Reference no: EM131045841

ALPAC and Eagon are corporations that import and export raw logs. In April, Setsuo Kimura, ALPAC's president, and C. K. Ahn, Eagon's vice president, entered into a contract for ALPAC to ship about fifteen thousand cubic meters of logs between the end of July and the end of August. Eagon agreed to purchase them. Subsequently, the market for logs began to soften, making the contract less attractive to Eagon. ALPAC became concerned that Eagon would try to cancel the contract. Kimura and Ahn began a series of meetings and letters, apparently to assure ALPAC that Eagon would purchase the logs.

Eagon was troubled by the drop in timber prices and initially withheld approval of the shipment. Ahn sent numerous internal memoranda to the home office indicating that it might not wish to complete the deal, but that accepting the logs was ‘‘inevitable'' under the contract. On August 23, Eagon received a fax from ALPAC suggesting a reduction in price and volume of the contract, but Eagon did not respond. Soon after, Kimura asked Ahn whether he intended to accept the logs; Ahn admitted that he was having trouble getting approval. On August 30, Ahn informed the home office that he would attempt to avoid accepting the logs but that it would be difficult and suggested holding ALPAC responsible for shipment delay. Kimura thereafter believed that Eagon would not accept the shipment and eventually canceled the vessel reserved to ship the logs, believing that Eagon was canceling the contract. The logs were not loaded or shipped by August 31, but Ahn and Kimura continued to discuss the contract.

On September 7, Ahn told Kimura that he would try to convince the firm to accept the delivery and indicated that he did not want Kimura to sell the logs to another buyer. The same day, Ahn informed Eagon that it should consider accepting the shipment in September or October. By September 27, ALPAC had not shipped the logs and sent a final letter to Eagon stating that because it failed to take delivery of the logs, it had breached the contract. Eagon responded to the letter, stating that there was ‘‘no contract'' because ALPAC's breach (not shipping by the deadline) excused Eagon's performance. Explain whether either party breached the agreement.