highly experienced crew, cover the additional residences without delay.

     In a letter to your client requesting the meeting, the city described the problems and also stated: "We must insist that you rectify these problems immediately, without additional charge. In the event you fail to do so, we will cancel our contract with you, hire another trash management company, and hold you responsible for damages."

     Your client is considering how it wishes you to respond to the city in the meeting scheduled for tomorrow. It wants your opinion as to its chances in litigation and the likely remedies for the prevailing party should it refuse to accede to the city's demands. Provide that opinion and the legal analysis upon which it is based.