MH
Maria Holloway
Answers (2)
MH
Answered
Analyzing the needs of the audience and the situation takes place during what stage of the email development process?
A) Planning
B) Writing
C) Completing
D) Revising
E) Responding
A) Planning
B) Writing
C) Completing
D) Revising
E) Responding
On Sep 27, 2024
A
MH
Answered
Hygrade Fruit Juice Co. entered into a contract with Citrus Suppliers Ltd. for the supply of orange concentrate for its juice production operation. The terms of the contract provided that Citrus would supply Hygrade with 1,000 cases of oranges at $10, per case one month later, subject to a deposit of $4,000 on signing the contract and the balance on delivery. The contract further provided that in the event of breach or repudiation of the agreement by Hygrade, the deposit would be forfeited as liquidated damages. A week after the contract was signed, a senior representative from Hygrade was meeting with a broker from Citrus on a particular matter when their discussion degenerated into an argument that culminated with the representative from Hygrade saying "We've suffered along with your substandard product long enough. We've paid you too much in the past and you're ruining the reputation of our juices. Are you getting this next shipment from the same source?" The citrus representative responded affirmatively. "Then you can just stuff the next shipment." At that, the representative from Hygrade left.
The fruit to be supplied to Hygrade was costing Citrus $5,000 from their source in Florida, USA. Taking the actions of Hygrade as repudiation, Citrus commenced negotiations with Cake & Cookie Co. for their purchase of the fruit. Cake & Cookie required the fruit for flavouring certain of their products, but certainly did not require high-grade fruit. As this was the case, regardless of the quality of Citrus's offering, Cake & Cookie was prepared to offer only $5,000 for the shipment to take it off Citrus's hands. At the time, other juice manufacturers for whom the fruit was suitable were offering $9,000 for a similar product. On learning of the impending sale between Citrus and Cake & Cookie, Hygrade immediately brought an action for an injunction against the sale and a return of their deposit, which they alleged was not liquidated damages. Citrus immediately filed an action against Hygrade in response, holding on to their $4,000 deposit and suing Hygrade for the $1,000 of lost profits that would have been generated by a sale to Hygrade. Discuss the arguments that will be raised by the parties and render a decision.
D.L.R. (3d) 1.
The fruit to be supplied to Hygrade was costing Citrus $5,000 from their source in Florida, USA. Taking the actions of Hygrade as repudiation, Citrus commenced negotiations with Cake & Cookie Co. for their purchase of the fruit. Cake & Cookie required the fruit for flavouring certain of their products, but certainly did not require high-grade fruit. As this was the case, regardless of the quality of Citrus's offering, Cake & Cookie was prepared to offer only $5,000 for the shipment to take it off Citrus's hands. At the time, other juice manufacturers for whom the fruit was suitable were offering $9,000 for a similar product. On learning of the impending sale between Citrus and Cake & Cookie, Hygrade immediately brought an action for an injunction against the sale and a return of their deposit, which they alleged was not liquidated damages. Citrus immediately filed an action against Hygrade in response, holding on to their $4,000 deposit and suing Hygrade for the $1,000 of lost profits that would have been generated by a sale to Hygrade. Discuss the arguments that will be raised by the parties and render a decision.
D.L.R. (3d) 1.
On Sep 23, 2024
This question raises the issues of damages, injunctions, efforts required to mitigate, liquidated damages and deposits, and repudiation. The facts given are sufficient for students to conclude that Hygrade has at least impliedly, if not expressly, repudiated their contract with Citrus. Given the willingness of Citrus to perform, and aside from issues of quality of the goods (which students should avoid drawing into the case), Citrus is entitled to the damages that may be reasonably foreseen to flow from this repudiation and breach.
The best method of analysis of this fact situation is to dispense with the issue of liquidated damages first. On a contract of sale wherein the goods cost the supplier $5,000 with a sale price of $10,000, a deposit of $4,000 (40% of the contract price) would not be viewed by the courts as liquidated damages, but rather as part payment of the price. The fact that $4,000 represents 80% of Citrus's acquisition cost and 40% of the contract price is far too significant for this to be termed as liquidated damages. On that basis, Hygrade may be termed as having made a $4,000 contribution to the purchase price of the fruit and this must be taken into consideration in any assessment of damages. With respect to the deal between Citrus and Hygrade, given a deposit of $4,000 and a final payment of $6,000, Citrus stood to earn $5,000 profit on the deal. This is the benchmark from which damages must be assessed. If the deal between Citrus and Cake & Cookie is allowed to stand, Citrus would have revenues of $9,000 (retaining the deposit of $4,000 plus Cake & Cookie's $5,000 payment) and would stand to make $4,000 profit. On that basis Hygrade should forfeit its deposit and be liable for a further $1,000 in damages.
