You want a well to be drilled in the backyard of your summer house. You have agreed with a contractor at a price of $1000/meter to be paid according to the schedule of rates contract. Your estimate for the contractor’s profit is $100/ meter
Due to municipality regulation, you cannot dig a well of depth more than 10 meters in the backyard of your house. Hence, if the contractor cannot reach a water source in 10 meters, then he has to stop. In such a case, your agreement is you pay him $5000 for all the construction work performed and he will close the well properly and safely. What would be the expected payment based on this type of contract?