Hygrade will argue that Citrus's efforts in mitigating their damages was insufficient. Where a liquid market exists for the fruit at $9,000 (assuming it continues to exist) Citrus should have made such a sale, retained $1,000 of the deposit paid by Hygrade, representing their loss on a sale to another juice manufacturer, and returned the balance of the deposit of $3,000 to Hygrade. Citrus's argument will be that the parties freely negotiated what would constitute the parties' assessments of damage of breach by Hygrade and that this was assessed as equivalent to the amount of the deposit. They would further maintain that they were under no obligation to seek the best deal in mitigating their losses, but rather merely make sufficient attempts to find any willing purchaser. On that basis they will contest the injunction and advance their claim for a further $1,000 payment from Hygrade.
After reviewing these arguments, the court will likely decide in the following manner: As noted above, the payment made by Hygrade cannot in good conscience be termed liquidated damages but rather part payment of the purchase price. On the assumption that the market for this fruit is liquid, it is not unreasonable to have required Citrus to make sufficient effort in mitigating its loss to secure a sale at the going market price. Given this, the court will likely decide that Citrus should be permitted to retain $1,000 as a more appropriate measure of liquidated damages, require them to return the remaining $3,000, grant an injunction against the sale to Cake & Cookie, and require Citrus to find a purchaser at the going market rate of $9,000. In this manner, Citrus will be restored to the position it would have been in but for the breach of Hygrade, and a more reasonable assessment of liquidated damages would have been determined.
Based on: Stephenson v. Colonial Homes Ltd., [1961] O.R. 407; Asamera Oil Corp Ltd. v. Sea Oil & General Corp. et al. (1978), 89 D.L.R. (3d) 1.
The best method of analysis of this fact situation is to dispense with the issue of liquidated damages first. On a contract of sale wherein the goods cost the supplier $5,000 with a sale price of $10,000, a deposit of $4,000 (40% of the contract price) would not be viewed by the courts as liquidated damages, but rather as part payment of the price. The fact that $4,000 represents 80% of Citrus's acquisition cost and 40% of the contract price is far too significant for this to be termed as liquidated damages. On that basis, Hygrade may be termed as having made a $4,000 contribution to the purchase price of the fruit and this must be taken into consideration in any assessment of damages. With respect to the deal between Citrus and Hygrade, given a deposit of $4,000 and a final payment of $6,000, Citrus stood to earn $5,000 profit on the deal. This is the benchmark from which damages must be assessed. If the deal between Citrus and Cake & Cookie is allowed to stand, Citrus would have revenues of $9,000 (retaining the deposit of $4,000 plus Cake & Cookie's $5,000 payment) and would stand to make $4,000 profit. On that basis Hygrade should forfeit its deposit and be liable for a further $1,000 in damages.
Hygrade will argue that Citrus's efforts in mitigating their damages was insufficient. Where a liquid market exists for the fruit at $9,000 (assuming it continues to exist) Citrus should have made such a sale, retained $1,000 of the deposit paid by Hygrade, representing their loss on a sale to another juice manufacturer, and returned the balance of the deposit of $3,000 to Hygrade. Citrus's argument will be that the parties freely negotiated what would constitute the parties' assessments of damage of breach by Hygrade and that this was assessed as equivalent to the amount of the deposit. They would further maintain that they were under no obligation to seek the best deal in mitigating their losses, but rather merely make sufficient attempts to find any willing purchaser. On that basis they will contest the injunction and advance their claim for a further $1,000 payment from Hygrade.
After reviewing these arguments, the court will likely decide in the following manner: As noted above, the payment made by Hygrade cannot in good conscience be termed liquidated damages but rather part payment of the purchase price. On the assumption that the market for this fruit is liquid, it is not unreasonable to have required Citrus to make sufficient effort in mitigating its loss to secure a sale at the going market price. Given this, the court will likely decide that Citrus should be permitted to retain $1,000 as a more appropriate measure of liquidated damages, require them to return the remaining $3,000, grant an injunction against the sale to Cake & Cookie, and require Citrus to find a purchaser at the going market rate of $9,000. In this manner, Citrus will be restored to the position it would have been in but for the breach of Hygrade, and a more reasonable assessment of liquidated damages would have been determined.
Based on: Stephenson v. Colonial Homes Ltd., [1961] O.R. 407; Asamera Oil Corp Ltd. v. Sea Oil & General Corp. et al. (1978), 89 D.L.R. (3d) 1.